Cerep predicts upturn in discovery services revenues

The company provides drug discovery services to companies including Eli Lilly but, like many of its peers, Cerep has been affected by pharma’s budget restrictions and has adjusted its operations in response.

Cerep has reduced staffing to offset declining sales but has maintained expenditure in R&D, which it regards as important to ensure it can capture new market shares.

The company anticipates that the reduced staffing, which cost it €300,000 ($429,000), will have a net positive impact in 2009. It is anticipated that this financial improvement will be accompanied by revenues from contracts delayed in the first half of the year.

A positive quarter-on-quarter trend has been noted in the first half of 2009, with sales growing by 7.7 per cent, and Cerep expects this to continue in the rest of the year. Cerep recorded an operating loss of €1.8m in the first half of the year, compared to a loss of €0.2m in the same period of last year.

This decline, and the 13.3 per cent drop in sales revenues that caused it, can largely be attributed by reduced sales in North America. Sales revenues fell in all geographies but North America was most significant, with the 16.9 per cent decline resulting in a €1.3m drop in income.

Falling North American revenues occurred despite Cerep signing a deal with Eli Lilly in the first half of 2009. Under the terms of the agreement Lilly will have access to Cerep’s kinase assay platform for research into undisclosed drug targets.