Lannett Co. is eliminating about 50 positions at its Cody Laboratories subsidiary as part of a restructuring and cost reduction plan expected to generate $10 million in annual savings for the Northeast Philadelphia generic drug.
Cody Laboratories, based in Wyoming, develops and manufactures active pharmaceutical ingredients [APIs] of pain management medicines. Lannett bought the company in 2007 to diversify its product offerings and it had about 130 employees at the start of the year. Lannett said in 2017 it was investing $50 million to expand the plant.
“In recent years the regulatory and competitive landscape for pain management APIs has changed, extending Cody’s timeline to profitability and causing us to revise our plan for this business,” said Tim Crew, Lannett’s CEO. “We determined the substantial continuing investment to attain the size and scale necessary to become a broad competitive force in that space was inconsistent with our renewed focus on our core business, where we see a great deal more near-term opportunities to grow high value assets.
“Nevertheless,” Crew continued, “Cody continues to offer intriguing vertical integration opportunities. We remain committed to investing in Cody’s operations, albeit in a more targeted and selective manner.”
As part of the Cody site’s restructuring, the company intends to transfer production of finished dosage liquid pharmaceutical products to its Carmel, N.Y., facility, and discontinue the manufacture of the less profitable products the plant makes.
Lannett said it expects the restructuring to be substantially completed by this December. The company estimates that it will incur about $5 million of total costs to implement the plan, comprised primarily of severance and employee related costs.
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