Contract Pharmaceuticals Ltd., the Canadian manufacturer of ointments and creams that took

over the former Westwood-Squibb plant in Buffalo five years ago, will close the facility by

the end of next year and shift that work to a sister factory in Mississauga, Ont., the company

said Friday.

The closing will eliminate 260 jobs at the CPL complex, at 100 Forest Ave., in the latest

blow to the Buffalo Niagara region's already battered manufacturing sector.

Contract Pharmaceuticals executives blamed the closing on excess manufacturing capacity

that resulted from the recession and moves by pharmaceutical companies to make more of their

own products, rather than contract them out to third-party manufacturers like CPL.

Pharmaceutical companies also have slowed their work on developing new drugs.

"When we acquired the facility, we believed that we could attract significant new business

to fill much of the excess capacity," said Ken Paige, CPL's chief executive officer, in a

statement.

"But given the current slower growth in the pharmaceutical outsourcing market, we never got

to the production levels we needed for long-term economic success," he said.

CPL executives said the sprawling Buffalo complex, which spans eight different buildings

and covers 415,000 square feet of space, has been operating at only about 25 percent of its

capacity in recent months.

That makes it uneconomical to continue operating a plant, especially when the trend toward

outsourced pharmaceutical production that CPL officials had counted on to build up workloads

at the Buffalo plant now has been reversed, said Jan Sahai, CPL's vice president of business

development.

Even after moving the Buffalo plant's work to its factory in Mississauga, the Ontario

plant, which now is running at about 60 percent of its capacity, still will have room to take

on additional production, Sahai said.

CPL executives also said they do not expect any major difficulties from shifting production

from the United States to Canada, noting that 80 percent of the drug products now made at the

Mississauga plant are shipped to the United States.

"We're very good at getting product across the border," Sahai said.

CPL said it will start to gradually reduce its work force in Buffalo later this year and

will continue to phase out production through the end of next year as its contracts with

customers expire and certain products are shifted to the Ontario plant.

The Forest Avenue factory had about 200 workers at the time CPL took it over in 2005 and

the company added 60 additional jobs over the ensuing five years as it invested more than $4.5

million in the facility.

The Buffalo plant makes and packages prescription and over-the-counter pharmaceutical

products, including liquids, creams and ointments. Its future was in question for much of the

late 1990s and early 2000s, before CPL purchased the plant, as speculation swirled about

whether Bristol-Myers Squibb would sell or close all or part of the Buffalo operation.