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| Recipharm CEO Thomas Eldered |
Meda, a Swedish specialty pharma outfit, is scaling back its relationship with contract drug developer Recipharm, endangering jobs and putting a site at risk of closure.
By the end of 2015, Recipharm will cease handling Meda's penicillin manufacturing, a service the company performed through its Strängnäs, Sweden, facility. That contract accounts for about 2% of Recipharm's revenue, the company said, and losing it will lead to job cuts at the 60-employee plant at Strängnäs.
Recipharm figures the plant's assets are worth about 9.8 million Swedish kronor ($1.3 million), and the company may have to sell or close the operation outright in time.
"I am disappointed that a long relationship will be terminated and in particular how it will affect a number of our Swedish employees, who have demonstrated their commitment and hard work to provide a high quality product and service to Meda," CEO Thomas Eldered said in a statement. "We have worked hard to explore opportunities to improve the business for both companies. Unfortunately our offers have been rejected and they have now decided to transfer this range of products to other manufacturers abroad."
Despite the setback, Recipharm expects a minimal short-term impact and is projecting an overall increase in profitability by 2016. Meda remains one of the company's largest customers and still has three long-term contracts running.
Recipharm has been rapidly expanding since going public earlier this year, spending more than $300 million in three deals designed to bolster its manufacturing and development capacity across Europe.
- read the statement