Euroapi resolves Budapest production snafu after taking 'considerable' financial blow: analyst

Sanofi’s drug ingredients spinoff Euroapi has made short work of its Hungarian manufacturing snafu—though not without incurring a sizable hit to its top line, one group of analysts contends.

The active pharmaceutical ingredient (API) specialist says it progressively restarted prostaglandin production at its site in Budapest, Hungary, on Jan. 19. 

Prostaglandins are hormonelike lipids that can influence several bodily functions like inflammation, pain and uterine contractions.

The drug ingredient is mainly used for ophthalmology products and forms a hallmark of glaucoma treatment, a Euroapi spokesperson told Fierce Pharma last year. Prostaglandins can also be used for pulmonary arterial hypertension, circulatory/erectile dysfunction, induction of childbirth and ulcers.

Back in November, Euroapi decided to halt batch release and temporarily stop making prostaglandin products at the plant. The company charted the move “out of an abundance of caution” after an internal assessment flagged manufacturing deficiencies around documentation management.

Now, in the span of two short months, Euroapi says it’s built and rolled out a remediation plan that should bring the “majority” of prostaglandin production back online by mid-April.

According to analysts at ODDO BHF, that means production of the molecule should “resume gradually with the manufacture of intermediates set to restart immediately.” In turn, finished API is only likely to be produced “and therefore available for sale” near the start of the second quarter, the research team wrote in a note to clients Tuesday.

Euroapi confirmed in its own release that the issue was confined to prostaglandin products, with no other contract manufacturing activities affected by the pause.

Last year’s production flub was an early lesson in lapsed manufacturing standards for Euroapi, which officially debuted on the Euronext exchange in May. The company has pitched itself as “the partner of choice for all pharmaceutical and biotech companies” and has previously said it believes it’s the world’s top manufacturer of small molecules and the second largest API maker by revenue.

Still, the prostaglandin problem has blunted Euroapi’s trajectory. In light of the issue, Euroapi in December whittled down its full-year 2022 sales forecast to 980 million euros, a drop from the 1 billion euros it predicted at launch in early May. At the time, Euroapi blamed the downturn on “loss of sales, related provisions and remediation costs” linked to the prostaglandin snafu.

The resultant toll on Euroapi’s sales has been “considerable,” the ODDO BHF team wrote, noting Euroapi had not drafted any revisions to its 2022 guidance following the production restart.

The analysts, for their part, largely agree with Euroapi’s 2022 sales estimates, with expectations that the company will reach around 975 million euros in revenue for the full year. 

Looking ahead, ODDO BHF foresees Euroapi’s 2023 sales hitting somewhere in the vicinity of 1.03 billion euros.