Shire bails out a contractor to keep its drug on the market

Repeated regulatory woes for SCM Pharma have left the U.K. contract manufacturer unable to afford its necessary upgrades, forcing Shire ($SHPG), its largest customer, to step in and take over.

According to The Journal, a newspaper in North East England, Shire has bought all of its partner's assets, picking up two production sites in Newburn and Prudhoe in order to protect the supply of Buccolam, an epilepsy treatment. SCM handled manufacturing for the drug, which Shire picked up in its $4.2 billion acquisition of ViroPharma last year.

The contractor's problems began with its Prudhoe site, which it halted after "a critical observation" from a Medicines and Healthcare Products Regulatory Agency (MHRA) inspection in March, founder Fiona Cruickshank told The Journal. SCM worked with regulators for about four months to craft a remediation plan, but, once it was all tallied, the company couldn't afford to follow through.

That's where Shire came in. Under an earlier loan agreement between the two, the drugmaker held the right to take SCM over under certain conditions and did just that once its drug was imperiled.

For now, Shire is preserving SCM's roughly 80 employees in its focus to maintain Buccolam supply, the company told FiercePharmaManufacturing. It has no plans on getting into the CMO business full time, though, saying it's not entering into any new contracts and isn't party to SCM's existing ones.

Cruickshank, who resigned after the company changed hands, hopes her former company can eventually get itself back in shape.

"I am saddened to see that Shire has decided to take the business into administration but hopefully the hard work of the non-exec directors over the last few months prior to resignation will ultimately help safeguard many of the jobs that have been created over the last few years and ensure the sites can continue to supply medicines to patients, albeit under different ownership," she told The Journal.

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