Sector News

EuroAPI appoints new CEO and lays out restructuring plan as manufacturer’s losses mount

March 2, 2024
Life sciences

With a new CEO tapped to drive EuroAPI’s turnaround, the Sanofi spinoff is proposing drastic steps to get its business on track, including potential layoffs and site closures.

Overseeing the four-year plan, dubbed FOCUS-27, will be new chief executive Ludwig de Mot—an industry veteran with a track record at “companies undergoing transformation,” EuroAPI said in an earnings release Wednesday. De Mot, who will take up the reins on Friday, joined the company in January as EuroAPI’s chief transformation officer.

The restructuring news comes as EuroAPI reported net sales growth of nearly 4% to 1.01 billion euros (about $1.09 billion) in 2023.

While the company’s 2023 financial results show revenue growth, EuroAPI’s losses have ballooned, likely providing the rationale behind its reorganization initiative. Last year, the company reported a net loss of 189.7 million euros, up more than 10-fold compared with 15 million euros in 2022.

EuroAPI said its reorganization project will include streamlining its active pharmaceutical ingredients portfolio, becoming a more “focused” contract development and manufacturing organization, developing a “rationalized” industrial footprint and transforming into a “leaner organization.”

To that last point, EuroAPI warned that “all functions,” including industrial operations, quality, R&D and support functions, will contribute to the cost-saving initiative through potential layoffs.

As for its industrial footprint, EuroAPI says planned moves—which will impact its site in Frankfurt, Germany, and could lead to two other workshops being “mothballed”—will allow the company to boost its capacity utilization up to an average rate of 80% to 85%. Further, as part of EuroAPI’s focus on higher-value APIs, the company is weighing whether to divest its sites in Haverhill, England, and Brindisi, Italy.

Regarding its API portfolio, EuroAPI will refocus its efforts around ostensibly more profitable drug ingredients for large molecules. The company is discontinuing 13 APIs with “low or negative margins,” including certain complex small molecules produced in Frankfurt and Brindisi.

EuroAPI figures that its contract manufacturing business will remain its biggest growth driver, and, to make sure it reaches its full potential, the company said it will begin shifting its portfolio toward more “customized and high-value CDMO segments.” The goal is to focus on large biotech and big pharma companies, EuroAPI said, adding that it wants to take on more late-stage projects, too.

Last year, EuroAPI’s CDMO sales grew 6.8% to 285.8 million euros (about $309.7 million). The company noted that beyond Sanofi, its CDMO business has accumulated a Rolodex of more than 500 customers.

EuroAPI’s board kicked off a strategic review last fall, around the same time the company slashed its projected revenue and earnings growth for 2023. At the time, then-CEO Karl Rotthier attributed the changes to pricing pressures from lower inflation, certain customers’ inventory reduction programs and the greater “biotech funding crisis.” He noted that more than 20 of the company’s projects had been delayed, reduced in scope or halted altogether.

As part of the strategic review, the board determined Rotthier would step down on Oct. 30 after helming the drug ingredients business since 2021, when it was still a part of Sanofi.

EuroAPI is just one of several biopharma companies undergoing significant changes.

Protein-based COVID shot maker Novavax, for instance, last year laid off 30% of its workforce amid a restructuring scheme. Elsewhere, OTC self-care specialist Perrigo recently unveiled its own restructuring initiative dubbed Project Energize, which will see it trim roughly 6% of its staff, or hundreds of workers.

By Fraiser Kansteiner


comments closed

Related News

April 14, 2024

Bayer taps new North America marketing chief for consumer health division

Life sciences

Avivi joins Bayer fresh off a yearlong stint as chief marketing officer of Advance Auto Parts, which followed about three years spent as marketing chief of another auto parts company, Tenneco. Rounding out her nearly 30-year career in marketing are leadership roles at consumer goods giants Kimberly-Clark and Procter & Gamble.

April 14, 2024

Air Liquide acquires healthcare businesses in Belgium and the Netherlands

Life sciences

Air Liquide S.A. (Paris) is continuing its development with the acquisition of Homecare activities in Belgium and the Netherlands. The two entities acquired in Belgium and the Netherlands support 10,000 patients living with respiratory insufficiency, sleep apnea syndrome or requiring infusion or nutrition treatments.

April 14, 2024

Vertex to acquire Alpine Immune Sciences for $4.9 billion

Life sciences

US-based Vertex Pharmaceuticals has agreed to pay approximately $4.9 billion in cash to acquire Alpine Immune Sciences, a compatriot biotechnology company focused on discovering and developing innovative, protein-based immunotherapies.

How can we help you?

We're easy to reach