PRWT has Buyer's Remorse 2.5 Years after Purchase

"It is not as easy as it looks to run a drug manufacturing company. Or so PRWT Services Inc. has discovered.
The politically connected Philadelphia firm, which, among other things, runs impoundment lots for the Philadelphia Parking Authority, took a huge leap - and doubled its size - in 2008 when it bought a Merck & Co. Inc. factory in central Pennsylvania that makes bulk chemicals for the pharmaceutical industry.

Now, in an extreme case of buyer's remorse, PRWT has persuaded Merck to buy back the Riverside plant just 21/2 years later.

In a statement, PRWT blamed "the challenging business environment in the pharmaceutical industry." The company apparently had been unable to significantly expand the customer base for the facility beyond Merck, which had agreed to buy up to $900 million worth of product from the plant over five years.

Merck is repurchasing the plant, according to company spokesman Ronald Rogers, because its products were "critical to our supply chain."

"Most importantly, they were critical to our customers," he said. "We felt it was important to ensure that the supply chain continues."

Neither Rogers nor PRWT spokeswoman Sherri Kyle-Jones would provide a purchase price. Rogers said the sale will be completed Sept. 3. There will be a six-month transition while Merck resumes management of the facility, which is on the Susquehanna River about 65 miles north of Harrisburg.

The plant, known as Cherokee Pharmaceuticals L.L.C., employs 454 people and makes intermediate compounds for two antibiotics, Invanz and Primaxin. The site also makes Merck's cholesterol drug, MK524, and Avermectin, an animal dewormer.

Merck had operated the plant for 58 years before the 2008 sale. The purchase doubled PRWT's yearly revenue to about $160 million. The firm took over the plant at a time when big drug firms were increasingly turning to overseas manufacturers to save costs.

PRWT's purchase of the plant was a sea change for the minority-owned firm, which until that time had built its revenue largely on service contracts with local, state, and federal agencies.

PRWT runs call centers for E-ZPass in New Jersey and Pennsylvania's Child Support Program. The firm also handles customer service for the parking authorities in Los Angeles and San Francisco as well as Philadelphia.

Through its U.S. Facilities subsidiary, it cleans two Philadelphia prisons and manages locks and tunnels for the Virginia Department of Transportation.

Among its management team is George Burrell, an adviser to former Mayor John F. Street, and former Pennsylvania Gov. Mark Schweiker. Burrell is the company's general counsel. Schweiker is president of PRWT Business Process Solutions division."