EuroAPI launches strategic review

During its full-year results presentation, CDMO and API supplier EuroAPI announced the launch of Focus-2027, a comprehensive project that will seek to unlock profitable growth and increase returns. Key means of achieving include:

* Streamlining the value-added API portfolio by discontinuing 13 with low or negative margins and focusing on highly differentiated, profitable products, such as vitamin B12, prostaglandins, peptides and oligonucleotides

* Having a focused CDMO offer “leveraging our recognised capabilities and technology platforms” *

Rationalising its industrial footprint to prioritise high-return capex and create “a leaner organisation with more efficient ways of working”

This is all subject to various local information and consultation processes with employee representatives, and agreements with stakeholders. EuroAPI plans to reveal the outcome during Q2.

The company added that its key objective for 2024 under new CEO Ludwig de Mot is to “focus on cash in a year of transition”. It has signed amended contractual terms with Sanofi, from which it was originally spun out, and is having discussions with key stakeholders on finance. Both Sanofi and EPIC BpiFrance have agreed to extend the lock-up of their stakes until December 2025.

In 2023, sales increased by 3.8% to €1,013.2 million. However, core EBITDA was down by 22.4% to €93.7 million and the core EBITDA margin, fell from 12.3% in 2022 to 9.2% due to unfavourable fixed cost absorption and input cost inflation. The company had to take a €226.4 million impairment on tangible assets and had a net loss of €189.7 million, over 12 times more than in 2022.

In 2024, EuroAPI anticipates a 4-7% decrease in net sales on a comparable basis, largely driven by a continuing fall in sales to Sanofi. The core EBITDA margin is expected to fall further to 6-9%. The company added that there will be a material impact from transformation and early restructuring costs, including industrial under-activity resulting from Focus-27.

CDMO sales were the bright spot in 2023, growing by 6.8% to €285.8 million. Sales to Sanofi were 6.3% up as commercial projects progressed despite the discontinuation of two late-stage programs at the end of 2022. Meanwhile, sales to other clients grew 7.2%, driven mainly by increased sales from commercial products. In all, 69 projects were active at the end of 2023 and 23 new contracts were signed, of which 12 were in the pre-approval or commercial phase, spurred by increasing demand for peptides and oligonucleotides, complex chemistry re-shoring and dual sourcing with European players.