Evotec has set its sights on scrapping around 400 roles as the drug development services provider continues to battle tough market conditions.
In a blunt assessment of the German biotech’s situation after reporting earnings for the first half of the year, CEO Christian Wojczewski, Ph.D., said revenues and profitability for the six-month period “have been more challenging for the company than expected.”
“We are operating in a more difficult market environment, most notably the slowdown of early-stage R&D spending,” said Wojczewski, who only joined Evotec July 1.
“This has required us to accelerate our transformation towards sustainable profitable growth, leveraging better on our strengths, driving productivity, reducing complexity and making the organization stronger for its next growth phase,” he added.
The company previously announced a “priority reset” that saw the company make a “strategic exit” from the gene therapy space in May, including closing the company’s site in Orth an der Donau, Austria, which operated under the Evotec Gene Therapy banner.
Evotec, which offers drug development services to all 20 of the largest pharmas as well as hundreds of biotech clients, first hinted at major changes to “rightsize our operational and corporate structure” in April. At the time, interim CEO Mario Polywka said the company’s “central focus for 2024 is to protect our strong balance sheet and refocus the company on profitable growth.”
Those previously announced changes are set to produce annualized savings of more than 40 million euros ($44 million) next year, current CEO Wojczewski said in today’s release.
Evotec also said today that it has identified around 400 roles “across the global footprint” that could be scrapped. The Hamburg, Germany-headquartered company employed 5,022 people as of the end of June, meaning the layoffs could affect about 8% of its workforce.
Reducing that footprint also means reducing its property portfolio by the “surrendering of certain lease agreements,” the company added.
It’s not all bad news for Evotec. The company continues to play a strong game when it comes to Big Pharma collaborations, including receiving a $25 million milestone payment from Bristol Myers Squibb last week to continue with a long-running neuroscience research pact that had already delivered $45 million in combined milestones from January and June. In July, Evotec signed a metabolic- and infectious-disease-focused agreement with Pfizer.
For the first half of the year, Evotec saw group revenues increase 2% year over year to 390.8 million euros ($430 million). But the company blamed a 7% drop in shared R&D revenues to 302.4 million euros ($33.3 million) on a “challenging market environment.”