Johnson And Johnson Sells Its India’s Largest Manufacturing Plant Due To Weak Demand

Company’s manufacturing plant was built across 55.27 acres which was completed in 2016 to make consumer health products. As per the company’s annual report, JandJ land asset were valued at Rs 33.1 crore in 2020-21. This is the second plant which JandJ sold in India. Hetero, announcing the acquisition of the plant said an investment of more than Rs 600 crore will be made to upgrade the manufacturing facility and make it the company’s flagship sterile pharmaceutical and biologics manufacturing unit.

Johnson and Johnson (JandJ), sold its largest manufacturing plant in India to Hetero on a slump sale basis situated at Penjerla in Telangana. The company has been struggling with lowered demand for its consumer products in India since a while.

No dislosure of financial details was made regarding the sale. Company’s manufacturing plant was built across 55.27 acres which was completed in 2016 to make consumer health products. The unit included production of babycare range, beauty, earbuds, electrolyte drinks, oral and skincare products. However, it has been idle of about Rs. 310 crore and put up the plant for sale.

As per the company’s annual report, JandJ land asset were valued at Rs 33.1 crore in 2020-21. This is the second plant which JandJ sold in India. During 2021-22, a strategic management decision was taken and the company sold its medical division unit in Baddi, Himachal Pradesh.

Hetero, announcing the acquisition of the plant said an investment of more than Rs 600 crore will be made to upgrade the manufacturing facility and make it the company’s flagship sterile pharmaceutical and biologics manufacturing unit.

Also, such investment aims at creating 2,000 jobs in biochemistry, pharmaceutical sciences, molecular biosciences, engineering and ancillary services, said the hyderabad-based drugmaker.

PwC played crucial role in giving financial advice to Hetero on the acquisition of the Penjerla manufacturing facility.

The company did not disclose any reasons behind idling its plant however, the company was struggling with reduced demand for its consumer health products, specifically in the babycare segment.

The company decided to discontinue its top-selling talc-based baby powder globally from 2023. This move came from charges against company of alleged contaminating of asbestos, a famous carcinogen, and this impacted sales too. The company talked about transition into cornstarch-based baby powder.

In September, the Maharashtra government cancelled the manufacturing licence of its Mulund plant mentioning the interest of “public health at large”. According to reports, JandJ’s revenue fell 49 per cent year on year in 2021-22 to Rs 2,911 crore.