Sun Pharma sudden closure of Vadodara RnD units leaves around 85 employees in lurch

Mumbai: In a move that will axe job of around 85 employees (as pegged my market sources), Dilip Shanghvi led Sun Pharmaceuticals Ltd. (Sun Pharma) has decided to shut down two of its Research and Development (RnD) Units based in Vadodara.

The move comes as a sudden shock to the employees, state medical reports as it comes without any prior intimation to the affected scientists.

According to various media accounts, the closure of these units has come in a wake of stiff competition and pricing pressure confronted by the Indian generic firms in the US. In a bid to optimise operational cost, Sun Pharma after reviewing the available options concluded to discontinue operations at two Clinical Pharmacology Units located at Tandalja and Akota in Vadodara. The sub-optimal utilisation of these units was not cost-competitive.

A clinical pharmacology unit (CPU) is dedicated to conducting early-phase clinical studies. Sun Pharma performs bio-equivalence studies at its in-house CPUs to facilitate the introduction of generics into the national and international markets. The company has 10 RnD units.

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The clinical research handled by the Vadodara facility will now be taken care of by the Gurgaon RnD centre, started by former Ranbaxy while the remaining research operations will continue at the Vadodara unit.

On the other hand, the affected employees have reportedly been handed over a notice of dismissal along with three months advance salary as severance package. In addition to this, the company has stated that the employees who have been terminated from their services will be offered full support and the company will be helping them with outplacement services as well as that of a counsellor.

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As per a media report by LiveMint, bouncers were allegedly called by the company to control the situation as the employees were informed about the discontinuation of services when they reported for work like usual. Responding to the allegation a Sun pharma spokesperson told the daily, "We also categorically deny that the company used the services of any bouncers as alleged in certain messages on social media."

Confirming the development about closure, a Sun Pharma spokesperson told TOI, "While we continue to make investments in our RnD operations, we also constantly evaluate our resources and future capacity requirements to bring in efficiencies in cost and processes. To ensure optimal utilisation of clinical pharmacology units (CPUs) that conduct bio-equivalence studies, we are discontinuing operations at two centres at Tandalja and Akota, Vadodara. The bio-equivalence studies from these centres will be transferred to our other facilities. We are offering full support to the affected employees and helping them with outplacement services."

All regulatory authorities have been updated about the same, ensuring compliance with all regulations, the company added. In FY19, the company's RnD spend (as a percentage of sales) had come down to 6.9 per cent from 8.6 per cent in the previous fiscal (FY18).