Catalent reshuffles business, reports operating loss

Catalent Pharma Solutions, the firm born from the spin out of Cardinal Health's contract manufacturing business, is reorganising its production facilities with an expansion of its UK site and the divestiture of some of its French operations.

Separately, the firm has released its first financial results, which show a significant operating loss for its first three months of activity.

Catalent was formed in April after Cardinal Health completed the sale of its Pharmaceutical Technologies and Services (PTS) unit to a subsidiary of private investment firm The Blackstone Group for $3.3bn (€2.5bn) in cash.

The New Jersey- based company announced this week it is expanding its temperature controlled warehouse in Bolton, UK to meet "increased customer demand for clinical supply services, especially cold-chain storage and distribution."

This project involves a purpose-built extension of the existing facility and is expected to be up and running in June next year.

This move comes on the heels of two already completed expansions at its other clinical supply plants in Schorndorf, Germany and Philadelphia, Pennsylvania.

In addition, the firm said it plans to divest its manufacturing facility in Osny, France.

"The Osny business is specialised and largely dedicated to the production of hormone products, and as such is not core to our future strategic direction," said Catalent's CEO John Lowry in a statement.

The company had also announced in June that it was going to divest its sterile facility in Albuquerque, New Mexico.

"We anticipate that both of these divestitures will be completed within the next nine to twelve months," said Lowry.

As part of its strategy, the firm recently organised its business into three operating segments, Oral Technologies, Sterile Technologies and Packaging Services.

Meanwhile, the firm released its financial results for the fourth quarter of 2007, which runs from 30 March to 30 June 2007, so there was a gap of ten days - between the start of the financial period and the actual separation of the PTS unit on 10 April - for which the company combined the financial results of the business before it was officially sold by Cardinal.

The combined results of the company and its predecessor are not exactly comparable and do not comply with generally accepted accounting principles, however, the company said it believes it provides "useful information to assess the relative performance of the businesses in all periods presented in the financial statements."

In the fourth quarter, combined sales totalled $451.3m, 5 per cent more than the $431.3m generated in the same quarter last year by the pharma business when it still belonged to Cardinal Health.

The firm attributed this increase to the performance of the Packaging Services segment, particularly in Europe, and to the strong demand for its Zydis products - based on Catalent's oral dissolving tablet technology - within the Oral Technologies business.

Cost of products sold increased 16 per cent to $361.5m in the quarter ended 30 June 2007, compared to $311.7m in the comparable quarter last year.

The company said this was partly due to the start-up costs involved in its new sterile facility in Belgium.

In contrast, the company recorded a combined operating loss of $146.5m, compared to the $45.0m operating profit generated by the business in the same quarter in 2006.

But Lowry was confident about the company's progress since April and commenting on the company's quarterly results, said; "Our separation activities from Cardinal Health are ahead of schedule and our anticipated expense savings are on track."