Chugai rejigs manufacturing with plant closures

Chugai said today that it is planning to cut the number of its domestic plants to two from five over the next five or six years in order to make more use of outsourcing.

This follows the divestment of two plants in 2003, as it used the opportunity of its half-ownership by Roche to cut costs. The company's production division may also be spun off as a separate company early next year.

Upcoming changes in the regulatory environment in Japan have made it possible for companies to outsource more of their production. The new Pharmaceutical Affairs law, which comes through in April, will for the first time allow Japanese companies to subcontract the complete manufacturing of their products. Previously, by law some elements of manufacturing had to be conducted in-house.

Chugai said it sell its Kagamiishi plant, which makes tablets and ointments, to Nipro Corp​, a custom manufacturer of disposable medical and pharmaceutical equipment. The latter company said the acquisition would boost its ability to make solid dosage form products and complement its core injectables business.

Chugai​ also plans to move some production at three of its plants to its Utsunomiya facility in Tochigi prefecture and its Fujieda plant in Shizuoka prefecture.

Around Y 20 billion yen (€140m) will be spent to upgrade the Fujieda factory over four years. Chugai said that no decision had been reached on restructuring costs and possible job cuts.