Biovail shifts focus, closing Puerto Rican plants
Biovail 3-month TSX chart
Pharmaceutical company Biovail Corp. unveiled sweeping changes to its business on Thursday, including the closure of two offshore production facilities and a shift in its research focus.
The Toronto company said it will concentrate on products targeted to central nervous system disorders.
The company said it estimates the global market for treatments for central nervous systems disorders is worth about $70 billion US, and growth is expected in the low-to-mid double digits in niche markets, such as Parkinson's disease and multiple sclerosis.
Biovail said it will invest $600 million US in research and development through 2012.
"Biovail's historic business model focused on reformulating existing drugs is under stress in the current pharmaceutical environment," the company's chief executive officer, Bill Wells, said during a conference call.
"Focusing on the development of products that primarily provide convenience and compliance benefits is not a winning long-term strategy. To be successful, our focus had to change."
Moving work to ManitobaBiovail also said it plans to close two manufacturing facilities in Puerto Rico and move some of the work to its plant in Steinbach, Man. The company said the closings are expected to be completed in 18 to 24 months.
The move aims to cut costs by $30 million US to $40 million US annually, although it will initially result in a charge in the range of $80 million US to $100 million US to be taken in the coming quarter.
Biovail also announced a new slate of five independent directors to be put up for election at the company's annual meeting on June 25 in Toronto. The five are:
Serge Gouin, chairman of Quebecor MediaDavid Laidley, former chairman of Deloitte & Touche LLPJ. Spencer Lanthier, former chairman and CEO of KPMG CanadaMark Parrish, former CEO of Healthcare Supply Chain ServicesRobert Power, former executive vice-president at WyethBiovail has been under pressure recently from founder and former chairman Eugene Melnyk, who has talked publicly about possibly proposing a new slate of directors.
Melnyk had said he was unhappy with the direction and management of the company, of which he retains a 11 per cent stake.
Also on Thursday, Biovail said its first-quarter profit came in at $56.4 million US, or 35 cents a share, on revenue of $208.5 million. That was down from a profit of $93.8 million, or 58 cents a share, on revenue of $247 million in the same quarter a year earlier.
Investors sent shares of Biovail up 68 cents, or more than five per cent, to close at $12.52 on the TSX.
With files from Canadian Press
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