Alkermes, the US company that acquired Elan's drug manufacturing business in Athlone, announced today that it will cut almost a third of the workforce.
The company said it will end production of a number of older products at the plant. It said they had become “uneconomic” due to decreasing patient demand as a result of competition from generics.
Alkermes said the drugs being phased out account for about 5 per cent of the company’s total revenues this year.
“As a result of the termination of these services. it is contemplated that APIL [Alkermes Pharma Ireland Ltd] will also implement a corresponding reduction in headcount of up to 130 employees.
Alkermes said the move was designed to “improve operational performance for the future” at the business’s Irish subsidiary.
The phasing out of the drugs, and the associated job cuts, will take place over the next two years. The products will continue to deliver some revenue for the company during that time.
Alkermes said it expected to make annual savings of between $15 million and $20 million by 2016 as a result of the cuts.
The company will take a restructuring charge of $12.5 million in the first quarter of this year to cover redundancy costs, it said in a statement. It will also incur a non-cash charge of $10 million next year and $7 million in 2015 due to accelerated depreciation of manufacturing plant.
Alkermes acquired the Elan Drug Technology (EDT) unit in Athlone in a $960 million transaction in May 2011. Alkermes, which is listed on the Nasdaq index in the United States, moved its global headquarters to Dublin following the deal.
At that time, chief executive Richard Pops visited the Athlone plant to meet staff and reassure them about their jobs.
In fact, he held out the prospect of additional recruitment in the future.
The parent group reported a 109 per cent jump in revenues to $390 million, in its most recent full year to end-March 2012. Adjusted Ebitda of $70.2 million compared with a prior year loss of $15.4 million in what Mr Pops said had 2012 had been a “transformative year”.
“With the EDT merger complete, Alkermes is a dramatically enhanced and financially strong company,” he said last May.
Alkermes focuses on therapies for psychotic conditions and diseases of the central nervous system. Its biggest sellers are schizophrenia drugs Invega Sustenna and Risperdal Consta. It also makes type-2 diabetes therapy Bydureon, Vivitrol for the treatment of alcohol dependence and opiate relapse prevention and Ampyra, which helps improve walking in multiple sclerosis patients.
