Impax Laboratories to cut workforce
Impax Laboratories, a technology-based specialty pharmaceutical company, will implement a reduction in its workforce as a part of efforts to streamline its operations in response to the need to reduce expenses and adapt to changing market conditions. The reduction primarily affects manufacturing operations and is intended to reduce Impax's cost structure and scale the organization appropriately for its current needs.
Approximately 110 positions are being cut, with the majority at its Hayward, Calif. manufacturing facility.
"This reduction in our workforce was a difficult decision, but necessary to position Impax for a brighter future," said Larry Hsu, Impax Laboratories president and chief executive officer.
"We remain committed to advancing our generic and brand business pipelines and growth strategy,” he said. “To succeed, we must decrease our costs while efficiently advancing our strategic growth priorities in both our generic and brand businesses. These steps ensure the availability of sufficient investment capital to fund these priorities."
The reductions became necessary as a result of lower production volumes at the Hayward facility due to the transfer of products to the company's more cost-efficient Taiwan plant, previously announced product discontinuances and delayed product launches. The company expects the reduction in both personnel and other variable expenses, including the product discontinuances, to yield an annual cost savings of approximately $15 million. Impax expects the total savings within cost of goods sold in 2013 from these actions to be approximately $10 million.
Impax also will reduce its contracted brand sales force from 84 to 64 positions, as well as four regional sales management positions. This short-term action is due to the delay in approval for RYTARY and is expected to result in a reduction of the company's selling expenses of approximately $2 million in 2013. It remains committed to receiving RYTARY approval and expects to expand its sales force to the appropriate level following regulatory approval of RYTARY.
The reduction in workforce is expected to result in a charge of approximately $2.4 million in the second quarter.