Bailing Out of Biotech: Olympus Seeks Buyer for Former Stryker Plant in W. Lebanon
Technicians monitor the manufacturing process at Stryker Biotech in West Lebanon in October 2006. Stryker spent $100 million on an expansion of the Technology Drive manufacturing plant before Olympus Biotech bought Stryker in December 2010 for $60 million. Olympus Biotech announced last week that it is getting out of the biotech business and wants to find a buyer for the plant in 90 days. If it can’t, the plant will close and 130 workers will lose their jobs. (Valley News - Renee Deemer) Purchase photo reprints »
The former Stryker Biotech plant on Technology Drive. (Valley News - Renee Deemer) Purchase photo reprints »
Technician Kari Junod calibrates scales in the formulation room at Stryker Biotech in West Lebanon in 2005. Olympus Biotech, which bought Stryker in 2010, wants to sell the plant in 90 days. (Valley News - Jennifer Hauck) Purchase photo reprints »
West Lebanon — One of the Upper Valley’s largest biotech companies is up for sale, and if a buyer is not found in the next 90 days, Olympus Biotech will close and 130 well-paying jobs will be lost.
The Japanese company announced last week that “aggressive” efforts were being made to find a buyer and that the 180,000-square-foot high-tech manufacturing facility in the Airport Industrial Park had been “written down” to a bargain price.
“There are a couple of prospective buyers who the company is talking with, but nothing has been finalized,” Olympus spokesman Jon Stone said in an interview last week from the New York City offices of the public relations firm Kwittken & Co.
The plant has 130 employees who are still working at the facility. If Olympus is unable to sell the plant, the workers will be released between May 30 and Aug. 29.
“We’re not selling the plant because the quality of the work is not high. It is purely an economic decision. Olympus is getting out of the biotech area,” Stone said.
“The main idea is to sell the facility, avoid closure and possibly fold the jobs into a new operation. We want to save the jobs. That’s why we’re lowering the price,” he said.
Olympus Corp., which is widely known for manufacturing cameras and microscopes, purchased the West Lebanon facility in December 2010 from Stryker Biotech for $60 million in a deal that came under the scrutiny of the FBI and was part of a string of acquisitions that have cost the company $1.2 billion in charges and write-offs, Reuters news service reported in 2011.
Under Stryker, the facility developed a bone-growth product, OP-1, a protein-based putty used to regenerate bone for treating spinal, hip and knee conditions. The product received approval from the Food and Drug Administration for limited use in the United States, but it has been more widely distributed outside of the country.
In 2004, the FDA approved Stryker’s OP-1 putty as a “humanitarian device exemption,” which means that the device’s effectiveness has not been established, and it can only be used to treat rare conditions and only as specified by the FDA. It also means that permission to use OP-1 putty on a patient must be granted by a review board prior to use and only after receiving the patient’s consent.
The exemption granted to Stryker is for a product intended to benefit patients by treating or diagnosing a disease or condition that affects fewer than 4,000 individuals a year in the U.S. By the end of 2005, Stryker had more than 700 hospital review board approvals for OP-1 in patients under the exemption , which also generally prohibits a company from making a profit on the product.
In 2006, Stryker officials were optimistic about full FDA approval for OP-1 and spent more than $100 million on the West Lebanon plant gearing up to increase production. The officials told the Valley News at the time that the 180-person workforce at the plant would be doubled in coming years.
Not long after, Stryker and four employees in Massachusetts became embroiled in federal fraud and conspiracy charges for illegally marketing OP-1 putty for uses other than those approved by the FDA, and for falsifying hospital records.
In January 2012, Stryker paid $15 million to settle federal charges and two Stryker sales managers pleaded guilty to engaging in illegal off-label promotions. The company also paid to Massachusetts $1.35 million to settle similar charges.
Despite the setbacks, when Olympus bought the plant in 2010, company officials were still optimistic about OP-1 and set a goal of expanding its uses. The product has not met the company’s expectations, and in October, the company began offering the West Lebanon facility for contract manufacturing to help other firms to develop biotech products.
But company officials last week defended the OP-1 product even while announcing the shutdown of Olympus Biotech. “This was a very difficult decision and was made only after numerous alternatives for business continuation were identified and exhausted over the past year,” David Renker, chief operating officer for Olympus Biotech, said in a news release. “This decision was a financial one and is not related to the performance of our OP-1 family of products. We are proud of OP-1’s legacy in the market and its significant contributions to regenerative medicine and the quality of life in patients worldwide. In addition, we are grateful to our employees for the incredible support they have shown our biotech business throughout its history and thank them for their dedication to the business and our mission.”
Until last week’s announcement, Olympus Biotech had been considered one of the Upper Valley’s top employers. In 2012, the plant was named the No. 1 best large company to work for in New Hampshire by Business New Hampshire Magazine .
Problems at Olympus Biotech apparently had little to do with the company’s overall woes.
Reuters discovered from company documents that Olympus Corp. had paid $30 million to the New York advisers who brokered the $60 million deal with Stryker. The deal and the fees were challenged by Olympus Chief Executive Officer Michael Woodford, who was later fired in a boardroom coup after objecting to another $687 million payment to advisers in the $2.2 billion Olympus takeover of the medical equipment company Gyrus in 2008.
In 2012, another former Olympus president and two other executives pleaded guilty in Tokyo to criminal charges related to a two-decade, $1.7 billion accounting fraud scheme aimed at covering up massive investment losses. Japanese prosecutors said the scheme used overseas bank accounts, shell companies and fraudulent transactions to hide the losses, Th e Associated Press reported.
And in September, a former bank vice president pleaded guilty in New York to a bank fraud charge, admitting he helped Olympus executives carry out a fraud involving several hundred million dollars that deceived investors into thinking the company was better off financially than it was, AP reported.
Warren Johnston can be reached at email@example.com or 603-727-3216.
Olympus Biotech spokesman Jon Stone is affiliated with the New York City public relations firm Kwittken & Co. The firm's name was misspelled in a story in the March 9 Sunday Valley News.