A pharma merger’s impact ripples across West Virginia as Viatris plant closes

For more than 11 years, Albert Haught has pulled up to an unassuming building on Chestnut Ridge Road in Morgantown, West Virginia every weekday morning. This past Tuesday was the last time he entered.

Haught is one of over 1,400 employees who will lose his job on Saturday when the factory, a hub for generic drug manufacturing for more than five decades, shuts its doors. The plant is one of up to 15 being shuttered, downsized or sold amid a restructuring of Viatris, the company formed when Mylan and Pfizer’s Upjohn unit merged in 2019.

Although the bulk of the layoffs at the Morgantown plant will occur this weekend, a Viatris spokesperson said around 185 employees will stay on to “execute final wind down and closure activities” and exit in waves through March 31, 2022.

Viatris will keep open its research and development center in Morgantown, the company said.

With the shutdown comes the reality that the plant, which has employed thousands of people in the last half-century and been a fixture for the city’s economy, will no longer exist. Haught reflected on its impact as he packed up his locker earlier this week.

“Lots of hugs, lots of tears,” he said. “Some people have been there 30 or 40 years. It’s the only job they’ve had since high school.”

The move is also years in the making. The value of several generic drugmakers collapsed in the past decade as pricing dynamics for copycat medicines changed swiftly and drastically. For Mylan, that problem was compounded by highly publicized accusations of price gouging on EpiPen, the life-saving anaphylaxis injection whose cost rose by 400% over four years.

The Morgantown plant became swept up in Mylan’s fall as well, a stunning development given its history. The facility has produced dozens of drugs for Mylan and been a key manufacturer of the thyroid medicine levothyroxine. It had a spotless regulatory track record for more than five decades.

“The FDA actually used Mylan’s facility as a training facility for new inspectors,” said J.D. Wilson, the international representative for United Steelworkers District 8 and a former Mylan employee. “Why? You’re the pinnacle. If you’re doing something right, you’re not hiding stuff, then that’s what we want to train our people on.”

That all changed in 2018, however. An FDA inspection of the site unearthed a bevy of problems, among them inadequate cleaning processes that led to a risk of cross-contamination. The regulator laid into Mylan, accusing it of a “lack of rigorous oversight” that resulted in “unexpected variation” in its drug products.

Mylan responded by restructuring, spending at least $100 million and laying off more than 400 employees. But its downward spiral continued to the point that the company needed a savior. Its rescue came in the form of the merger with Pfizer’s Upjohn division, a deal that closed last year and birthed Viatris.

Mergers commonly lead to cost-cutting moves as the combining companies search for ways to reduce redundancies, and the Mylan-Upjohn merger was no exception. Once Viatris was formed, it announced plans to save $1 billion over the next four years.

It wasn’t clear what the future held, then, for the Morgantown plant. The sentiment among workers immediately shifted, according to Haught.

“It was night and day,” Haught said. “When Mylan was in charge, people enjoyed going to work as much as they did going home.”

Manufacturing facilities are often sold off after acquisitions, deals that can help ensure future employment for staff. But that hasn’t been the case in Morgantown, at least not yet. In December 2020, a month after Viatris launched, the company said the facility would close. (Viatris is still working with West Virginia public officials to identify “viable alternatives,” though a buyer hasn’t been found yet, according to the spokesperson.)

Wilson, for his part, had a feeling bad news was coming. “Most companies when they make a merger, what’s the first thing they do? They put up a sign,” he said. Viatris “never did that.”

The announcement led to bargaining over severance deals, a negotiation Wilson worked on for over 700 union members. An agreement was reached in July that includes two weeks of pay for every year of service and medical coverage for up to a year for all 850 union members. Non-unionized employees will also receive a severance package, but Viatris did not share details of what is included.

In addition to the Morgantown plant, other Viatris-owned facilities being closed, sold or downsized include sites in Ireland and Puerto Rico that make tablets and capsules, as well as two drug ingredient facilities in India. Viatris expects $250 million to $300 million in yearly savings once all five are shuttered.

The decision to close the Morgantown facility “is one we did not take lightly,” said the spokesperson, in an email to BioPharma Dive. It came as a response to “challenging market conditions” and a shift by Viatris to focus on more complex biologic products.

The closure “in no way reflects upon the company’s appreciation for the commitment, work ethic and valuable contributions of our employees,” the spokesperson added. “We especially appreciate all those with long and respected tenures who helped pave the way for the company’s growth in its early years.”

Yet the economic effects on Morgantown will be “striking,” said Michael Shuman, an independent economist and consultant who analyzed the impact of the closure. Workers historically earned more than three times the average wage of Monongalia County’s median income, a loss that will trickle down to vendors who have depended on their purchasing power. Morgantown will “have to move to a very different kind of economic development strategy,” he said.

The plant’s employees, meanwhile, are left to figure out their next moves. Haught said he considers himself lucky, as he received a grant to go back to school and get trained to fix heating and cooling systems. But others feel they’re unemployable given their older age or lack of college — and, for some, high school — degrees.

“It’s a sucker punch to the gut,” Wilson said. “Right now, it’s a lot of somber moods and people are just to a point of what do we do?”