Cambrex makes €33m third quarter loss
writing down goodwill in its biopharma division in a move that
paints a pessimistic picture of the market for outsourced
manufacturing of biological drugs.
The company, which provides contract production and development services for pharmaceutical and biotech companies, made a loss of $42 million (€33m) in the quarter, after writing off $48.7 million in goodwill for its biopharma manufacturing facility in Baltimore, US.
Cambrex intimated at the end of September that it may have to make the move, because of regulatory delays and hold ups at its customers.
Such delays are part and parcel of the contract manufacturing environment, but the fact that Cambrex has had to downgrade the long-term value of the unit is a discouraging sign, given the oft-repeated view that biological production capacity is in such short supply, and suggests that the competition for available contracts is getting fiercer.
Worldwide sales from continuing operations for the third quarter 2004 grew 4.3 per cent to $99.3 million, reflecting increased sales in both the Bioproducts and Biopharma segments but partially offset by lower sales in the Human Health segment.
The Biopharma segment - which consists of Cambrex' contract biopharmaceutical process development and manufacturing business saw sales in the third quarter increase 31 per cent to $11.4 million, helped by a restructuring exercise.
John Leone, Cambrex' president and CEO, explained that while sales of the Biopharma segment are showing improvement, "the sales attributed to the Baltimore site have been unable to offset the volume reduction resulting from the loss of the TKT business."
He gave an optimistic view of the future, however. "The contract biopharmaceutical development and manufacturing market is expected to show continuing growth with over 300 biotech drugs in development."
Meanwhile, the Bioproducts segment - with products including cells and media, endotoxin detection and electrophoresis, and chromatography - reported a 14.7 per cent hike in sales to $34 million. The increased sales for the quarter reflect stronger demand for endotoxin detection and cell culture products and new cell therapy projects.
Finally, the Human Health segment - which consists of small molecule Active Pharmaceutical Ingredients (APIs), advanced intermediates, imaging chemicals, and fine custom chemicals - reported a decline in revenues of 5.2 per cent to $53.9 million, which reflects the difficulties affecting wider pharmachem sector.
Gross sales of generic APIs, pharmaceutical advanced intermediates, and fine custom chemicals were lower, although this was partially offset by increased sales of certain branded APIs. New products, such as the Alzheimer's disease drug memantine (sold by Forest Laboratories as Ebixa) and certain other cardiovascular and central nervous system APIs, showed continued growth in the third quarter.
Cambrex has been busily expanding its offerings to the pharmachem industry with its recently announced Epoch and Johns Hopkins licenses and Genolife acquisition in the area of process microbiology
