Omega Diagnostics has reached an agreement with Accubio, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech, to sell its diagnostic test kit manufacturing business and facility in Alva for £1 million.

The manufacturing business was sold as a going concern, with approximately 93 full-time Alva-based employees transferring with the company, with no layoffs.

The agreement also covers the sale of certain fixed assets, including plant and equipment – ​​but not government-funded equipment at the site – as well as the assignment of the lease for the Alva site.

As previously announced, the transition services agreement meets the site’s continued requirements to continue producing lateral flow testing (LFT) for Omega, specifically the Visitect CD4 Advanced Disease test. These provisions cover the period until December 2022.

Jag Grewal, Chief Executive of Omega, said, “We are extremely pleased to confirm today the sale of the historic Alva site, ensuring job security for all employees transferring to Accubio.

“This is the first step in our planned strategy to reshape and restructure the business.”

Last February, Omega won a contract with the Department of Health and Social Care (DHSC) to provide manufacturing capacity for Covid-19 antigenic LFTs.

As a result, and with pre-production funding provided by DHSC as well as the group’s own cash resources, Omega expanded the Alva manufacturing site, increasing the site footprint, workforce and equipment, as well as installation of government funded equipment to seek to support UK based manufacturing capability for CFLs.

This significantly increased the cost base of Alva’s site and the company as a whole.

DHSC did not license a test developed by a third party for technology transfer to Omega’s Alva site for Omega to manufacture on its behalf and let the contract expire.

Due to the DHSC not advancing the contract to phase two of manufacturing, Omega was left with insufficient demand for the production volume and a manufacturing cost base at Alva became unsustainable. .

The Alva site generated a loss of £4.9 million in the nine months to December 31, 2021. In the November 25, 2021 interim results announcement, Omega highlighted the need to scale its capacity to manufacture of lateral flow tests, improve operational efficiency and significantly reduce costs.

The sale of the Alva site and the corresponding change in the company’s cost base represent the first step in implementing this strategy.

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