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Novartis to close Spanish site in revamp of European antibiotics production

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FILE PHOTO: The logo of Swiss drugmaker Novartis is pictured at the French company's headquarters in Rueil-Malmaison
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ZURICH (Reuters) -Swiss drugmaker Novartis's Sandoz generics unit will close one Spanish site, expand another and proceed with a new Austrian facility, it said on Tuesday, as it revamps its European antibiotics production to better compete with rivals including from China.

Sandoz will by 2024 close its Les Franqueses site in Spain, with 170 workers, where it makes oral active pharmaceutical ingredients for antibiotics, it said.

Simultaneously, it is shifting injectible penicillin production from Kundl, Austria, to another Spanish site in Palafolls, part of a 50 million euros ($61.1 million) investment in production due to start in 2025 and where some Les Franqueses workers will be moved.

Sandoz is also moving ahead with plans to build manufacturing facilities in Kundl for oral amoxicillin, with an initial investment of more than 100 million euros.

The project is part of a five-year phased investment, including 50 million euros from Austria's government, announced last July that is slated for the site near Innsbruck.

Novartis's reorganization of its European generic antibiotics production comes as its Sandoz business has suffered from fierce price pressure as well a pandemic-related hit to sales of not only cold and flu medicines, but also antibiotics.

"Despite a temporary drop in demand due to the pandemic, we remain as confident as ever in the mid- to long-term prospects for this segment, which meets a significant quantity of the global disease burden," Sandoz CEO Richard Saynor said in a statement.

Sandoz, which recently bought a GlaxoSmithKline antibiotics business, did not say how many workers currently at Les Franqueses will move to Palafolls, though there will likely be some job reductions.

($1 = 0.8187 euros)

(Reporting by John Miller, editing by Silke Koltrowitz)