A Recipharm plant in the U.K. has been on the edge financially for some time, having been unprofitable for three years. Now, the Swedish-based CDMO says it will likely close just months after U.K. authorities cited it for not meeting standards.
Recipharm today said it is exploring the “discontinuance of operations at its solid dose manufacturing facility" in Ashton-under-Lyne, U.K., a move that will affect 140 workers. It will start with talks with employees, which may be able to get jobs at other Recipharm plants.
It also will talk with clients about transferring their products to other Recipharm facilities to minimize the impact on patients.
“We have taken this decision as there is no likely prospect of the facility in Ashton-under-Lyne being able to deliver an acceptable return in the medium term,” CEO Thomas Eldered said in a statement. “It has clearly been a difficult choice as any closure will affect approximately 140 of our employees who have demonstrated commitment and hard work to provide high quality products and services.”
Eldred said the plant has averaged a loss of SEK 18 million ($2 million) on an EBITDA basis the last three years. He said the cost of upgrading the plant to deal with issues raised by the Medicines and Healthcare products Regulatory Agency will knock SEK 8 million off of the company’s 2018 results. Eldred explained that work is ongoing but won’t be finished until the second half of 2019.
A spokesperson insisted the costs associated with dealing with the MHRA issues are not a factor in the plant's closing.
European authorities in October posted a Eudra filing showing the Recipharm plant did not meet GMP standards for manufacturing and packaging of potent products during an inspection in August. U.K. authorities pulled the facility's GMP certificate for potent drugs that are noncritical to the public.
The company said discontinuing operations would allow the company to improve its margin and profit in its solids business. The drugmaker said it would take a SEK 122 million ($13 million) charge in the fourth quarter to cover the costs of discontinuing operations at the plant, including costs for severance.