Catalent's plant in Beinheim, France, offline for four months because of suspected sabotage to products, is expected to be fully up and running next month. It is a good thing for the Somerset, NJ-based company since its suspension of the soft-gel capsule plant shaved $21 million off its top line in the last quarter and led it to lower its forecast for the year.
CEO John Chiminski told analysts on Tuesday that the ANSM, France's drug regulator, reviewed its new security provisions in December during a simulated production run with a placebo, according to a transcript of the earnings call from Seeking Alpha. The CEO said that the regulator has since held its inspection so that Catalent can "restart processes with prioritized customers under ANSM-approved exceptions."
Chiminski said Catalent ($CTLT) believes the facility will be fully operational by mid-March but that one more inspection is called for and that it has developed contingency plans in the event that the restart is delayed. He said the company continues to work with ANSM and law enforcement on their ongoing criminal investigations.
The criminal probes were launched after a series of incidents within the facility involving out-of-place capsules, which Chiminski said spiked in July. The company decided the problems were not accidental and tightened up security, limiting access to production, and filed a criminal complaint with authorities.
The ANSM asked for the suspension in November after a customer found some out-of-place capsules during a premarket packaging quality assurance check. The agency was worried over the "potential for a malicious actor within the facility who might engage in action beyond out-of-place capsules," Chiminski said. So far, there is no indication that any of the wrong capsules made it to consumers.
The episode did delay launches for some customers but has not led to any significant defections because many of the products are "sole-source products for Catalent," Chiminski said. He declined to name any customers, but GlaxoSmithKline ($GSK) confirmed it delayed the launch in Japan of Zagallo (dutasteride) for alopecia because of the issues at the plant in France.
Catalent is working on restart plans with those customers, some of which will occur over the next few weeks. He said the company also has contracts that limit its exposure for something like this, as well as insurance to cover some of the costs.
The CEO said Catalent expects to be able to get the "Beinheim issue behind us" soon. The effects, however, will linger for the year. The company is now forecasting revenue in the range of $1.78 billion to $1.84 billion, compared to the previous range of $1.81 billion to $1.9 billion and EBITDA of $410 million to $435 million, compared to the previous range of $434 million to $457 million.