Officials in Cody are bracing for an economic hit after the June 11 announcement that Cody Laboratories will wind down its operations by the end of September.
“It’s certainly an unfortunate development,” said Amy Quick, regional director of the Wyoming Business Council in the Big Horn Basin. “Some would say there was writing on the wall, but certainly everybody was optimistic that things could work out.”
The business, which manufactures active pharmaceutical ingredients for pain management, is being phased out, with completion expected by about Sept. 30, according to Philadelphia-based Lannett Company, which owns Cody Labs. Plans for the business have evolved during the past year. In June 2018, the company announced it would cut 50 jobs as part of a restructuring, citing changes in the regulatory and competitive landscape for pain management application programming interfaces. In September, the company decided to sell the business.
“The company has been unable to sell the Cody API business as an ongoing operation, and now intends to sell the equipment and real estate utilized by the Cody API business and to have Cody Labs cease all operations,” Lannett Company said in an 8-K filed with the Securities and Exchange Commission.
The company expects costs of about $5 million to shut down the business, including $2.5 million for severance and employee-related costs, and approximately $2 million for contract termination costs, as well as approximately half a million dollars to be incurred in connection with moving equipment and other property, according to the 8-K. That filing said about 70 positions remained at Cody Labs.
A $2.53 million grant from the State Loan and Investment Board was made in 2012 to help support growth of the business, including the construction of a $3.7 million warehouse that opened in 2015, when the company had aspirations of exceeding 200 employees.
“Forward Cody still owns that building. So, they are able to remarket that and be looking for a new tenant, and, in the meantime, Cody Labs is still on the hook for the lease payments,” said Tom Dixon, content marketing manager for the Wyoming Business Council. He said 16 years remain on that lease.
No other state incentives were awarded for the business, Dixon said. A $23 million state loan approved in 2017 for further expansion of the business never materialized after expansion plans stalled.
“No one’s happy when this kind of thing happens,” Dixon said. “This is really a tragedy for the local families in Cody. That’s the thing that everyone’s thinking about.”
The company was founded in 2000 by Ric Asherman. Lannett bought the business in 2007 and expanded it.
“In a lot of ways, what (Asherman) did is what we want more people in Wyoming to be able to have the path forward to do,” Dixon said. “He started a company on his own. He grew it from nothing into a major employer for Cody.
“This doesn’t speak ill of Cody or Wyoming. This is something with big, national implications. This is something that the pharmaceutical industry is facing as a whole. That’s certainly not something that reflects on Wyoming’s business culture or favorable business environment or the workforce we have here. I think really it speaks to the importance of why we need to continue diversifying.”
Pharmaceutical companies, including Lannett, have faced scrutiny related to the nation’s opioid crisis. Lannett also was among 20 pharmaceutical companies named in a lawsuit brought by attorneys general in 43 states and Puerto Rico alleging a conspiracy to fix prices of numerous generic drugs.
Forward Cody CEO James Klessens continued to work throughout June, hoping to reach a deal to save the jobs remaining at Cody Labs.
“What is hard about this, too, is Cody Labs has a lot of those highly qualified, skilled scientific employees,” the Wyoming Business Council’s Quick said. “(It’s) likely they’re going to follow the industry somewhere else. They’ll probably land on their feet.”
She has reached out to some of the area’s large employers about workforce needs and is working to support Cody Labs employees.
“Cody Labs did bring in a lot of young people, which was great for our community, but those are the folks that are probably going to move on, unfortunately,” Quick said. “We would love to keep them and capture them, if we can, but it’s those people who are here and who have been here that may be affected the hardest, so (they are) trying to find other opportunities.”
The Wyoming Department of Workforce Services is working with Cody Labs to provide Rapid Response services to its employees, including help with job applications, resume writing and mock interviews.
“We want to make sure that we offer those services, and they know how to access those,” said Andrea Hixon, Rapid Response program manager. “Sometimes, helping them through those transitions, it’s like a grief.”
One Rapid Response meeting already has taken place, and another is expected in August. The department offers services in group settings and one on one.
“We really customize all of our efforts to fit the needs of those individuals, because everybody handles it a little differently,” Hixon said. “There’s not a one-size-fits-all. Hopefully, with those efforts, and depending on what we can do in August, hopefully they’re all able to stay in the state.”