Patheon trims global footprint, cuts costs as part of new strategy

Contract drug manufacturer Patheon (TSX:PTI) is paring back some operations in Europe and Canada as part of a new corporate strategy to review the company’s global footprint and cut costs.

Research Triangle Park, North Carolina-based Patheon said that its new strategy will include investing in its pharmaceutical development services business (PDS), which includes manufacturing the investigational drugs that pharmaceutical companies use in clinical trials. Patheon said it would expand its presence in early drug-development services. Currently, the manufacture of already commercialized drugs brings in most of Patheon’s revenue.

Patheon disclosed the new strategy on Sept. 9 as the company released fiscal third-quarter results in which it recorded a net loss from continuing operations of $3.2 million. A year ago, the company’s net loss for the third quarter was $1 million. Revenue in the quarter was $172.7 million, a 5.7 percent increase compared with a year ago.

The company reported higher corporate costs in the third quarter totaling $8.9 million compared to $5.5 million in the year-ago period. The company attributed the nearly 62 percent increase to higher consulting fees related to the strategic and operational review as well as higher compensation expenses.

Patheon employs about 4,000 in North America and Europe. As part of its strategic review and cost-cutting efforts, the company is moving its European headquarters from Zug, Switzerland to the United Kingdom. The company is also considering “strategic alternatives” for its commercial business in Swindon, United Kingdom, a site the company said has attracted some interest. The company does not expect its U.K. pharmaceutical development services operations will be part of any potential deals.

In Canada, Patheon plans to consolidate a lab outside of Toronto with the company’s Toronto operation. The company could also sell its clinical packaging operation, which operates from the suburban Toronto facility.