Impax Laboratories said today it will shut down its Middlesex, NJ, manufacturing and packaging site, and eliminate the facility’s 213 positions over the next 2 years.
The shutdown, disclosed in a regulatory filing, is part of a restructuring plan approved by the company’s board. Impax said the restructuring plan is designed to cut costs as well as improve operating efficiencies and enhance the company’s competitive position.
Impax acquired the Middlesex site from CorePharma as part of deals totaling $700 million in 2014. The deals consisted of the acquisitions of Tower Holdings—including CorePharma and another Tower operating subsidiary, Amedra Pharmaceuticals—as well as Lineage Therapeutics.
Impax’s Middlesex site “has a full range of capabilities, including research and development, manufacturing, and packaging,” according to the company’s website. The company’s primary packaging facility for products produced both domestically and internationally is in Philadelphia, with another site capable of producing approximately 1.2 billion units of oral, solid dosage forms annually in Hayward, CA, where the company is headquartered.
Impax added that products now manufactured at the Middlesex site will be transferred to other company facilities or to third party manufacturers.
The restructuring is projected to save Impax between $23 million and $27 million annually beginning in 2017, Impax said in its filing.
However, Impax estimated that it will take pre-tax charges of approximately $45 million to $53 million in connection with the cost-cutting plan. The largest share—between $19 million and $23 million—will consist of charges related to asset impairment and accelerated depreciation. Product transfer and lease costs will account for between $14 million and $16 million, while employee termination and retention expenses will account for the remaining $12 million to $14 million.
Impax is carrying out the restructuring 2 weeks after reporting a 32% year-over-year decrease in net income in 2015, down to $38.997 million from $57.353 million. However, the company said its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 21% last year to $225.7 million from $186.7 million in 2014.
For 2016, Impax has projected in guidance to investors that revenues will rise at least 15% over 2015, which saw a 44% jump over 2014 to $860 million, and that adjusted earnings per share will increase at least 10% over 2015, just as it rose 10% over 2014 to $1.45.
In the same filing, Impax disclosed it would cooperate with the U.S. Attorney's Office for the Southern District of New York Civil Frauds Unit following a request for information and documents relating to the company and any pharmacy benefit manager (PBM) concerning Zomig® (zolmitriptan) nasal spray, indicated for acute migraine, with or without aura, in patients aged 12+. The request included “any contracts between the Company and PBMs, as well as services performed by and payments to the PBMs pursuant to those contracts,” Impax said.
