Sandoz, the generics arm of Swiss drug maker Novartis AG, has decided to shutter a second research and development (R&D) centre in India in under 12 months. This time it is the formulations or finished dosage forms R&D unit located in Kalwe, near Mumbai, that is facing closure affecting 147 employees.
Novartis India confirmed the development via e-mailed responses from vice-chairman and MD Ranjit Shahani. It attributed the move to long-term development strategy “to better leverage existing technology and expertise”.
In April, this blog reported that Sandoz had closed its active pharmaceutical ingredients (API) R&D unit, also near Mumbai. At the time, the company had said it planned to continue with formulations R&D, manufacturing and commercial operations. See post here.
Industry watchers have reckoned that the realignment in Sandoz’s global R&D may have to do with a dialling down of the generics opportunity once a slew of blockbusters lose patent protection by 2015 and as biosimilars and other differentiated generics gain importance. (See the earlier Sandoz post for numbers on patent expiries beyond 2015).
An industry executive familiar with the group observed that the move might also stem from a preference to in-licence generics R&D wherever possible. This does not seem far-fetched. Note, for instance, that many Indian companies rely on foreign partners like Sandoz to distribute their generics in regulated markets.
See below the detailed questionnaire sent by Apothecurry to Novartis earlier today and the responses that came in just a little while ago.
1. What is the reason for the closure?
Sandoz recently optimized its development center network in alignment with its long-term development strategy to better leverage existing technology and expertise. The decision to close the center in Mumbai was aligned to this business strategy with focus on differentiated medication.
The projects will be transferred to other development units of Sandoz.
As a matter of company policy we do not publish those details.
4. Coming, as this does, close on the heels of the closure of Sandoz’s API R&D near Mumbai, I have to ask : is owning Indian infrastructure in generics R&D and manufacturing no longer of strategic importance to Sandoz? Would the company prefer to outsource/in-licence ? If so, why?
India continues to be of importance to the Novartis Group. Sandoz recently optimized its development center network in alignment with its long-term development strategy, to better leverage existing technology and expertise. The optimization of the company’s development center network will fuel Sandoz growth. The Sandoz Development Centre was an extension of Global Development in India which is being reorganized and separate from the manufacturing site at Kalwe which produces growing volumes and remains a strategic production facility for the company..
5. Did the cost structure of the formulations R&D centre in Kalwe compare favourably or unfavourably with that of other Sandoz formulation R&D locations globally?
The Kalwe cost structure did not influence this decision.
147 associates are likely to be impacted but we are committed to reemploy as many of them as possible.
As a matter of company policy, we do not comment on our collaboration strategy.
There is no impact on Sandoz manufacturing or commercial operations in India.
Apothecurry 
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Excellent piece of journalism. Very informative and well analysed.
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On 30/11/2012, Sandoz announced that they will close this unit by March 2013. Total number of employees affected by this move are 170. Sandoz have laid off many employees already and that number if not included in this 170. They are planning to retain only 17 employees now. All others will lose their jobs.
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