Teva’s white elephant plant in Mexico inoperative
pharmafile | November 14, 2016 | News story | Manufacturing and Production | Mexico, Rimsa, Teva
The Teva-Rimsa debacle continues to rumble on, with Teva’s plant in Mexico not producing any drugs for market. The plant is effectively closed, with many of the existing staff having been laid off, rendering it completely ineffectual.
Teva Pharmaceuticals agreed to a $2.3 billion takeover of Rimsa back in October of 2015 but the acquisition has not been a smooth one for Teva. Not long after the acquisition, Teva tried to back out of the deal suggesting that there had been fraud on the part of Rimsa, suggesting that the brothers who ran Rimsa had deceived authorities and had sold defective and illegal drugs. The brothers sued in return, under the claim that Teva had falsely accused them.
“Shortly after the acquisition, Teva concluded that it had substantially overpaid for the Rimsa companies,” the former owners said released in a statement. It “now wants its money back because otherwise Teva knows that its management will be held accountable by its shareholders.”
The bitter wrangling between the two has left a white elephant in Mexico for Teva, with little chance of making any return on operations. The deal has been partly responsible for the fall in Teva stock of late, with the potential for Teva to see little return on their $2.3 billion investment. The case is now being used as an example of the risks of expanding into emerging pharmaceutical markets.
Teva is fiercely defending their own position and maintains that the farcical position of the plant can be blamed upon the actions of the Espinosa brothers. Teva is quoted, by Globe, as stating in response to the news that: “Following the discovery of the severe infractions committed under Rimsa’s previous ownership, that of the Espinosa brothers, the health authorities in Mexico suspended production activity at the plant. Teva’s business was affected by this and the company had to adjust the workforce to the level of activity. As a leading global drug company, Teva is committed to continuing to invest in its business in Mexico, to launch new products and to expand its activity in the country. We are working in full consultation with the health authorities with the aim of resuming production and restoring the products to the marketplace. Teva is committed to improving the health of patients in Mexico through the supply of high-quality, safe drugs, while complying with local law and health procedures and meeting the highest global standards that are in force at Teva with regard to quality.”
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