Canadian firm to sell off Irish business

CANADIAN life sciences heavyweight Bioniche is to offload its loss-making Galway-based subsidiary just 15 months after announcing an €11 million expansion plan at the plant.

The company said yesterday it was putting Bioniche Pharma, its Irish business which employs 120 people at Inverin in the Connemara Gaeltacht, on the market after a “disappointing” year. But it said it hoped to find a buyer quickly that would provide the unit with the investment it needed to succeed.

Bioniche chief executive Graeme McRae said market factors and regulatory issues were behind the poor performance last year. “On the positive side, however, it recently constructed a state-of-the-art production facility which will increase capacity by 500%,” he said. “Existing sales revenues and the new manufacturing capacity provide a good opportunity for a qualified buyer and management is diligently pursuing potential partners.”

The company, which makes sterile injectable products and first set up in Galway 17 years ago, announced a major expansion in June 2004 that aimed to bump up the workforce from 70 to 170 within three years. Over 50 of the 100 extra staff have been hired since then.

Udarás na Gaeltachta, the state authority with responsibility for promoting development in Irish-speaking regions, contributed almost €2m towards the €11m financing package required. The authority said yesterday that it was confident a buyer would be found.

Revenues in the Irish subsidiary tumbled 26% to Can$18.2m (€12.9m). It recorded a loss of Can$3.1m (€2.2m) after a slight profit of Can$0.5 million the previous year. The company blamed the slide on competitive pressure that forced it to cut prices, as well as a strengthening of the euro against the dollar.

Costs and research and development expenses remained flat, however.

The parent company reported a doubling of losses to Can$15.6m (€11m). It will use the proceeds of the sale of the Irish business, in which ICC venture capital holds a minority stake, to reduce its debt burden while it incurs costs in developing licensing and marketing its technology.