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Lilly finds buyer for threatened manufacturing unit

Published on 16/10/09 at 08:36am


Lilly has found a buyer for its manufacturing facility Tippecanoe Laboratories in Indiana, USA, which had been under threat of closure since July 2008.

Germany's Evonik Industries has stepped in to purchase the facility and save around 700 jobs, which accounts for all the full-time non-contracted workers at the site. Altogether the plant currently employs around 800 staff.

Evonik said the deal would strengthen its exclusive synthesis business in the US, and help it "meet the growing demand for intermediates and active pharmaceutical ingredients in the pharmaceutical industry". The company declined to disclose the purchase price but said the handover would complete by the end of the year.

Evonik is one of the world's largest chemical companies and operates across a number of sectors, but has been bolstering its position in pharmaceuticals of late as a way to reduce its reliance on more cyclical industries.

"The pharmaceutical market is attractive, economically stable, and produces growth rates near the double-digit range every year," explained the group's chief executive Dr Klaus Engel.

Evonik will continue to manufacture APIs and intermediates for Lilly under a nine-year supply and services agreement.

The Tippecanoe facility - known as Tippe Labs - was first set up in the 1950s and manufactures final bulk and intermediate steps for human health and Elanco brand animal health products.

Lilly said last year it was putting the site on the block because a number of its main products had lost patent protection or were losing exclusivity in the next few years. It also said changes in production practices meant that some of the equipment at the plant was no longer suitable.

Another factor behind the decision was the shift towards more biologic medicines in its product pipeline and a strategic decision to purchase rather than manufacture many late-stage chemical intermediates.

Tippe Labs produces APIs for a number of Lilly's top products, including cancer treatment Gemzar (gemcitabine) which is due to lose US patent protection in 2013, antidepressant Prozac (fluoxetine) and erectile dysfunction drug Cialis (tadalafil).

"These actions ... support Lilly's goal to reduce our workforce and cost structure over time," said Lilly chief executive John Lechleiter.

"We are taking the steps necessary to ensure our long-term success by becoming a leaner, more focused, more customer-oriented and more competitive company," he added.

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