Recipharm will initiate a process with the intention of discontinuing manufacturing operations at its facilities in Stockholm and Höganäs, Sweden.
Recipharm’s operations in the greater Stockholm area employ approximately 180 people and are specialized in the manufacturing of tablets. The company will explore the opportunity to close the facilities during the second half of 2019.
Recipharm’s operations in Höganäs employ approximately 45 people and are specialized in sachet and stick pack filling, primarily for powders and granules. As part of the process, the company will evaluate different options for the facility. This will include divestment of the manufacturing site, with the intention to have discontinued its involvement in operations by the end of 2018 at the latest.
Negotiations with representatives of the employees will be initiated immediately with the expectation for a final decision regarding discontinued manufacturing operations in Stockholm and Höganäs to be made before year end 2017.
As part of this activity, Recipharm will offer clients the opportunity to transfer manufacturing to other facilities in the group to minimise any potential impact on patients.
“The intended changes will enable us to serve our customers with best in class service and value. We will see immediate efficiency improvements from this change and in the long term, it will allow Recipharm to offer a more competitive manufacturing structure for oral solids,” Thomas Eldered, CEO of Recipharm, said.
The operations in Stockholm and Höganäs currently generate a negative annualized run rate EBITDA of approximately 25 SEK million. Discontinuing operations in Höganäs and Stockholm will lead to an EBITDA margin and profitability improvement in the strategic business segment Solids and Others. Estimated non-recurring costs associated with the decision to discontinue operations are expected to be charged to the Q4 2017 results.