Drugmaker Wockhardt is closing its manufacturing facility in Illinois and will continue its business in the United States through contract manufacturing alliances for its products sold in North America, the drugmaker said.

The management has initiated various cost optimisation measures, including restructuring its US business model, and closing the facility, the company said in a regulatory filing. All staff directly engaged by the subsidiary at the manufacturing plant are being relieved in a phased manner and in full compliance with the applicable local laws, it added.

No financial compensation

The site had received “483 observations” and warning letters from the US Food and Drug Administration and has entered into a Consent Decree with the Department of Justice which resolves and settles all matters with the US FDA. The company will stop all manufacturing activities at the plant for the present, it said, adding there is no financial compensation in the Consent Decree.

Will not affect availability

The company has also engaged multiple USFDA (US Food and Drug Administration= approved manufacturing partners to make products for this region under the Wockhardt brand. And the new arrangement will help the company avoid manufacturing and quality management cost completely, resulting in significant savings in operating and overhead cost while allowing the management to completely focus on expansion of the market share of its products in the US and North America, it said. The closure of the facility will not affect availability of its products in the US, given the alternate arrangement already put in place, the company added.

For the last three months ended June 30, 2022, Wockhardt’s US Business clocked revenues of ₹74 crore, as compared to ₹102 crore in the same period last year. The US business contributed to 12 percent of its global revenue, the company had said announcing its quarterly financial performance, adding that it had been impacted by price erosion and supply disruptions.