(AOF) – Euroapi, specialist in active pharmaceutical ingredients, has terminated the functions of Karl Rotthier as Managing Director on October 30, 2023. Its board of directors, now looking for a new Managing Director, has appointed Viviane Monges, the current President of the Euroapi Council, until the appointment of a permanent successor. In this context, the Board of Directors also decided to appoint the Chairman of the Nominations and Remuneration Committee, Elizabeth Bastoni, to the position of Lead Independent Director.
Euroapi lost almost 50% of its value on October 10 after a third profit warning – the previous one dated March 2023 – since its split from Sanofi in May 2022.
AOF – LEARN MORE
Key points
– One of the world leaders in active pharmaceutical ingredients (No. 1 in small molecules, 2nd in APIs combining small and large molecules and 7th in innovative molecules), created in December 2021 by separation from Sanofi;
– Revenues of €977 million, distributed between API Solutions for 73% and CDMO.
– Business model based on a clear commercial strategy of expansion into new markets and aiming to become a reference partner for pharmaceuticals and biotechs;
– Capital held 30.1% by Sanofi, 12% by bpiFrance and 5.5% by L’Oréal, Viviane Monges chairing the board of directors of 12 members, Karl Rotthier being general manager;
– Very healthy balance sheet with €1 billion in equity and €19.8 million in net debt.
Challenges
– Strategy 2026:
– growth in turnover of +7% to +8% including double-digit increase in revenue from activities other than Sanofi,
– operating margin of +20% in 2026 and greater than 18% in 2025
-€510 million in investments over 2022-25
– Innovation strategy:
– 4 major axes:
– industrial and logistical optimization, innovative molecules developed in the CDMO (Contract Development and Manufacturing) with 30 projects in progress, the combined offer of oligonucleotides and peptides from 2025,
– in response to sovereignty issues, mobilization of €125 million in investments: in France, focus on morphine R&D with the aim of increasing production from 2027 and, in Hungary, creation of a kilo -lab of highly active molecules in the Budapest laboratory and doubling of the industrial capacity of the prostaglandin site by 2027
– massive recruitment, particularly in CDMO and signing in 2022 of 20 R&D partnerships relating to manufacturing processes
– Environmental strategy aiming for carbon neutrality in 2050:
– 2 stages: 100% of sites powered by renewable energies in 2025, 30% reduction in CO2 emissions in 2035 (vs 2020),
– footprint reduction technologies and investments in biomass;
-Ramp-up in the production of vitamin B12, prostaglandin, peptides, hormones and oligonucleotides with an investment ratio increased to +14% of turnover;
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Competitive advantage in the manufacturing of conjugated and complex peptides and oligonucleotides
– Extensive portfolio of 200 references, 55% of which are differential and complex, produced on 6 industrial sites in Europe, an asset in the face of Asian competition penalized by costs and disruptions in the supply chain.
Challenges
– Change in capital, with Sanofi and Bpifrance having to retain their shares until May 2024 and L’Oréal until 2023;
– Increase in operating margin, less than half that of its European competitors – Lonza, Siegried, Bache and PolyPeptide – via an industrial transformation aimed at additional value creation of €50 million;
– Response from the European Commission to the group’s project to respond, by 2030, to the needs for macrolide antibiotics and corticosteroids;
– Continued reduction of dependence on Sanofi by obtaining new contracts;
– After a loss in 2022, due to depreciation on Brindisi assets, downward revision of the 2023 objective: turnover of €980 million and operating margin between 12 and 13%;
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No dividend for financial years 2022, 23 and 24
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Biotechs put to the test
These companies are suffering from a much less favorable economic cycle, which is reflected in particular by a drop in venture capital financing of start-ups. These companies are therefore obliged to carry out layoff plans. Added to this is a much more restrictive regulatory framework. First, in the United States, measures linked to the Inflation Reduction Act (IRA) could have a strong impact on the margins of stakeholders. Indeed, from 2026, the federal Medicare program will be able to renegotiate the price of drugs marketed for nine years (chemical) or 13 years (biological), with discounts that could range from 35 to 60% for biotechs. Likewise, in Europe, with the new drug regulations presented in Brussels in April, the duration of patent protection will be reduced if the innovative treatment is not marketed in all member countries within two years.