• Drug manufacturer to cease operating Friday

• Gov’t labels firm’s closure as ‘heartbreaking’

• Fear $400m expansion ‘gone terribly wrong’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The loss of more than 100 well-paid jobs through PharmaChem Technologies’ Friday shutdown was last night branded “another kick in the teeth” for Grand Bahama’s struggling economy.

James Carey, the Grand Bahama Chamber of Commerce president, told Tribune Business the pharmaceutical manufacturer’s closure revelation had taken him by “total surprise” and raised fears that “something has gone terribly wrong” with its recent $400m expansion.

With the move “putting a damper” on renewed late 2023 optimism that Grand Bahama’s economy is poised for a turnaround, he suggested it must have also come as “a real shock” to the company’s workforce, who were only informed via Zoom call yesterday afternoon that they will be unemployed in three days’ time.

“That’s a total surprise. I didn’t expect that,” Mr Carey told this newspaper. “PharmaChem has just spent millions on creating a new plant to begin a new manufacturing process. This comes as a complete surprise really.

“There’d been no indication of problems coming out of PharmaChem. I was trying to message some folks to find out some information and didn’t get any replies. There’s some talk that the [manufacturing] process; they may have had some issues with the process going on on the ground.

“For Grand Bahama it’s just another kick in the teeth. I’ve personally been upbeat on Grand Bahama and the prospects for 2024, and we’ve hardly begun the year when here we go again. There’s no control over private enterprises; they must do what they have to do, but we can’t get a start.”

Mr Carey said that while “there’s other developments coming on stream”, such as Carnival’s $500m Celebration Key cruise port; Weller Development’s $250m Six Senses resort; and the Grand Bahama Shipyard’s near-$600m investment in two new docks, “they will take time” to come to fruition and fully transform a Grand Bahama economy that continues to struggle in escaping its recent stagnation.

“It just seems to put a damper on things all of a sudden,” the GB Chamber chief told Tribune Business of PharmaChem’s imminent closure. “While some people may say it’s only 100 jobs, 100 jobs in the Freeport market is a lot, particularly when they are well-paid jobs.

“There seems to be more to it than the announcement. It just can’t be that simple. Something has gone terribly wrong. Something has gone awry, and it’s hard to determine what that is.” This newspaper understands that up to 120 jobs will be terminated come Friday this week.

PharmaChem itself provided no details on what has driven it to start winding down its business with effect from yesterday, with operations set to totally cease from Friday, January 12. The company, which was not entertaining media inquiries yesterday, would only say it “has faced unprecedented challenges that have significantly impacted our ability to sustain operations”.

Tribune Business, though, was told by well-placed sources that PharmaChem had run into “technical and operational issues” with its $400m plant expansion, which one contact labelled as “a very ambitious project”.

The expansion, designed to expand the range of drugs supplied to the company’s sole client, Gilead Life Services, was said to have gone significantly over-budget due to cost overruns. And both Hurricane Dorian and the COVID-19 pandemic delayed the construction completion and production of test batches.

“In the chemical world, they have to do test batches, and each batch has to meet specific criteria before they can do a production run,” one contact, speaking on condition of anonymity, said. It is understood there were quality issues with these test batches, while some PharmaChem staff were said to be reluctant to work the 24-hour production shift system that was required to meet Gilead’s orders.

Ultimately, with the Grand Bahama-based manufacturer unable to meet Gilead’s desired production timelines and volumes, the latter pulled its financial support from PharmaChem, resulting in yesterday’s closure announcement.

PharmaChem Technologies, in yesterday’s statement, said it will “immediately petition” for the company to be placed into full liquidation and wound-up. Attorneys stressed this does not necessarily mean it will be put into Supreme Court-supervised liquidation, and there is no suggestion of any wrongdoing.

“PharmaChem Technologies GB Ltd regretfully announces the commencement of winding down current operations, effective January 8, 2024,” the company said.

“After 20 years of service to both the local community and global markets, despite our best efforts, dedication of our talented team and support from our customer and lender, PharmaChem has faced unprecedented challenges that have significantly impacted our ability to sustain operations.

“We extend our heartfelt gratitude to our employees, customer and lender and other stakeholders who have been part of our journey. PharmaChem will cease operations by January 12, 2024, and immediately petition for a formal liquidation process in accordance with requirements under Bahamian law.”

The closure was likely timed to avoid making employees redundant before Christmas and the New Year. PharmaChem pledged that all staff will be paid due severance and benefits in accordance with Bahamian employment law.

It added: “Our company has always been proud to contribute to the industrial landscape of Grand Bahama and The Bahamas, and we are grateful for the relationships that we have built over the years.

“PharmaChem will continue to uphold its commitment to integrity and transparency through the winding down process. We thank everyone who has been a part of our journey and look forward to the possibility of crossing paths in the future.”

The pharmaceutical producer hinted it will say more about the closure decision at a later date, adding in a message likely targeted at sub-contractors, suppliers and creditors who may be owed money that “further information will be forthcoming to address inquiries related to the closure and any ongoing commitments”.

The Ministry of Grand Bahama, speaking for the Davis administration, described PharmaChem’s closure as “heartbreaking” given that the island seemed poised for economic recovery and “our efforts to bolster the industrial sector”. Tribune Business understands that the Government was given advance warning of the company’s intentions.

“The Government of The Bahamas was advised by PharmaChem Technologies of their decision to commence winding down of operations, effective today, as a result of ‘unprecedented challenges that have significantly impacted their ability to sustain operations’,” the ministry said. “This decision is heartbreaking, considering the ongoing recovery of Grand Bahama and our efforts to bolster the industrial sector.

“PharmaChem, for many years, has contributed significantly to the economic landscape of Grand Bahama and, of course, our immediate concern is the well-being of the affected employees. While the situation is challenging, the Government remains actively engaged, and PharmaChem has reaffirmed its commitment to adhere to all legal and environmental obligations.”

The Ministry of Grand Bahama pledged that the Government, through the Department of Labour, “will work closely with the employees of PharmaChem on potential redeployment opportunities, retraining, soft-skills enhancement and counselling”.

Howard Thompson, the Department of Labour’s labour director, confirmed that the company had notified it of the terminations as required by law. “We’re looking to help redeploy them based on their skills. Their entitlements are being taken care of in terms of their redundancy packages. They’re operating in accordance to the law,” he said.

Mr Carey, though, suggested some of PharmaChem’s staff might have difficulty finding alternative employment with similar pay because of the specialised nature of their work. “Most of the jobs at PharmaChem will be fairly well paid jobs, and that is going to create a very great impact,” the GB Chamber chief said.

“Those persons are going to be out looking for employment, and many of them are specially trained in that field. It’s going to be a challenge for a lot of them to get jobs. It must be a real shock that it’s all come tumbling down right now.”

PharmaChem, which was founded by Italian entrepreneur, Pietro Stefanutti, supplied antiretroviral API drugs (tenofovir disoproxil fumarate) for Gilead, which employed them in the worldwide treatment of HIV/AIDS. This product helped treat one million persons worldwide, and the new plant was intended to give it the capability to produce an additional two to three drugs.

“We manufacture the single API for Gilead, the anti-retro viral drug for HIV/AIDS. We are looking for a sustainable future by diversifying our product line, and the new facility will be a multi-product facility so we can handle two or three products at the same time,” said PharmaChem chief executive, Randy Thompson, in 2018.

“The best-kept secret in The Bahamas - right here we actually produce material that treats more than one million HIV/AIDS patients around the world. Gilead is committed to offering product at a discount price at cost to various countries. Like Gilead, we at PharmaChem believes it is our responsibility to extend medicine beyond developed countries around the world.”