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Another life for Petersburg pharmaceutical plant

June 30, 2019

PETERSBURG, Va. (AP) — Five years after it was idled, a pharmaceutical ingredients factory in Petersburg is once again at work.

Petersburg city officials hope that AMPAC Fine Chemicals’ reinvestment in the former Boehringer Ingelheim chemicals factory on Normandy Drive will not only create hundreds of jobs, but also help spark new interest in manufacturing investments in the city.

Aslam Malik, who leads the company that is restarting the plant, is hoping to prove that manufacturing ingredients for pharmaceuticals can be done better in the U.S. than overseas.

“There is a big misconception going on in the industry in the U.S.,” said Malik, the president and CEO of AMPAC Fine Chemicals, during an event ... to ceremonially reopen the plant.

“The misconception is that you have to go to India or China to get the drugs made, because the capability to manufacture drugs has left the United States,” he said. “That is wrong. The capability is right here.”

Based near Sacramento, Calif., AMPAC is owned by SK Holdings, the investment arm of South Korea-based SK Group. The company is making infrastructure upgrades to the 200-acre site.

About 50 people now work at the factory, which is currently doing production to validate that it can make active pharmaceutical ingredients to meet FDA requirements.

AMPAC expects the employment to increase, with plans to hire more than 110 people over the next few years. To reach full capacity at the plant, the company will need to gain more contract manufacturing, Malik said.

The company’s customers include Noramco, a Wilmington, Del.-based maker of pharmaceutical ingredients.

Malik said AMPAC plans to manufacture active ingredients at the Petersburg plant for pharmaceuticals to treat conditions such as HIV, hepatitis, cancer and central nervous system conditions such as epilepsy.

The plant previously was owned by Boehringer Ingelheim Chemicals Inc., a Germany-based company that had operated manufacturing in Petersburg since 1978.

In 2009, Boehringer Ingelheim announced it would start production at a $135 million expansion of the plant to make such chemicals as the active ingredients in the hypertension drug Micardis.

In 2013, however, the company said it would close the factory by the end of 2014, costing about 240 jobs. At the time, the company said competition from foreign-made drug ingredients was one reason for the closure.

Hopes were revived later in 2014 when UniTao Pharmaceuticals, a China-based company, bought the plant and announced it would invest $22.5 million and hire for 376 jobs.

But just five months later, in March 2015, UniTao said it would “idle its pharmaceutical operations in Petersburg until business conditions improve.”

In part, the factory fell victim to consolidation in the pharmaceuticals industry, said Keith Boswell, president and CEO of Virginia’s Gateway Region, an economic development organization for eight localities in the Petersburg area.

“Different products were no longer profitable and generics came along and could be made somewhere else,” he said.

“Our region has lots of manufacturing capability,” Boswell said. “A deal like AMPAC could draw a lot of positive attention to our workforce.”

AMPAC acquired the plant in late 2016, said Malik, a chemist who has worked for AMPAC and its predecessor companies since 1991.

The company started out as a chemical manufacturing division of defense contractor Aerojet.

Malik became CEO in 2005 when American Pacific Corp. acquired the pharmaceutical chemicals business, which was named AMPAC.

AMPAC was acquired in January 2014 by the private equity firm H.I.G. Capital LLC in an all-cash transaction valued at $392 million.

In 2018, H.I.G. sold the business to SK Holdings, whose South Korean-based parent SK Group is one of that nation’s largest industrial conglomerates.

As a veteran of the pharmaceutical chemicals industry, Malik said he has been familiar with the Petersburg plant for years and saw it as a ideal spot to expand AMPAC’s production capacity.

“When (Boehringer Ingelheim) had it, I knew the people here,” he said. “I knew this area had some very qualified people who had been laid off from B.I.

“At one time, they had 400 people here.”

That local workforce with experience in pharmaceuticals is the main reason the company chose the site, Malik said.

“If you really want to bet on something, you bet on the people,” he said.

“The second thing that attracted us was that they (Boehringer Ingelheim) built part of this plant in 2009,” Malik said. “It has hundreds of millions invested in it, and it is a very good plant.”

AMPAC also has a plant in La Porte, Texas, and an analytical facility in El Dorado Hills, Calif.

The 200-acre factory site in Petersburg is assessed by the city at about $25 million, said Aretha Ferrell-Benavides, Petersburg’s city manager.

“One of the main priorities of the city of Petersburg is to change our image and show people that we are about moving forward,” she said.

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Information from: Richmond Times-Dispatch, http://www.richmond.com

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