In cutting sales guidance, EuroAPI cites CDMO industry struggles and customers' inventory reductions

Flush with business during the COVID pandemic, the CDMO industry is struggling to adjust in the aftermath.

Case in point is EuroAPI, which has slashed its projected revenue growth in 2023 from a range of 7% to 8% to a new window of 3% to 5%. The Sanofi drug ingredients spinoff also has dropped its estimated earnings growth from between 12.5% and 13.5% to range of 9% to 11%.

During a conference call on Monday, CEO Karl Rotthier chalked the changes up to pricing pressures resulting from lower inflation, coupled with “inventory reduction programs implemented by some of our customers.”

Rotthier also mentioned the “biotech funding crisis.” He said that more than 20 of the company’s projects have been delayed, reduced in scope or halted altogether.

The board of EuroAPI has begun to conduct a strategic review of its operating model. The company’s midterm view of its prospects from 2023 to 2026, which was presented in March, has been suspended.

EuroAPI will present its new outlook on or before Feb. 29, the company said.

When asked whether the company was considering a sale, Rotthier said that was beyond “the scope of the review” and that new ownership has “never been discussed.”

Timing has not been fortuitous for EuroAPI as it launched as an ambitious standalone company in May of last year, just as CDMO fortunes were beginning to decline. The company operates six manufacturing plants in Europe.