Patheon transformation continues with adjustments to its global platform
Posted: 9 May 2012 | | No comments yet
Patheon continues to implement its corporate transformation strategy across its commercial and pharmaceutical development services…
Patheon Inc. (TSX: PTI), a leading provider of contract development and manufacturing services to the global pharmaceutical industry, announced today that it continues to implement its corporate transformation strategy across its commercial and pharmaceutical development services (“PDS”) networks to enhance capacity utilization, focus capital investments on its core business, and accelerate operational excellence programs to increase efficiency, meet customer needs, and improve its cost structure.
As part of this process, the Company determined to make certain adjustments over the next 24 to 36 months to the scale and scope of business conducted at its Swindon, U.K., facility. These adjustments will include winding down or transferring non-cephalosporin commercial production to other facilities and, to the extent possible and commercially appropriate, directing PDS projects that require commercialization activities to other facilities. The Company will be working with each of its affected commercial customers to develop plans to maintain supply chain continuity to the extent possible and commercially appropriate.
On May 8, 2012, the Company concluded that it is required to record an impairment charge ranging from approximately $50 to $60 million for the impairment of long-term assets at the Company’s Swindon, U.K. facility, to be recorded during the second quarter 2012. The impairment charge will not result in any current or future cash expenditures.
In addition, on May 9, 2012, the Company announced a plan of termination (the “Plan of Termination”) that is expected to result in a workforce reduction of approximately 91 employees across the Company’s global PDS and commercial operating segments. In the U.K., the Company has begun the consultative process with the works councils representing the employees at the Swindon and Milton Park facilities. Subject to these consultations, the Company expects to complete the Plan of Termination across all affected sites by the end of fiscal 2012. In connection with the Plan of Termination, the Company expects to incur approximately $5.4 million of expense associated with employee termination benefits, to be recorded during the second quarter 2012. The Company anticipates that it may further adjust the size of the workforce at the Swindon facility as it continues its transformation process, with a total of approximately 400 jobs at risk of redundancy.
In connection with the impairment charges at its Swindon, U.K. facility and the Plan of Termination, the Company expects that it will incur a total amount ranging from approximately $55 to $65 million in costs (as itemized above), of which $ 5.4 million are expected to result in future cash expenditures, in connection with the Plan of Termination.