The firm gained control of the Huddersfield plant in 2005 through its £10m (€11m) acquisition of Avecia Pharmaceuticals in December 2005. Pirmal plans to shut down the facility, which contributed £19m to its earnings last year, but has not yet said whether it is seeking a buyer.
The move, which will result in the loss of 93 jobs and cost Piramal around £10m, will split the Huddersfield plant’s roster of manufacturing contracts between the Morpeth plant and facilities in Ennore and Ahmedabad in India.
Piramal said that the move will improve margins in its Pharma Solutions Business (PBS) by between 6 to 8 per cent over the next two years, according to a report in India’s Business Standard
CEO Ajay Piramal told the paper that Piramal’s international business will shrink by around 5 per cent this year but predicted that this will be more than offset by a 15 per cent expansion of its Indian operations.
He added that although the global downturn has cut spending by its smaller customers, a greater number of contracts from a Big Pharma sector keen to reduce manufacturing costs would drive growth of the firm’s business in India.
The Morpeth facility, which houses active pharmaceutical ingredient (API) and finished dosage manufacturing capacity as well as clinical packaging and distribution units, was purchased from global drug giant Pfizer in June 2006.
The plant is approved by both the US Food and Drug Administration (FDA) and UK’s Medicines and Healthcare products Regulatory Agency (MHRA), employs a staff of 450 and already has a $350m (€260m) supply contract with Pfizer.
Talk of Sanofi merger deal “incorrect,” says Piramal
Piramal has again denied it is in talks with France’s Sanofi Aventis about a potential takeover after a series of rumours linked the two firms, according to a report in India’s Economic Times.
As recently as last month Piramal described reports that it was in talks with the European giant as “unfounded,” adopting a similar stance to the one it took in February when speculation named GlaxoSmithKline (GSK) as a potential suitor.
Piramal’s desire to remain independent was leant further credence last week with the installation of Nandini Piramal, daughter of the current CEO, as an executive director.
Mr Piramal told India’s Financial Chronicle that: “I am strengthening the top management of the company. My daughter will now take up more responsibilities. My son will also get a similar role once he completes his MBA.”
While reorganisation of Piramal’s UK operations is not likely to impact on any buyout decision, the plan to shift more business to India does fit with the desire of Big Pharma in general, and Sanofi in particular, to focus on growth in emerging markets.