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PHILADELPHIA — Lannett Co. has instituted a restructuring plan to streamline operations, sharpen efficiencies and trim costs.
Announced this week, the plan is part of the generic drug maker’s efforts to integrate its recently completed acquisition of Kremers Urban Pharmaceuticals Inc.
Lannett said actions are already under way and include the closing of Kremers Urban’s corporate offices in Princeton, N.J., along with an immediate workforce reduction of about 10% and a total staff reduction of approximately 20% over the next three years.
The restructuring plan is expected to result in about $40 million of cost reductions over the 12 months following the late November 2015 completion of the acquisition, including $27 million in fiscal 2016. Lannett said the initiative is estimated to generate annualized synergies of approximately $50 million by the end of fiscal 2018 and achieve an ultimate run rate of approximately $65 million by the end of fiscal 2020.
“A thorough strategic review of our business revealed opportunities to optimize our operations, improve our profitability and implement accelerated and increased cost reduction measures,” stated Arthur Bedrosian, chief executive officer of Lannett. “Our efforts, which include consolidating our research and product development functions and streamlining our 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 our competitive position.”
The company expects that in implementing the restructuring it will incur aggregate costs of $20 million to $22 million. The effort is being led by president Michael Bogda and his team, who Lannett said have extensive experience integrating acquired companies and managing cost reduction initiatives.
