Chennai-based Shasun Chemicals and Drugs (SCDL) has joined the list of Indian contract manufacturing companies closing facilities abroad, as drug production at sites in Europe has become increasingly unviable for Indian drug companies.
Shasun shut its manufacturing facility at Annan in Scotland yesterday and production is being shifted to locations in the US, the UK and India, according to local news reports.
Two days earlier, Piramal Healthcare — one among the top 10 contract manufacturers in the world — said it was closing an active pharmaceutical ingredient (API) contract manufacturing facility, which employed about 90 people, at Huddersfield, UK. Ajay Piramal, chairman, says the move will help improve profit margins of their pharma solutions business by 6-8 per cent.
Manufacturing locations in India can produce drugs at a fourth of the West’s cost of production, where strict environmental rules and overheads are causing multinational drug makers to discard facilities. The latter are increasingly outsourcing production to countries such as India to save costs.
The 27-acre facility at Newbie, Annan, in southwest Scotland, is part of the two production units Shasun acquired from the pharmaceutical customs synthesis business of Rhodia Pharma Solutions (RPS) of France in 2006. The unit employs 86 people and has four production facilities which manufacture APIs and a range of intermediaries. The other facility at Dudley, UK, offers a pilot to commercial-scale production of APIs and intermediates and this plant is still operating.
Operational problems at the Annan facility were impacting Shasun’s financial health for the past two years. Following this, Shasun invested in a process development facility in the US last year, with the intention of moving production.
"Following a detailed and comprehensive review of customer demands and activity levels, the Company has reached a decision that the Annan facility is no longer a viable facility and will be closed by end-March 2009," Shasun had said earlier.
Sources said Shasun was looking for a buyer for the Annan facility and is yet to get a suitable one.