Roche has announced that it plans to restructure its manufacturing network for small molecules to address current underutilization as a result of its evolving portfolio, which includes specialized small-molecule medicines produced in smaller volumes. As a result, Roche plans to exit four manufacturing sites in Clarecastle, Ireland; Leganes, Spain; Segrate, Italy; and Florence, South Carolina. In an effort to minimize job reductions, the company is actively looking into divestment opportunities for these facilities.

At the same time, Roche will further invest CHF 300 million ($298 million) into a dedicated facility in Kaiseraugst, Switzerland to support future technology requirements for manufacturing small-molecule specialized medicines.

“With these changes we are responding to the evolution of our small-molecule portfolio towards specialized medicines produced in lower volumes,” says Daniel O'Day, chief operating officer, Pharmaceuticals Division of Roche, in a company statement. “We are aware of the impact this decision has on our colleagues, and we will do our utmost to support them during this transition.”

Roche will immediately begin discussions with employee representatives in the respective countries and said it will conduct the consultation process in an open and socially responsible manner. Transition will begin in 2016 and is planned to end by 2021. Affected employees will be notified as soon as possible and will receive appropriate support during the transition, said the company.

Roche said it expects that site exits will result in non-core restructuring costs of CHF 1.6 billion ($1.58 billion) until 2021, of which up to CHF 600 million ($596 million) will be in cash. This also includes additional efficiency efforts undertaken in the manufacturing network and organization. Estimated non-core costs in 2015 are up to CHF 800 million ($794 million), with only a minor cash flow impact in 2015.

The rationalization in its small-molecule manufacturing capacity has come following a series of announced investments by Roche over the past two years of more than CHF 2 billion ($1.98 billion) in its biologics manufacturing capacity.

Source: Roche