Glaxo SmithKline Pharmaceuticals is weighing the option of winding down operations at two of its four plants in India in an attempt to rationalise manufacturing.
The drug giant has undertaken a viability study, which will be completed by December.
Under consideration are the bulk drugs unit in Mysore and the formulations unit in Bangalore. The Bangalore unit also makes Iodex, which is marketed by Glaxo SmithKline Consumer Healthcare.
Confirming the development, a senior executive at Glaxo SmithKline told Business Standard: "This is part of the parent company's strategy of reviewing the viability of its manufacturing units annually across the globe. The operational and financial viability of the Bangalore and Mysore units is being weighed. The report will be submitted by December."
In case the report suggests that these two units are unviable, the company may look at increasing the capacity of its Nashik unit.
"While third-party manufacturing could be a possibility, there is scope for an additional shift at the Nashik facility," the executive added.
Glaxo SmithKline's Nashik and Thane units in Maharashtra manufacture formulations and bulk drugs, respectively.
The closure of the company's Ankleshwar facility last year affected sales during the half-year ended June 30. However, the company was incurring a cash loss of Rs 11.4 crore (Rs 114 million) per annum on the unit.
Glaxo SmithKline has discontinued operations at its Mulund (Mumbai) unit and has accepted the voluntary retirement applications of 509 employees in July. The separation cost is an estimated Rs 64 crore (Rs 640 million).
According to details shared by Glaxo SmithKline, the Ankleshwar unit's closure resulted in a 47 per cent decline in the company's exports in the first half of the current financial year, primarily due to the discontinuation of ranitindine exports during the period. The unit was sold to Glenmark Pharmaceuticals for Rs 14 crore (Rs 140 million).
Glaxo SmithKline, with a pharmaceutical market share of 5.9 per cent, enjoys a leadership position in dermatological, corticosteroid and thyroid preparation segments, in which its products are represented.
The company has been working on various measures to improve the profitability of its operations. Recently, it announced that it would focus on just 30 core brands and new product launches from the parent's stable.
