Sun Pharma says US plant closure impact negligible

In less than a month since it announced its biggest acquisition-the acquisition of Ranbaxy-Sun Pharmaceutical Industries, in what seems an unrelated development, announced on Friday, May 2, that, the company has "as a part of its manufacturing consolidation in the US, notified the Workforce Development Agency for the State of Michigan regarding its decision to cease manufacturing operations and close the Detroit (Caraco Pharmaceutical Laboratories, Ltd.) facility located at Elijah McCoy Detroit, Ml, USA."
 
The move raises some obvious questions and here is what the company spokesperson had to say: First, on how many plants Sun has in the US now and how will this closure help? The spokesperson says: "We have 7 facilities in US. The decision to close down the Detroit facility is driven by business considerations.  Our capacity in USA is considerably large and it has become essential to consolidate our manufacturing in line with the market requirements."

What about the perception that this was a problem plant and therefore closure was the only option? "This is not true. We have turned around the Detroit unit post the consent decree. It was brought back into operation since 2012," he said.

If the issues were not with the USFDA (US Food and Drug Administration) and the plant (as it was under consent decree) and the issue was closed and the operations were commenced in 2012 then why it is being shut? "The current decision to close the unit is in line with our strategy to consolidate our manufacturing operations in the US."

On when was the Workforce Development Agency for the state of Michigan notified about this closure? "We notified the Workforce Development Agency on April 30th."

Last but not the least, what was it manufacturing and on what basis it say the impact of this Detroit plant closure will be negligible on FY15 results? "We manufacture six products at the Detroit unit. The financial impact will be negligible."

Earlier, in a statement announcing the decision, the company said: it has "provided the requisite advance written notice of the facility closure to the employee union and all affected employees," it also adds that "the company has ensured that the impacted employees get compensated with more than their regular entitlement under the severance package. They will also receive other support services including out-placement assistance. The rest of the employees are continuing through mutually consented arrangements."

It also said, it "has undertaken necessary measures to ensure business continuity of the products being manufactured at this facility. The manufacturing of these products is being transferred to other units and all necessary steps have been taken to avoid market shortage."