2024 was previously marked as a “transition year” for Sanofi spinoff EuroAPI as it lays the groundwork for longer-term growth with its FOCUS-27 restructuring plan. Now, with an unexpected production derailment at one site hampering sales, the company is trying to overcome a steep revenue decline.
During the first half of this year, EuroAPI saw a 9.6% decrease in net sales to 448.7 million euros ($485 million). In a release, the company said the slide was largely a result of a production suspension at its Brindisi, Italy, plant after an internal audit revealed quality control issues that were later confirmed to have stemmed from “malpractices at the local level.”
The situation impacted a commercial manufacturing contract and, coupled with a “strong decrease” in sales to Sanofi, ended up overshadowing the “positive momentum” of sales to clients outside of Sanofi, the company said in its earnings release. Those projects include a “major” commercial contract with a global animal health company and a five-year development and manufacturing agreement with oncology specialist Priothera. Sales to Sanofi, meanwhile, fell by 14.2%.
Excluding the Brindisi site troubles, net sales were up 2.9%, EuroAPI pointed out.
After the Brindisi snafu in March, EuroAPI had already projected a negative impact on overall sales.
Overall, the manufacturer expects full-year net sales to come in at a decrease of 8% to 11% compared with 2023, it reaffirmed in its Tuesday release, with the second half of the year “slightly exceeding” the first half as far as sales go. Last year, the company delivered 1.01 billion euros (about $1.09 billion) in total sales.
While the drugmaker intends to gradually restart production and shipments from the Brindisi plant during the third quarter, the facility will likely be out of its hands by 2027. That spot, along with its Haverhill, U.K., site will be sold off under the FOCUS-27 program. The restructuring campaign is intended to turn EuroAPI into a “more focused” CDMO with a “leaner organization,” the company has said.
“Our H1 actions set the foundations of our more agile, streamlined, and value-creating model,” new CEO Ludwig de Mot said in Tuesday's release. “Over the past months, with the entire organization's support, we have made significant progress in deploying the four strategic pillars of our operational roadmap.
The Haverhill divestment process, for one, is already “well advanced” and expected to wrap up in 2025, according to EuroAPI. Selling the two plants will whittle down the company's production presence to four sites across France, Hungary and Germany.
Other components of the restructuring strategy include the divestment of 13 active pharmaceutical ingredients (APIs) products between 2026 and 2027 and 550 layoffs by 2027.