The new owner of Banner Pharmacaps announced March 8 that it will permanently close its newly acquired 32-year-old Olds facility by the fall.
Considered one of Olds' largest employers, Banner Pharmacaps' plant in the town is one of four the company has around the world that develops and manufactures softgel pharmaceutical formulations.
It came under new ownership in December 2012, when Patheon Inc. bought Banner for $255 million US.
Patheon CAO James Mullen announced the Olds closure during the company's fiscal 2013 first quarter results conference call on March 8.
"The decision was primarily driven by current resources and volume demand at the site, as well as our goal to fully optimize the available capacity within the network of all Patheon and Banner sites,î Mullen said.
Patheon Inc. is a leading global provider of contract development and manufacturing services to the global pharmaceutical industry.
The company provides products and services to approximately 300 of the world's leading pharmaceutical and biotechnology companies.
Mullen said the Olds closure is consistent with Patheon's overall strategy to strengthen core operations.
It is similar, he said, to consolidation initiatives already executed in Puerto Rico, the United Kingdom and other Canadian sites.
He said he expects minimal loss in revenue with the wind-down of all manufacturing activities in Olds, targeted for the company's 2013 fiscal year-end of Oct. 31.
Mullen said he continues to anticipate revenues of the combined companies to be in excess of $1 billion annually.
Patheon will, though, incur impairment charges of $10.1 million in connection with the Olds site closure, said Patheon's chief financial officer Stuart Grant during the conference call.
Severance for employees and other one-off closing costs are expected to be approximately $5 million, Grant said.
More than 100 people will lose their jobs.
"...And that will result in an estimated annual saving of roughly $8 million going forward,î Grant said.
Staff at the Olds Banner Pharmacaps plant had known of the planned closure prior to the company's conference call on March 8.
The Banner plant opened in town on March 23, 1981 with production starting May 12 of that year.
Banner is the world's second-largest pharmaceutical business focused on delivering proprietary softgel medicine capsule formulations.
In Olds, both nutritional and pharmaceutical products are manufactured and packaged.
Vitamin A capsules in Canada have been primarily manufactured by two companies - Banner in Olds and Accucaps Industries Limited in Windsor, Ont.
In November of 2008, the five-billionth vitamin A capsule for a Canadian-based international vitamin A supplementation program was produced at the Olds plant.
The Micronutrient Initiative, which distributes the capsules to boost the immune systems of children in 70 countries, held an event at the Olds plant on Nov. 25, 2008 to mark the production milestone.
Another milestone was celebrated at the facility in March 2011, with staff gathering to mark 30 years since the opening of the plant.
During the celebration, several employees were honoured for their tenure, with some having been there since Day 1.
"We're known throughout Canada, we're Ö certainly known internationally, and it started 30 years ago, so it's a progression,î said Kate Willoughsby, director of human resources, during the 30-year anniversary celebration.
