Lek Abandons Investment in New Factory at Prevalje

By , 03 Sep 2019, 11:00 AM Business
Lek Abandons Investment in New Factory at Prevalje lek.si

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STA, 2 September 2019 - Lek, the Slovenian subsidiary of pharma company Novartis, has aborted its investment into expanding production in the town of Prevalje, north, where it has been present for more than 40 years. The decision seems to be have been made due to lower demand for generics following an in-depth analysis and studying all options.

"Despite lower demand on the generics market, especially in the US, over the recent years and despite the need for new technologies, Novartis has studied all options to realise the planned expansion.

"The analysis has shown the facility is suitable for introducing the technology of continuous manufacturing, but this has proved to be merely a short-term solution, so we decided not to continue the investment," Lek wrote in a press release on Monday.

The cornerstone for the additional facility for broad-spectrum antibiotics in Prevalje, a EUR 150 million investment, was laid in April 2017.

Production at what would have been Novartis's biggest investment in Slovenia to date was expected to be launched in 2020, bringing 140 much needed jobs to the Koroška region.

The Slovenian government had approved EUR 7 million in state subsidy for the new factory, which Lek was to receive in three years.

The company has so far received only EUR 1.5 million, but will return it by the end of the month, the Ljubljana-based company told the STA today.

The additional facility was completed at the end of 2018, but Novartis said already that spring that the purchase of technology for the new factory was suspended.

It explained the facility was first planned for classic production, but then it made it among possible locations for continuous manufacturing.

Last year Lek also decided not to co-finance a purification plant in Prevalje which would be used for Lek's waste waters.

Nevertheless, Novartis said today it was strengthening investment in new technologies in Slovenia.

However, the local community is extremely disappointed at the decision, regretting the loss of jobs and opportunities for the region's economic development.

"Today is a sad day not only for Prevalje, but for the entire Meža Valley and Koroška," Mayor Matic Tasič told the STA.

"Every investment is vital for entire Koroška, and of course we're interested in successful investments," said the director of the local chamber of commerce, Aleksandra Gradišnik.

She hopes Lek would implement its business plans, whatever they are, to the benefit of the region.

Tasič added "we did not expect a company with such a good reputation to afford to invest more than EUR 30 million and then abort the project".

Novartis is yet to decide what to do with the new facility.

The company, which employs more than 4,200 workers in Slovenia, has so far invested over EUR 2.3 billion in Lek, which makes it the biggest foreign investor in the country.

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