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AMRI mulls closing Budapest site

AMRI has announced that it is considering more job cuts in Q2 and "potential further actions" at its site in Budapest

HUNGARY

Global CRO AMRI has announced that it is considering more job cuts in Q2 and "potential further actions" at its site in Budapest, Hungary. This came only weeks after the troubled firm revealed that it had already taken a series of actions to "reduce the company's workforce, right size capacity and reduce operating costs in 2012" during Q4 2011.

AMRI said that shifting market preferences towards the co-localisation of integrated drug discovery activities had impacted demand for services from Budapest. Consequently, it is considering closing this site and moving many of the services offered there to its other sites, most notably those at Singapore and Hyderabad, India.

About 100 employees at the Budapest site, the former ComGenex, might be affected. At present, AMRI is consulting with employee representatives about ways of avoiding or reducing the number of proposed redundancies and mitigating the consequences. No further detail was given in the company's annual results presentation on 7 February.

AMRI acquired ComGenex in March 2006. Formerly a private drug discovery services company that combined chemical synthesis and computational chemistry to create drug-like compounds, it was said to give AMRI both an improved ability to offer a range of flexible services and cost models and provide a hub for additional relationships with European pharmaceuticals and biotechnology companies.

AMRI's Hungarian site carries out organic synthesis and drug discovery using advanced techniques

"The contemplated actions further demonstrate AMRI's commitment to taking the necessary actions to reassess its global footprint and strengthen its core contract research and manufacturing business by focusing its resources to improve efficiency and respond to the demands of the marketplace," the company stated.

In December, AMRI had announced that it had cut jobs in the US and terminated the lease on an R&D laboratory, one of its four facilities in its home town of Albany, New York state. It later emerged that this affected some 30 employees, though all bar five were reassigned to other projects, including a major ongoing R&D collaboration with Eli Lilly.

This move was linked to the decision, announced in the Q3 results, to end its internal R&D programmes, other than those on generics, and wind these down immediately. These cuts were expected to save about $10-11 million/year in costs. CFO Mark Frost explained that Big Pharma licensees increasingly demand proof of concept and it was never AMRI's intention to finance Phase II trials, making the programme unviable.

AMRI chairman, president and CEO Dr Thomas D'Ambra said at the time that the company must act to reduce operating expenses and focus on its core contract research and manufacturing business. "Although our outlook for growth in outsourced contract services remains positive, we continue to evaluate our global infrastructure for additional opportunities to streamline our operations and reduce cost," he said.

Total revenue in 2011 was $207.6 million, 4.8% up from 2010, while the company made a loss of $32.3 million, nearly half of the loss sustained in 2010. D'Ambra described 2011 as "a year of significant challenge", with disruption and reorganisation at large customers and a difficult financing environment for smaller ones leading to softer demand than expected.

The company's businesses diverged sharply in fortune, reflecting the downturn in early stage outsourcing as much as AMRI's own problems. Total contract revenue from Large Scale Manufacturing was 19.6% up to $95.6 million and Development/Small Scale Manufacturing was 4.0% up to $36 million but for Discovery Services it was 22.0% down to $38 million.

 

From Online Issue: February 2012