EuroAPI's troubles mount as audit reveals manufacturing lapses in Italy, spurring 2024 guidance suspension
15 Mar 2024
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Source: FiercePharma
As EuroAPI investigates the situation, production at its Italian facility in Brindisi will remain suspended until further notice.
Beleaguered Sanofi spinout EuroAPI can’t seem to catch a break. After reporting ballooning losses and a four-year restructuring plan last month, the company revealed Thursday that manufacturing lapses at an Italian plant have temporarily derailed its guidance for the year.
EuroAPI’s Italian subsidiary is suspending production of all active pharmaceutical ingredients (APIs) at its plant in Brindisi after an internal audit uncovered quality control deficiencies “due to potential local misconduct,” the company said in a release.
As the manufacturer investigates the situation, production at the facility will remain suspended until further notice, EuroAPI added.
The situation is likely to weigh on the company's operational and financial performance for 2024, EuroAPI warned, so it's suspending its guidance for the year. A revised 2024 outlook is being planned for release in the year’s second quarter.
The Brindisi site produces 11 APIs and intermediates, which primarily consist of anti-infectives including spiramycin, rifaximin, rifampicin and teicoplanin. Last year, sales from the Italian facility clocked in at 63 million euros (around $69 million).
While sales from the site are "limited," the production lapse could have an “image impact” on the company in relation to its clients, ODDO BHF analysts wrote to clients.
Given the evolving situation at EuroAPI, the ODDO team has slashed 52 million euros from its topline forecast for the company and is now predicting a sales decline of 11%, versus the 6% revenue slump the analysts had previously projected.
Since EuroAPI’s market debut as a standalone API maker and CDMO in May 2022, the company has encountered numerous hurdles that have threatened its goal to become a “partner of choice for all pharmaceutical and biotech companies.”
Last month, in tandem with the company’s 2023 earnings report, EuroAPI appointed a new CEO and unveiled a four-year restructuring scheme dubbed FOCUS-27, which will involve streamlining the company’s API portfolio, focusing its CDMO activities, rationalizing its industrial footprint and becoming an altogether “leaner organization.”
Naturally, potential layoffs are a part of the plan, which could see job cuts across “all functions” at the company, including industrial operations, quality, R&D and support roles.
As part of the plan, EuroAPI said at the time that its attempt to focus on higher-value APIs could result in potential sales of its sites in Brindisi, Italy, and Haverhill, England.
As the ODDO BHF team sees it, the transformation and restructuring costs under FOCUS-27 could be “made worse” now that EuroAPI will need to get its Brindisi plant up to standard before a potential sale.
For all of 2023, EuroAPI reported net sales growth of 4% to 1.01 billion euros (about $1.09 billion). The company logged a net loss of 189.7 million euros.
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