Manufacturing licence restriction at Recipharm

Restriction due to potential cross-contamination.

Recipharm’s facility in Ashton-u-Lyne, primarily manufactures non-potent solid dose products. In addition, highly potent products are manufactured in a separate dedicated area.

Following the audit, production was immediately suspended to ascertain the risks and in the meantime the company liaised with the MHRA and customers regarding remediation plans. These plans have been endorsed by the MHRA and are being executed. Supply has recommenced and will continue in a phased manner for the non-restricted products. It is unlikely that this issue will cause significant supply interruptions to patients and it is expected that the licence restriction will be completely lifted by the end of the year.

The financial effect of this issue on Q4 results is anticipated to be less than SEK 10 million.

Recently, Recipharm announced that it will continue the manufacturing operations at its facility in Höganäs, Sweden, operations that earlier were set towards being discontinued.

In 2017, Recipharm announced the intention to discontinue the operations in Höganäs and evaluate different options for the facility, including divestment of the site. During this evaluation, new customers have actively approached Recipharm, adding demand for several new products in Höganäs. Consequently, Recipharm is now reversing the decision to discontinue the operations in order to progress these new opportunities.

At this stage, an important new customer contract has now been established, comprising development and launch of a new product by a large European pharmaceutical company. Recipharm expects that today’s decision will facilitate the completion of further customer agreements, as well as extending relationships with already existing customers.

Recipharm’s operations in Höganäs employ approximately 45 people and are specialised in sachet and stick pack filling, primarily for powders and granules.

Thomas Eldered, CEO of Recipharm, says: “The decision to stay in Höganäs is a consequence of the increased demand for the technology and capacity we can offer. This has been somewhat unexpected, but we are of course pleased to see new customers entering in Höganäs and that we by this also are able to continue the services to existing customers.”

“We expect to see volume growth already in 2019 and it will allow Recipharm to continue to offer an extensive and competitive manufacturing structure for powders and granules. I am also glad that our highly skilled workforce will have continued employment with Recipharm. They have shown a high level of commitment during this period.”

The decision to continue the Höganäs operations will trigger release of the associated accrual for estimated closing costs. This will lead to a minor non-recurring income that will be reported in the Q3 2018 results.