Following its announcement in October to adjust the organization to the more volatile market environment, Lonza has reported site closures. The company cites the economic pressures of the past 18 months for having accelerated the cost reduction efforts of the pharmaceutical industry. In response to that, Lonza is strengthening its platform in Asia and will close the sites of Conshohocken, Penn. (U.S.); Shawinigan (Canada) and Wokingham (UK) in 2010. This step complements Lonza's existing platform in Nansha (China) and is the response to customer needs for mature regulated products at competitive conditions in a new market segment for Lonza.
The closure of the sites will affect 175 employees. Lonza has put a comprehensive severance package in place, in consultation with local employee representatives and authorities. The total restructuring cost amounts to approximately CHF 140 million, 75% of which is attributed restructuring activities in small molecules. The amount also includes impairments of assets and other restructuring activities and will be booked into 2009, 70% of the charges are non-cash.
The Riverside plant will cease its activities in Q4 2010. Lonza is in contact with all Riverside customers to offer tailored solutions that will strengthen the supply security of their individual drug substances by transferring the projects into other operations within Lonza's global network.
The pilot scale plant for the vitamin K3 activities in Shawinigan will cease its activities by the end of March 2010 after having completed the full technical development of this new, proprietary, environmentally friendly technology. Lonza will evaluate further opportunities to provide its customers with chromium-free vitamin K3 from another site in the future.
As part of a modernisation and streamlining initiative within the Lonza Bioscience supply chain, the offices and warehouse in Wokingham (UK) will be closed and the activities will be transferred to Verviers, Belgium. The Verviers facility already supplies all other countries in Europe and can readily handle orders from UK and Irish customers, while maintaining an equivalent level of service to that enjoyed by customers today.
"The closure of the three sites will help to optimize our global operational network and further increase the competitiveness for our customers. The re-engineering project is a key element in our endeavour to bring Lonza back to a sustainable growth," Lonza CEO Stefan Borgas said. "We will continue to drive this project throughout the year and we will see many initiatives rising from it. We are confident that we are on the right track and that the identified measures support the Lonza strategy."