In 2016, J&J’s manufacturing facility, which spans 55.27 acres, was completed. It produced a variety of consumer health goods. However, now Johnson & Johnson is selling its largest India plant as demand weakens.
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Johnson & Johnson (J&J), which is experiencing a decline in demand for its household goods in India, has sold its largest manufacturing unit in the nation, located in Penjerla, Telangana, to Hetero on a slump sale basis.
The sale’s financial specifics were kept confidential, reports The Economic Times.
In 2016, J&J’s manufacturing facility, which spans 55.27 acres, was completed. It produces a variety of consumer health goods, including skincare, earbuds, electrolyte drinks, oral care, and babycare products. However, the factory has been idle ever since. The business had to list the factory for sale and incur a roughly 310 crore impairment charge.
In 2020–21, J&J evaluated their land asset at 33.1 crore, per the company’s annual report.
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J&J has now sold two plants in India. As part of its strategic management decision, it sold its medical division facility in Baddi, Himachal Pradesh, in 2021–2022.
Hetero, the business that announced the purchase of the factory, stated that it will upgrade the manufacturing facility and spend more than 600 crore doing so in order to make it the company’s hallmark sterile pharmaceutical and biologics manufacturing unit.
The Hyderabad-based pharmaceutical company stated that it also plans to add 2,000 jobs in biochemistry, pharmaceutical sciences, molecular biosciences, engineering and ancillary services.
“We are committed to an investment upwards of $75 million to upgrade and enhance existing facilities at the site and expand manufacturing of our global biologics and sterile pharmaceutical products,” said Vamsi Krishna Bandi, managing director of Hetero.
PwC served as Hetero’s only financial advisor in connection with the acquisition of the Penjerla manufacturing site.
J&J did not provide an explanation for why its production was halted, but those with knowledge of the situation said the business was struggling with declining demand for its consumer health goods, particularly in the babycare market. Sales have also been hampered by the company’s intention to stop producing its best-selling talc-based baby powder globally starting in 2023 in response to allegations that asbestos, a known carcinogen, may have been present. The business announced that it would switch to making baby powder with cornstarch.
The Maharashtra government revoked the manufacturing license for its Mulund factory last month in the sake of “public health at large.”
Tofler estimates that J&J’s revenue in 2021–22 decreased by 49% year over year to ₹2,911 crore.