Johnson & Johnson (J&J), which is struggling with slowdown of demand for its consumer products in India, sold its largest manufacturing plant in the country – at Penjerla in Telangana – to Hetero on a slump sale basis.
The financial details of the sale were not disclosed. A J&J spokesperson did not comment on the sale.
J&J’s manufacturing plant spread across 55.27 acres was completed in 2016 to make consumer health products, including babycare range, beauty, earbuds, electrolyte drinks, oral and skincare. The plant, however, has been idle ever since. The company had to take an impairment charge of about ₹310 crore and put up the plant for sale.
According to the company’s annual report, J&J valued its land asset at ₹33.1 crore in 2020-21.
This is the second plant sold by J&J in India. In 2021-22, it sold its medical division unit in Baddi, Himachal Pradesh, as part of its strategic management decision.
Hetero, which announced the acquisition of the plant, said it will invest more than ₹600 crore in upgrading the manufacturing facility to make it the company’s flagship sterile pharmaceutical and biologics manufacturing unit.
The Hyderabad-based drugmaker said it also aims to create 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 acted as the exclusive financial advisor to Hetero on the acquisition of the Penjerla manufacturing facility.
J&J did not give any reasons for idling its plant, but people aware of the matter said the company was grappling with reduced demand for its consumer health products, especially in the babycare segment. The company’s decision to discontinue its top-selling talc-based baby powder globally from 2023, following charges of alleged contamination of asbestos, a known carcinogen, has also impacted sales. The company said it will transition into cornstarch-based baby powder.
Last month, the Maharashtra government cancelled the manufacturing licence of its Mulund plant in the interest of “public health at large”.
According to Tofler, J&J’s revenue fell 49% year on year in 2021-22 to ₹2,911 crore.