Abandoning drug plan sees pharma giant dip into red

The main Irish unit of Swiss-owned pharma giant Roche last year plunged into the red arising from the costs of abandoning plans to produce a potential new blockbuster drug at its Clare plant.

According to returns filed with the Companies Office, Roche Ireland Ltd recorded a pre-tax loss of €10.5m. This followed the company recording a pre-tax profit of €222,717 in 2011.

The Clarecastle firm recorded the loss after booking a €18.6m impairment when the company’s parent terminated all activities in May 2012 concerning the production of a new drug, Dalcetrapib.

Preparatory work was well advanced and planning permission already secured for the facility’s expansion to cater for the production of the new ‘good cholesterol’ drug to combat heart disease.

However, Roche decided to abandon the trials “due to a lack of clinically meaningful efficacy”.

A note attached to the 2012 accounts states that as a consequence of the decision to abandon plans to produce Dalcetrapib, “certain assets that had been acquired by the company in anticipation of the commencement of production of this pipeline drug are now not required”.

It continues: “These assets, some of which had been completed and were in use, and others which were still under construction have been fully impaired by the company in the year.”

A review of the Roche operations at Clarecastle followed the decision to abandon the Dalcetrapib project with the Roche Group ending uncertainty over the plant’s future when it reaffirmed its commitment last year to its Clare plant where 227 are employed.

The new figures show that revenues increased from €87.3m to €90.3m in the 12 months to the end of December last.

Before the €18.6m impairment and non-cash depreciation costs of €12.56m, the firm recorded earnings of €21.9m.

According to the directors’ report, “the company’s primary focus for 2013 will be to continue to supply fine chemical products to Roche group companies”.

The directors state that “the principal risks and uncertainties facing the company include the Roche group’s identification of replacement products for existing group products that have come off patent and adjusting the cost base in line with the lower levels of production”.

At the plant, Roche produces the ingredients for Xenical for the treatment of obesity; CellCept, used in the prevention of organ rejection in transplant recipients; and the HIV drug Invirase.

The numbers employed by the firm last year decreased from 234 to 227, with staff costs falling from €21.9m to €21.1m. Emoluments for directors last year decreased from €345,456 to €285,156 – Gerry Cahill was appointed as managing director last year Shareholder funds at the firm last year topped €76.6m, which included accumulated profits of €70.6m. The firm last year sustained an actuarial loss of €20.49m in its pension scheme.