Catalent mothballing recently bought UK plant

CDMO Catalent will delay bringing new capital expenditure projects in Oxford and Princeton, New Jersey online as it looks to keep utilization rates stable during the post-COVID period.

Correction November 17: The original headline suggested Catalet was mothballing both the Oxford and Princeton site. While this is the case for the Oxford site, it is only the expanson at Princeton that is on hold and it continues to operate.

Catalent expanded its manufacturing footprint in April this year after acquiring the 74,000 square-foot Vaccine Manufacturing & Innovation Centre (VMIC) near Oxford from the UK Government for an undisclosed fee. The contract development and manufacturing organization (CDMO) also pledged to invest up to $160 million in the facility going forward.

However, changing industry dynamics driven by lower COVID-19 related product demand has led the firm to mothball the site, according to a Catalent spokesperson.

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“To ensure that Catalent continues to operate efficiently and sustainably, the company has decided to reduce and delay some of its capital expenditure projects,” BioProcess Insider was told.

“This includes temporarily suspending construction activities at our Oxford facility, which remains an important element of Catalent’s long-term growth plans in Europe.”

The hold on the capacity expenditure (CAPEX) project was alluded to in Catalent’s first quarter FY23 call earlier this month, along with a delay in bringing online a 30,900 square-foot cell therapy expansion in Princeton, New Jersey, after the firm acquired the site from Erytech Pharma for $44.5 million earlier this year.

“Given the current macroeconomic environment, our assessment is the capacity that we have is more than enough for the runway that we have in front of us for the next several quarters,” CEO Alessandro Maselli told stakeholders.

He referred to the decision to delay both Oxford and Princeton as “a rephasing” in order to “keep our utilization rates at reasonable levels to continue to drive margin and cash flow.”

Chief financial officer Tom Castellano added factors negatively impacting margins “include headwinds from COVID related volume declines, inflationary and supply chain pressures, start-up costs related to our acquisitions of Princeton and Oxford.”

Net income fell 52% to $61 million year-on-year, while contribution from Catalent’s biologics business – which includes large molecule drug development and manufacturing as well as cell and gene therapies related activities – declined 2% to $523 million.

Castellano said on the call both Oxford and the Princeton expansion “are now expected to come online during fiscal 2024 and contribute revenue in that period versus in the current fiscal year.”