July 21, 2017
By Alex Keown, BioSpace.com Breaking News Staff
DUBLIN – Less than one month after Endo International agreed to pull its opioid pain medication, the reformulated Opana ER, from the market, the company announced it was shuttering a manufacturing facility in Alabama and terminating hundreds of employees.
Endo said the move follows a comprehensive review of its manufacturing network. That review showed the Alabama facility “has been impacted by declining volumes of commoditized products.” That review lead to the closing of the manufacturing and distribution facilities in Huntsville, Alabama. The closure of the facility is expected to take place over the next 12 to 18 months, Endo said in a statement. The closure of the Alabama plant comes about one year after the company shuttered a site in Charlotte, N.C. The closure of the two sites resulted in the elimination of about 875 jobs, including 35 open positions, the company said.
Paul Campanelli, president and chief executive officer of Endo International, said the company’s priorities are focused on building its product portfolio and its technological capabilities for future growth.
“Today’s announced action enables a redeployment of investment from commoditized products to more differentiated capabilities and products that represent our core areas of future growth,” Campanelli said in a statement.
Campanelli added that he wanted to thank the employees who were affected by the plant closures for their “valuable contributions to our company.”
Endo said its restructuring actions are “intended to better match manufacturing capacity to projected future demand.” The loss of the facilities and the jobs is expected to cost the company approximately $325 million in pre-tax charges, including approximately $60 million of cash charges. The remaining estimated non-cash charges consist primarily of accelerated depreciation of approximately $165 million and intangible asset and property, plant and equipment impairment charges of approximately $90 million. Endo expects to realize approximately $55 million to $65 million in annual net run rate pre-tax cost savings by the fourth quarter of 2018.
Earlier this year, Endo initiates a restructuring program focused on the company’s corporate functions and branded pharmaceutical R&D functions in Malvern, Penn. and Chestnut Ridge, N.Y. That restructuring resulted in the loss of about 90 jobs. Endo went through several restructuring rounds in 2016, which resulted in layoffs of approximately 1,000 employees. In May 2016, the company slashed its 2016 forecasts due to increased competition and regulatory delays. That caused Endo to undergo a restructuring and evolution of its corporate strategy to meet the new challenges.
In June, the U.S. Food and Drug Administration made a bold move and asked Endo to remove Opana from the market due to the opioid epidemic in the United States. The FDA’s request is the first time the agency has taken steps to remove a current opioid product due to concerns over abuse.
Opana ER was initially approved in 2006 for the management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time. On July 7, the company agreed to remove Opana ER from the market. As a result, the company said it expected to incur a “pre-tax impairment charge of approximately $20 million in the second quarter of 2017 to write-off the remaining net book value of its Opana ER intangible asset.” Opana ER generated $158.9 million for full-year 2016 and $35.7 million for first quarter 2017.
Shares of Endo International are trading at $12.39 as of 10:07 a.m.
