Dive Brief:
- Swedish drug manufacturer Recipharm is looking into closing its solid dose manufacturing plant in Greater Manchester, England, the company said Wednesday.
- Company CEO Thomas Eldered said Recipharm conducted a review of the plant and believes "there is no likely prospect" the operation could deliver "acceptable return in the medium term." The U.K. plant has about 140 employees, and Eldered said Recipharm would look for ways to redeploy affected workers where possible.
- The facility has averaged negative earnings before interest, taxes, depreciation and amortization — a common financial metric — of roughly $2 million annually over the past three years.
Dive Insight:
Operations haven't been discontinued yet, but Recipharm provided little reason to believe in the plant's future livelihood Wednesday.
On top of not being profitable for several years, the plant has faced license restrictions by the U.K.'s Medicines and Healthcare products Regulatory Agency. Recipharm expects those restrictions to impact its 2018 result by nearly $1 million.
Additionally, while the CDMO is working to address deficiencies that would clear this restriction, it's expected to remain in place until the first half of 2019.
Recipharm estimated it would absorb a one-time cost of about $13.5 million in the fourth quarter of 2018 if it decides to shutter the facility. This cost would come from severance costs, asset impairment and fulfilling existing contracts.
For their clients, the company stated it would talk about possibilities to transfer manufacturing work to its other facilities to avoid disruption or delays.
In June, Recipharm paid $60 million to Sanofi for a plant near Manchester to grow its business for respiratory medicines.
The company had previously intended to wind down and shutter operations at two manufacturing facilities in its home country of Sweden, but has since reversed its decision to close its Höganäs site, citing new demand from customers.
Correction: A previous version of this article incorrectly stated Recipharm still intended to shut down its facility in Höganäs, Sweden.