API Auckland closure, 150 jobs cut: Supermarket decisions, low medicine demand cited

Brands manufactured by API in New Zealand include the Health Basics range. The brands will be outsourced over the next two years. Photo / API website

About 150 jobs are set to disappear from Manukau as Australian Pharmaceutical Industries plans to stop manufacturing in New Zealand.

The ASX-listed company announced in July as part of a strategic review it would focus on its pharmacy distribution and retail businesses in Australia, and outsource the manufacture of its personal care and over-the-counter products in New Zealand.

Products made by API in New Zealand are expected to be progressively outsourced over the next one to two years, and the company's two sites set to close completely by midway through 2023.

After purchasing what was Pharmaceutical Sales and Marketing in 2002, API has been operating from two sites in Manukau on Norman Spencer Dr and Plunket Ave. One was previously used by Elizabeth Arden. The operations bought by API trace their roots back to Thoros Packers, which began manufacturing on the North Shore in the 1970s.

According to its website, its pharmaceutical facilities is a licensed manufacturing facility for both Medsafe and its Australian equivalent, the Therapeutic Goods Administration.

Its over-the-counter products include the Health Basics, Only Good and Home Essentials.

A spokesman for the company declined to comment beyond a statement to the ASX.

"By moving to outsourced contract manufacturing we will generate lower cost of goods and have greater continuity in product supply, both of which have been impeded by Covid-related impacts," chief executive Richard Vincent said in a statement.

In an email to Food & Grocery Council chief executive Katherine Rich, the API said the impact of Covid-19 and the "continual unfavourable ranging decisions by grocery retailers has made this an easy decision".

The decision was "just another example of how the current market duopoly has a very real impact on the fabric of our economy," Rich said.

"Margin expectations are so high, often it makes no sense to manufacture in New Zealand."

API also told suppliers it had been hurt by changing consumer habits and very low demand for cold and flu medicine.

Earlier this week, API rejected an A$1.38 a share offer to buy the company from retail conglomerate Wesfarmers, the owners of Bunnings and KMart.