The reason for the decline in demand for pseudoephedrine is a change in the US over-the-counter drug regulations - currently the world's largest market for this product.
The regulations state that pharmaceuticals that contain pseudoephedrine can no longer be sold over the counter, only now available under prescription.
In addition, one of the main reasons for declining sales in caffeine could be due to the pricing pressure from manufacturers of the product in Asia.
BASF's decision to adjust its production means the workforce at the Minden site must be reduced by 95 positions from 630.
"It is not easy for us to carry this message to our workers. However, the production adjustments are necessary to improve the international competitiveness of the Minden site," said Dr Roland Minges, managing director of BASF Pharma.
BASF's main sales products are caffeine and pseudoephedrine. Pseudoephedrine is an active ingredient to treat cold related illnesses and allergies; caffeine is used in the manufacture of pharmaceutical products and soft drinks.
The cutbacks will be achieved through voluntary redundancy payments, and the company's management plans to work closely together with employee representatives.
In addition, they will receive support in looking for a new job at another company.
The trend towards using alternatives to pseudoephedrine is predicted to escalate as regulations worldwide limit the use of this ingredient.
An increasingly popular choice is phenylephrine, which has been used as a nasal decongestant successfully in the US and Europe for many years.
Pseudoephedrine is a precursor chemical that, when misused, can be used to make the drug methamphetamine, also known as "speed."
Phenylephrine hydrochloride cannot be used in making methamphetamine, and there are no restrictions on its use, as there are with pseudoephedrine.
In the US, 13 states have passed laws or regulations that control access to pseudoephedrine at the retail level.
Some laws, for example, require retail stores to keep cold tablets containing pseudoephedrine behind the pharmacist's counter or in locked cabinets, while other laws limit the quantity that can be purchased at a time or within a 30-day period.
Additionally, a bipartisan group of 12 US senators introduced a bill in late January to limit consumer sales nationwide of medications containing pseudoephedrine.
For pharmaceutical manufacturers, the various restrictions on pseudoephedrine can lead to higher costs for packaging, transportation and Drug Enforcement Administration compliance, while also reducing or eliminating prime shelf space for these products at the retail level.