Sanofi's new drug ingredients spinoff EuroAPI drops sales guidance to €980M after Hungarian manufacturing flub

In the world of CDMOs, good manufacturing practices (GMPs) are sacrosanct. Now, less than a year after EuroAPI’s launch, Sanofi’s drug ingredients arriviste is getting a firsthand lesson in what to do when those processing standards lapse.

Wednesday, EuroAPI said it was pausing some production at its site in Budapest, Hungary, and whittling down its revenue guidance for the year by 20 million euros. Specifically, the active pharmaceutical ingredient (API) specialist decided on Nov. 30 to halt batch release and temporarily stopped making prostaglandin products at the facility.

EuroAPI charted the move “out of an abundance of caution” after an internal assessment flagged GMP deficiencies around documentation management, the company explained in a press release.

The issue is confined to production records for prostaglandins made in a segregated unit in Budapest. Prostaglandin production could continue to be held up for “a few weeks,” the company added.

Prostaglandins are hormonelike lipids that can influence several bodily functions like inflammation, pain and uterine contractions, and doctors use synthetic forms to treat multiple conditions.

The drug ingredient is mainly used for ophthalmology products and forms a hallmark of glaucoma treatment, a EuroAPI spokesperson said over email. Prostaglandins can also be used for pulmonary arterial hypertension, circulatory/erectile dysfunction, induction of childbirth and ulcers. 

EuroAPI is now hammering out an action plan to fix the problem in Hungary, it said, adding that it’s apprised health authorities of the issue.

The company “does not anticipate any impact on the other activities of its Budapest site, including contract development and manufacturing organization (CDMO) activities and based on the Group’s internal assessment, considers that the prostaglandin products on the market are within specification and are suitable for their intended use.”

In light of the issue, EuroAPI also revised its full-year sales forecast to 980 million euros, down slightly from the 1 billion euros it predicted at launch in early May. EuroAPI blamed the downturn on “loss of sales, related provisions and remediation costs” linked to the prostaglandin issue.

EuroAPI officially debuted on the Euronext exchange back in May. The company is angling to position 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.

The company, in which Sanofi retained a roughly 30% stake, employs around 3,350 workers and operates six high-tech manufacturing and development centers in France, Germany, Hungary, Italy and the U.K.

Sanofi first telegraphed its API spinoff intentions in February 2020, amid then-new CEO Paul Hudson’s quest to wring 2 billion euros out of Sanofi’s annual costs in the coming years through a mix of methods including clamping down on its manufacturing budgets.

To accomplish that goal—and add to its top line—the French drugmaker said it would create a massive new company by wedding its six API manufacturing sites in Europe and the U.K.

Despite the latest production snag, EuroAPI has gotten off to a strong start in its first few months of life. For the first half of 2022, the company pulled down 483.8 million euros (about $483.2 million) in revenue, climbing roughly 11% over the 434.7 million euros ($434.2 million) it brought home for the same period in 2021.

That haul came in “well ahead of expectations,” ODDO BHF analysts wrote in a note to clients in September, noting that EuroAPI’s commercial strategy is “beginning to deliver.”

Editor's note: This story has been updated with comments from EuroAPI.