Tribune Staff Reports
The Philadelphia company that recently acquired a Seymour drug-maker announced Monday an immediate reduction of about 10 percent of its workforce as part of the restructuring process.
The number of jobs that were eliminated at Kremers Urban Pharmaceuticals Inc. in the Freeman Field Industrial Park was not available Tuesday, but a total reduction of 20 percent is planned over the next three years, according to a news release from Lannett Co. Inc.
That company purchased Kremers Urban for $1.23 billion on Nov. 27, and the elimination of Kremers’ corporate offices in Princeton, New Jersey, along with the reductions at the Seymour operations are part of Lannett’s efforts to streamline operations, improve efficiency and reduce costs.
Company officials declined Tuesday to discuss any additional details about the restructuring process, including what positions had been eliminated at Seymour.
According to Jackson County Industrial Development Corp.’s annual survey of companies, Kremers Urban was the third-largest employer in the county with 690 workers in early 2015. This year’s numbers have not been tabulated.
The plan is expected to result in approximately $40 million costs savings during the next 12 months following the close of the acquisition, including $27 million in fiscal 2016, according to Lannett.
Company officials are expected to provide more details about the restructuring plan during a conference call concerning second quarter financial results for fiscal year 2016 this afternoon after the stock market closes.
“A thorough strategic review of our business revealed opportunities to optimize our operations, improve our profitability and implement accelerated and increased cost-reduction measures,” said Arthur Bedrosian, chief executive officer of Lannett Co. Inc.
Bedrosian said in the news release that the efforts, which include consolidating research and product development functions and streamlining manufacturing, packaging and distribution operations, are designed to build a sustainable, strong foundation for future growth, leverage the combined company’s size and scale and enhance its competitive position.
The company currently estimates it will incur aggregate costs of $20 million to $22 million to implement the plan.
The costs associated with the plan primarily consist of a reduction in headcount through reorganization and integration, including severance and termination benefits for employees, expected to be approximately $11 million to $13 million.
Other costs are primarily related to the rationalization, consolidation and relocation of certain portions of research and product development, manufacturing and distribution centers and other facilities, expected to be approximately $8 million. Contract termination costs expected to be approximately $1 million.
Michael Bogda, president of Lannett, and his team are spearheading the plan.