The company will explore opportunity to close facilities during second half of 2019.
STOCKHOLM, Sweden -- – Contract manufacturing organization Recipharm AB will shutter manufacturing operations at two facilities in Sweden by the end of 2019. The decision to shut down those facilities could displace up to 225 workers.
Recipharm said the sites in Stockholm and Höganäs, Sweden are part of the company’s goal of implementing greater efficiency in its business segment dubbed “Solids and Others.” These initiatives have included a reduction in headcount and the rationalization of low profitability contracts, the company said.
Recipharm said the two facilities are a financial drain on the company. In its announcement, Recipharm said the sites generate a negative annualized run rate EBITDA of approximately 25 million Swedish Kronor.
“Discontinuing operations in Höganäs and Stockholm will lead to an EBITDA margin and profitability improvement in the strategic business segment Solids and Others,” Recipharm said.
The Stockholm facility employs 180 people and the Höganäs site employs about 45 people. Recipharm intends to shut down the Höganäs site first, by the end of 2018 at the latest, the company said. The Stockholm site will be closed down by the end of 2019.
Recipharm Chief Executive Officer Thomas Eldered said the company anticipates immediate improvements to its efficiency from the decision to shutter the two sites. Recipharm clients will be given the opportunity to shift work being performed at the Stockholm and Höganäs facilities to other Recipharm sites. Eldered, who was tapped as CEO in 2015, said the closures will allow the company to offer its clients a more competitive manufacturing structure for oral solids.
“While this is a strategic choice made to optimize our manufacturing, it is a difficult decision as the closure affects approximately 225 of our Swedish employees, who have demonstrated commitment and hard work to provide high quality products and services. It is of course our intention to ensure fair and respectful treatment to all throughout this process,” Eldered said in a statement.
Eldered added that the changes will enable the company to focus its attention on the most competitive and efficient manufacturing facilities in its group. He said the company will continue on its strategic path to provide its clients with high quality contract manufacturing services.
The decision to shutter the two Swedish sites comes about two months after the company acquired a manufacturing facility in Spain from Roche. The site in Leganés, Spain employs about 200 people. It produces solid dose products and is licensed to supply products globally to more than 95 countries. As part of the agreement, Roche and Recipharm signed a long-term manufacturing agreement whereby Recipharm will manufacture a range of solid dose products.
