U.K.-based SCM Pharma last year crowed about getting approval from the Medicines and Healthcare products Regulatory Agency (MHRA) for a new sterile manufacturing facility in Newburn in Northumberland that would help it realize global expansion plans. But the MHRA giveth and it taketh away. After the regulator hammered another SCM site for failing standards, the small CDMO came up short of cash to fix the problems and went into administration. Now Ireland's Shire ($SHPG), its largest customer, has taken over some operations to prevent interruption of production of an epilepsy drug it picked up with its acquisition of ViroPharma.
Shire has acquired all of the company's assets under an agreement that was triggered when one of its licenses was revoked by the MHRA, The Journal reports. That includes the £6 million ($9.24 million), 26,000-square-foot facility it opened in June 2013 to expand its manufacturing of sterile injectable drugs to commercial scale. The newspaper said about 80 employees of SCM that work at sites in Newburn and Prudhoe are expected to become employees of the specialty pharma company.
Shire told the newspaper that its bought some assets of SCM out of administration to protect production of Buccolam, its epilepsy drug for children that SCM was making for it. Shire picked up Buccolam with its $4.2 billion buyout of ViroPharma. The drug is approved in some European countries. Having secured its product, Shire says it does not intend to continue to produce products for any of SCM's other former clients.
A Shire spokeswoman said, "Shire has worked closely with the MHRA in order to transfer SCM Pharma Limited's manufacturing license into Shire's name. Shire has the licenses required to manufacture Buccolam going forward. There are no current plans for redundancies. Shire's focus is on the manufacture of its own product Buccolam, and to this extent it is business as usual. Shire has no plans to enter into new contracts to manufacture products owned by other companies at SCM's former site, and is not party to SCM Pharma Limited's contracts."
|SCM founder Fiona Cruickshank|
It is the site in Prudhoe that set off the chain of events, SCM founder Fiona Cruickshank told the newspaper. "Following a scheduled inspection in March by the MHRA at the SCM Pharma site in Prudhoe, SCM Pharma voluntarily suspended selected manufacturing operations at the facility as a result of a critical observation made during the audit." She told the newspaper that executives worked with the regulator for four months to come up with a remediation plan that would fix the issues but which SCM could afford.
"However, given the high costs associated with operating a complex manufacturing business, SCM Pharma did not have the funds to operate with limited manufacturing and also invest in the agreed remedial work required to address the issues raised," Cruickshank said. That is when Shire exercised rights under a loan agreement and took over the company. She said she hoped that Shire would continue to operate both sites and keep all of the employees. Shire did not comment.