The Contract Development and Manufacturing Organization (CDMO) sector, which experienced a surge in business during the COVID-19 pandemic, is grappling with significant adjustments in the post-pandemic landscape.
For instance, EuroAPI has significantly reduced its anticipated revenue growth for 2023, revising it down from an initial range of 7% to 8% to a new range of 3% to 5%. Additionally, the Sanofi spinoff specialising in drug ingredients has also lowered its previously estimated earnings growth from a range of 12.5% to 13.5% to a new range of 9% to 11%.
During a recent conference call, CEO Karl Rotthier attributed these adjustments to several factors, including pricing pressures resulting from reduced inflation rates and the implementation of “inventory reduction programs” by some of EuroAPI’s customers. Rotthier also shed light on the challenges posed by the “biotech funding crisis,” which has led to delays, scope reductions, or the complete cessation of over 20 of the company’s projects.
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In response to these challenges, EuroAPI’s board has initiated a strategic review of its operating model. The company has put its previously outlined midterm prospects for the period spanning 2023 to 2026, presented in March, on hold. EuroAPI is set to unveil its revised outlook on or before February 29, as part of its commitment to transparency and informed decision-making.
When questioned about the possibility of a sale, Rotthier clarified that such considerations were not within the scope of the ongoing review. He emphasized that discussions regarding new ownership had never taken place. The timing of EuroAPI’s launch as an independent entity in May of the previous year coincided with the onset of declining fortunes in the CDMO sector. Despite these challenges, EuroAPI remains a formidable player in the industry, operating six manufacturing plants across Europe.
As EuroAPI navigates these transformative times, its strategic decisions and revised outlook will undoubtedly shape its path forward in the evolving landscape of the CDMO industry. The company’s commitment to adaptability and resilience underscores its determination to continue providing valuable services to its customers and stakeholders.
