This Closed Factory Shows How Hard Reviving Drug Manufacturing Will Be

This year, as President Trump threatened tariffs, nearly all of the wealthiest pharmaceutical companies have pledged to spend billions of dollars to build factories in the United States. Construction is underway in industry hubs like North Carolina on state-of-the-art plants that will produce blockbuster drugs.

But the president’s drug-manufacturing renaissance in America is largely leaving out the production of generic medicines, which account for 90 percent of Americans’ prescriptions.

For these factories, far more typical than the sight of cranes is the scene in Shreveport, La., where a plant shut down in March. Its workers are gone, and the machines that churned out millions of tablets each day are silent.

Over four decades, the factory manufactured generic drugs that are staples in Americans’ medicine cabinets, like the pain relievers ibuprofen, aspirin and Tylenol, as well as treatments for burns and allergies.

The factory’s owners have been trying to sell it for years, but no one has bought it — even as Mr. Trump has been calling for drug manufacturing to return to the United States.

The plant is a vivid example of the decades-long decline of generic drug manufacturing in the United States and the hard realities that would make it difficult to revive.

Financial filings show that the Shreveport plant had been losing millions of dollars a year for its longtime owner, the Indian drugmaker Dr. Reddy’s Laboratories. Like other generic drugmakers, Dr. Reddy’s does most of its manufacturing in India, where production costs are much lower than in the United States.

Dr. Reddy’s declined to comment. A company spokeswoman, Lori McCreary, told a Shreveport newspaper that the plant lacked “a clear path to profitability.”

The brutal economics of generic drug manufacturing has made these closings common. In 2021, America’s largest remaining generic drug factory, in Morgantown, W.Va., shut down, with production moving to India and 1,400 people losing their jobs.

In the last few years, other plants that produced generic chemotherapies, antibiotics and treatments for diabetes, A.D.H.D. and asthma have closed in Illinois, North Carolina, California, New Jersey and Minnesota. A factory in Pennsylvania is scheduled to close next year.

In some cases, the closed plants have been bought and revived by another drug manufacturer. But most of the shuttered factories aren’t making medicines anymore.

The number of U.S. facilities formulating generic drugs, like the Shreveport plant, has fallen by 27 percent since 2013, according to a New York Times analysis of data collected by the Food and Drug Administration.

Drug manufacturing is a multistage process, managed by factories in different parts of the world. Raw materials are used to produce active ingredients, which are in turn used by factories like the one in Shreveport to formulate the final product.

The Shreveport plant never made active ingredients, instead importing them in barrels from countries like China and India. The number of U.S. plants handling that stage in the generic drugmaking process has fallen by 38 percent since 2013.

The Trump administration has tried to encourage more U.S. generic drug manufacturing, but supply chain experts have said there was not a financial incentive for that to happen at a large scale.

So far, only a few generic drugmakers — Hikma, Amneal and Lupin — have announced plans to build factories in the United States.

Sandoz, one of the biggest generic drugmakers,recently said it had no plans to manufacture in the United States. “You sell a packet of antibiotics more cheaply than a packet of M&M’s,” the company’s chief executive, Richard Saynor, told The Wall Street Journal. “That’s offensive, and we lose money doing that.” The company has since said it is open to producing in the United States, but has yet to announce any investments.

Unlike the sparkling state-of-the-art U.S. facilities making brand-name products like Covid vaccines and million-dollar gene therapies, many of the remaining American generic drug plants are deteriorating with age.

In the Shreveport factory, built in the 1980s, much of the equipment is decades old. Repairs in the boiler room could cost more than $2 million, according to estimates by workers who assessed the problems earlier this year.

The sprawling factory was built to house many more workers than the roughly 100 left when the plant closed. Now, only three workers remain to keep the lights on and the climate-control systems running while the search continues for a buyer. The Dr. Reddy’s signage has been taken down.

The place has a postapocalyptic feel, with office supplies strewed about on desks and forklifts parked haphazardly on the manufacturing floor, as if the factory was abandoned in the middle of a shift.

The process of making tablets began in the factory’s cavernous warehouse, where workers received and stored big barrels of active ingredients and raw materials. They would then weigh and measure out the amounts needed for each recipe.

Machines turned tiny particles into slightly larger granules and then compressed them into tablets. Another machine spun the tablets like laundry and sprayed them with a coating. The tablets had lines and letters printed on them before they were placed on an assembly line that sorted them into bottles.

For years, the factory’s most important product was Tylenol, which Dr. Reddy’s had a contract to make first for Johnson & Johnson and, later, Kenvue. The plant also made prescription and over-the-counter drugs sold in pharmacies and retail stores like Walmart.

Boom times come to an end

One of the workers laid off in March was Sonny Rambin, 65, who worked at the plant from before it opened until the day it closed.

In 1984, Mr. Rambin was working in the oil industry when a friend helped him get a job in Shreveport at Boots Pharmaceuticals, a major British drugmaker that gained a foothold in the region a few years earlier when it bought a local drug company.

Boots built the plant for $36 million — or more than $100 million in today’s dollars, far less than it would cost to build a similar factory today. In 1986, local and British dignitaries gathered at the plant for a grand opening ceremony. Mr. Rambin was tasked with spraying a shovel with gold paint. The local symphony played. Shreveport’s mayor called it a jewel in the city’s crown.

In those years, business was booming for Boots, and the Shreveport factory’s offices and production lines were full.

“That was the heyday,” Mr. Rambin said. “They were giving bonuses, they had big company parties. It was like episodes of ‘Mad Men’ — everybody was drinking and smoking and having great times.”

The great times continued in the 1990s, as the plant’s head count grew to about 400 employees and a German chemical company, BASF, took over.

But by the time Dr. Reddy’s bought the plant in 2009, in an effort to bolster its U.S. presence, the ground had already begun to shift.

U.S. production of pharmaceuticals had peaked, by one measure, in 2006.

States passed a series of clean air and clean water laws that, along with rising U.S. labor costs, helped drive drug manufacturing out of the United States. Around that time, a wave of top-selling medicines were losing patent protection, and overseas factories, particularly in India, were jumping at the opportunity to make generic versions.

The lower overseas production costs provided many foreign generic drugmakers with an advantage over their American counterparts.

Unable to compete, some generic companies have abruptly left the market, resulting in widespread drug shortages. Those that remain in business often have razor-thin profit margins. Multiple manufacturers competing help to drive prices lower.

“When you’re manufacturing some products that have been around for decades, there’s just not a lot of money in it,” said Mike McCorkle, who worked at the Shreveport plant for 20 years, most of the time as a manager. “With how much less it can cost to make the drug in another country, including India, it can be hard to be as competitive with the dynamics of manufacturing in the U.S.”

The average cost of each U.S. employee can be 10 or more times as high as each Indian worker. Today, India produces about half of the generic drugs that Americans take.

A harbinger of the Shreveport plant’s decline was the decision by Dr. Reddy’s a few years ago to move production to India for a generic version of Zyrtec, an allergy drug, several former employees said.

“When you see a drug that they’ve been manufacturing for years, and they’re taking it to India to manufacture, you think, ‘Oh boy, that’s not a good sign,’” said Curtis Webb, a manufacturing technician at the plant for 11 years.

Factory up for sale

Over time, workers at the plant noticed that they were being asked to make fewer tablets. Longtime employees left, and so did new ones. Losses piled up for Dr. Reddy’s.

Workers weren’t surprised when management announced the plant’s closing in January. “We knew it was coming,” said Troy Norris, 60, who cleaned and stocked equipment at the plant for 33 years.

Dr. Reddy’s sold the factory to a firm, Ten Oaks Group, that was seeking to flip it to a new owner. The plant and its equipment were initially listed online for just $18 million.

Senator Bill Cassidy, Republican of Louisiana, has tried to raise the plant’s profile. But a buyer remains elusive. The plant would need regulatory approval to begin manufacturing pharmaceutical products — a substantial upfront investment that could take years before it leads to any revenue.

In July, the plant changed hands again, to a New York real estate firm, Green Dock Partners, that is now searching for a buyer, said Jacob Solomons, a partner there. Mr. Solomons said he was optimistic that the plant would be scooped up soon and was not limiting the search to only generic drug manufacturers.

“We really think that this does provide a great opportunity, at a discount, to building a brand-new facility and buying brand-new equipment,” Mr. Solomons said.

Some of the plant’s laid-off workers have found local jobs in different industries, while others have moved across the country to work at other drug companies. Some hope to return to the plant if it reopens.

Over the years, Mr. Rambin rose through the ranks to become a chemist. But he grew disillusioned with the generic drug business under Dr. Reddy’s. He viewed the plant’s closing as a sign that it was time to retire. “Every time I drive by the plant, I just kind of get sad,” Mr. Rambin said. “So much of my life was spent there.”