Eli Lilly and Company announced Thursday plans to conclude production and pursue a sale of one of its Guayama plant, one of three operations it has in Puerto Rico. The site will remain in production until the end of 2015, company officials said.
All of the approximately 100 full-time non-contracted employees currently working in Guayama will be offered employment at Lilly’s Carolina location, which the company has made significant investment and will continue expanding, officials further noted.
“The decision to conclude operations at Guayama is based upon the evolution of the company’s pipeline, which includes a growing insulin and biologics portfolio, coupled with a less capacity-intensive small molecule portfolio,” said Paul Ahern, senior vice president of Global Active Pharmaceutical Ingredient and Dry Products Manufacturing.
“The utilization of the site has been impacted by patent expirations on the medicines produced there. As we assessed our long-term capacity needs, the company made the business decision to conclude manufacturing at the site,” he said.
“Our employees at Guayama have demonstrated strong, sustained performance throughout the years and have produced lifesaving medicines for patients around the world,” said Maria Crowe, president for Lilly’s Global Manufacturing Operations.
“For nearly 50 years, Puerto Rico has served as a major manufacturing location for Lilly, and it will remain so in the future. We have talented and experienced colleagues in Puerto Rico, and we are pleased to be able to maintain employment opportunities for the Lilly employees affected by this decision,” she said.
As a result of this action, the company expects to record a charge of approximately $170 million (pre-tax) or approximately $0.16 per share (after tax) in the fourth-quarter of 2014.
While Lilly will initiate efforts to sell the Guayama site, the company will continue to invest in two manufacturing plants at Carolina. In November 2013, Lilly announced a $200 million investment to increase capacity in its Carolina-based insulin active ingredient manufacturing plant. In July 2014, Lilly announced an additional $40 million in investments to increase capabilities at its Carolina-based drug product site as part of a rebalancing of Lilly’s oral solid dosage network.
Lilly began manufacturing operations in Puerto Rico in 1965 and employs approximately 1,600 employees on the island.
Lilly’s announcement drew immediate reaction from Puerto Rico government officials, who expressed confidence in the pharmaceutical’s ongoing presence on the island.
“As the pharmaceutical industry moves to new and more efficient technologies, companies like Lilly are transforming to drive efficiency in their global manufacturing operations,” said Antonio Medina-Comas, head of the Puerto Rico Industrial Development Company, known as PRIDCO.
“After nearly 50 years in Puerto Rico and considering its business plans, new products and investments that Lilly is doing in Carolina, PRIDCO is betting on the future of the company on the island,” he said, noting the company has expressed a desire to include PRIDCO in its efforts to sell the Guayama plant.