Sweden's Recipharm closing 2 plants, cutting 225 workers as growth takes financial toll on the CDMO

Recipharm
Swedish CDMO Recipharm is closing two plants in Sweden and laying off 225 workers.

Recipharm has been among the CDMOs that have rapidly expanded to get a global footprint and a wider set of services. With the growth now dragging on earnings, the drugmaker will close two plants in Sweden and lay off 225 workers.

The company is closing a tablet plant in the Stockholm area with about 180 workers, as well as a sachet and stick pack filling facility in Höganäs, Sweden, with about 45 workers. The company said it expects to close the Stockholm plant plant by the end of 2019 and “to have discontinued its involvement in operations” at Höganäsby at the end of 2018 at the latest.

The contractor is negotiating with employee representatives and expects to reach decisions by the end of this year and the timetables. It is also talking with clients about whether they want to transfer their work to other Recipharm facilities.

RELATED: Roche unloads another plant in deal with Recipharm that saves 200 jobs

The cuts are a part of its two-year-old process to make its “Solids and Others” business more competitive. It came as the company reported that adjusted net sales fell slightly in the last quarter, while diluted earnings per share slid to SEK 0.26  ($0.03) from SEK 2.13 ($0.25) a share in the same quarter a year ago. Recipharm said given the results, it will find it hard to hit its earlier earnings forecast for the year.

“We will see immediate efficiency improvements from this change and in the long term, it will allow Recipharm to offer a more competitive manufacturing structure for oral solids,” Recipharm CEO Thomas Eldered said in a statement.

RELATED: CDMO Recipharm expects last year’s big expansion to position it well for the future

The decision to whack the 225 jobs comes just weeks after Recipharm struck a deal to acquire a solid dose products plant in Leganés, Spain near Madrid, taking on 200 Roche workers in that deal. It also negotiated a long-term manufacturing agreement to supply Roche with a number of solid dose products from the plant.

Last year, Recipharm announced it would spend $205 million in a two-part deal with India's Kemwell, getting development operations in the U.S. and an API manufacturing plant in India. That news came on the heels of the Swedish CDMO acquiring a 74% stake in India’s Nitin Lifesciences for $102 million that gave Recipharm three manufacturing plants that specialize in small-volume production of sterile injectable products. Additionally, the company snapped up Mitim in Italy, which provides sterile liquids manufacturing services, and bought a Swedish company that focuses on solids.

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