Recipharm cutting Swedish manufacturing but ‘unlikely’ to sell facilities

By Flora Southey contact

- Last updated on GMT

GettyImages/naruedom
GettyImages/naruedom
Recipharm says it will cease manufacturing at sites in Stockholm and Höganäs, citing ‘underperforming operations’ at its package filling and manufacturing-focused sites.

Stockholm-based operations will close in the second half of 2019, and the Höganäs site will close by the end of next year, said Recipharm.

“The company will evaluate different operations for the ​[Höganäs] facility…this will include divestment of the manufacturing site...” ​said the firm in a statement.

However, a Recipharm spokesperson told this publication the firm is unlikely to sell the facilities.

“We are evaluating all opportunities but we believe it ​[the selling of facilities] is unlikely to happen, especially in Stockholm,” ​said the spokesperson.

The closure would affect 180 employees in the greater Stockholm area, and 45 staff in Höganäs.

“We do expect redundancies, but we will also try to minimise the impact whenever possible by transferring employees to other operations in the region,” ​the spokesperson said.

Recipharm said it will begin negotiations with employee representatives immediately, and expects a final decision regarding Stockholm and Höganäs-based manufacturing to be made before the end of the year.

We were told clients can opt to transfer manufacturing to other facilities in the group to minimise impact on patients.

Results

The contract development and manufacturing organisation (CDMO) said the decision was influenced by negative annualised run rate EBITDA (earnings before interest, taxes, depreciation, and amortisation) or approximately 25 SEK million ($3m) within its Solids and Others segment, during its Q3 results last week.

This segment covers tablet manufacturing from its facility in greater Stockholm area, and sachet and stick pack filling in Höganäs.  

“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,” ​CEO Thomas Eldered said in a statement.

The firm recorded net sales of SEK 1.2m and a negative operating profit of SEK -17m.

“Net sales adjusted for comparable units and currency effects decreased by 0.8% compared to the same period last year,” ​said Eldered.

“In the interim report for the second quarter we identified factors, mainly delays, with negative effect on the result for the rest of the year…moreover, the weak development within Solids & Others as well as phasing of orders had a further negative effect,” ​said the CEO.

However, reduced working capital has improved operating cash flow, said Eldered.

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