Evotec plans to lay off 400 workers and shutter facilities as the German manufacturer and biotech continues to grapple with pharma’s cutback on R&D activities, causing the company to lay off 400 workers and shutter facilities.
“The market environment has given us no new signals of recovery to happen within 2024 as we hoped for. We expect a broader recovery now, earliest in 2025 as we continue to face stagnation of early-stage R&D spending,” Evotec CEO Christian Wojczewski said Wednesday during his first investor call after joining the company in July.
Many pharma companies are pulling back their spending on early-stage pipelines and discovery efforts, and manufacturers are feeling the tightening of purse strings. Earlier this month, Charles River also gloomily predicted that this trend will continue well into next year.
Christian WojczewskiEvotec is having to further shrink its manufacturing footprint and has identified 400 jobs globally that could potentially get cut, with a “sizable share” set to be laid off this year, according to Wojczewski. The first round of layoffs saw 100 workers cut across the UK and US, according to the company presentation. The rest of the layoffs will be made in Germany, Italy and France, Wojczewski added.
The company has also completed the shutdown of its chemistry work at a site in Lyon, France, and is closing an API manufacturing facility in Halle, Germany. In addition, Evotec said it shut down operations at two sites — one in Hamburg, Germany, where the company is headquartered, and one in Abingdon, UK — and plans to move them elsewhere.
The closures and layoffs follow Evotec’s plans to end its gene therapy operations and close a plant in Orth, Austria, which it disclosed in May. The company had originally announced its business was undergoing a “reset” in April, at the same time it announced the appointment of Wojczewski as CEO. Former CEO Werner Lanthaler resigned in January.
On a positive note, Evotec touted its partnerships with drugmakers like Bristol Myers Squibb, Pfizer and Sandoz. On Tuesday, the company disclosed a $75 million milestone payment from Bristol Myers. “We remain open to other partners,” Wojczewski said. “Just to be clear, I know this is not a big call, but we remain open.”
Evotec’s R&D revenues decreased 7% to €302 million ($334 million) for the first six months of 2024, compared to the €325 million ($359 million) reported in the same period last year.
The company’s total revenue came in lower than Jefferies analysts’ estimates, standing at €391 million ($431 million) for the first half of 2024, up 2% compared to the €384 million ($424 million) reported for the first half of 2023.