Restructuring for some
As some companies make select expansions, other leading contract manufacturers are restructuring. At the end of last year,
Patheon (Toronto, Ontario), a contract manufacturer of solids, semisolids, and liquid dosage forms, outlined its progress
in returning to profitability. In December 2007, Patheon reported a modest gain in revenues from continuing operations for
fiscal year 2007 (ended Oct. 31, 2007) to $677.1 million compared with $674.1 million in the year-ago period. Its loss from
continuing operations for FY 2007 was $84.5 million compared with $288.7 million for FY 2006.
Contributing positively to its financial results were its European, Canadian, and Cincinnati sites, which generated revenues
of $577.3 million in FY 2007, an increase of 6% over 2006, according to a company release. These gains, however, were offset
by losses in the company's Puerto Rico facilities in the fourth quarter. The company was affected by generic competition and
resulting significantly lower revenues in the fourth quarter for "Omnicef" (cefdinir), the largest single product manufactured
at its Carolina site. Its Caguas facility also experienced increased losses because of lower revenues of several products
and various operating efficiencies.
Patheon reported in December that it will retain and continue to streamline its facilities in Caguas and Manati. Patheon
hopes to return its Puerto Rico operations to break-even on a EBITDA (earnings before interest, taxes, depreciation, and amortization)
level by the end of FY 2008. To that end, Patheon reduced its workforce at Caguas by 40 to bring the total workforce at Caguas
and Manati to 775 positions as of the end of fiscal 2007. It also secured commitments to manufacture four additional products
and expects revenues for these products to begin contributing to its bottom line in 2008.
The company, however, plans to divest its 230,000-ft2 facility in Carolina, Puerto Rico. The Carolina site specializes in manufacturing oral cephalosporin solid-dosage forms,
including tablets, capsules, and powders for suspension.
Patheon also is in the process of restructuring its Canadian operations. In December 2007, it agreed to sell its Niagara-Burlington
OTC pharmaceutical manufacturing business to Pharmetics (Laval, Quebec), a nutraceuticals producer. The deal includes the
assets of Patheon's facilities in Fort Erie and Burlington, Ontario. As of press time, the deal was scheduled to close by
Jan. 31, 2008.
The divestment of its Niagara-Burlington OTC business is part of a larger strategy by Patheon to improve its profitability
by focusing on manufacturing prescription pharmaceutical products. Patheon announced in April 2007 plans to restructure its
six manufacturing facilities in Canada. In addition to divesting its Niagara-Burlington OTC business, Patheon plans to close
its York Mills, Toronto, facility and transfer substantially all commercial production and development services to its site
in Whitby, Ontario. The process of transferring production to other facilities is expected to be completed by the first half
of fiscal year 2009.
Patricia Van Arnum is a senior editor at Pharmaceutical Technology, 485 Route One South, Bldg F, First Floor, Iselin, NJ, 08830, tel. 732.346.3072, email@example.com