The facility has underperformed since it was bought by the firm in 2003 – losing money in two out of the past four quarters, including $200,000 (€157,000) in the third quarter results announced last week.
Following a detailed analysis of the site's processes, management, cost structure, efficiency and profitability, the firm said it has decided to move away from the loss-making large scale contract manufacturing activities at the plant and instead refocus on the production of clinical trial active pharmaceutical ingredients (APIs) that have strong commercial potential.
The specific goals of the overhaul are to attract new business and strengthen competitiveness in this component while reducing operating costs and regain profitability by increasing efficiency and eliminating overlap.
"This initiative is designed to sharpen operational and financial focus and right size our large scale manufacturing operations with customer demand," said AMRI's CEO Thomas D'Ambra.
"We are transitioning this facility away from a structure built to accommodate a few, larger legacy products to a more nimble, agile infrastructure that supports a number of projects produced simultaneously."
As part of efforts to reprioritise and focus resources, AMRI said it has already invested over $40m in improvements at the facility during the last three years.
The plant is already working on 14 Phase III clinical trial compounds on behalf of pharma clients and it is hoped that the majority of those compounds will eventually be approved by the Food and Drug Administration (FDA) and sold commercially, facilitating a return to consistent long-term profitability for the business.
"Securing commercial supply agreements for many of these compounds is strategically important for the growth of this component," said the company.
Through the restructure, AMRI said it also expects to realise annual savings of $5m as of 2007 and will achieve this through a series of initiatives that will be implemented by the end of this year, including the disposal of underutilised assets, elimination of non-essential operating expenses and reductions in raw material costs.
In addition AMRI plans to slash 15 per cent of the plant's 305-person workforce – the equivalent of 41 jobs – 27 of which will be engineering and manufacturing technician redundancies.
Meanwhile, the company as a whole reported a sharp loss in earnings for the third quarter, down to $1.4m from $4.4m the previous year and in addition to the proposed restructure, AMRI indicated it would now also increase focus on its drug development services at its plant in Hyderabad, India, as well as on drug discovery services from its laboratories in Singapore and Hungary – areas which both saw very positive third quarter gains.
Contract revenue from Development and Small Scale Manufacturing in the third quarter was $9.6m, an increase of 45 per cent compared to 2005, while contract revenue for Discovery Services in the third quarter was $10m, an increase of 61 per cent – a significant proportion of which was driven by the Hungarian operation.
