This increase in large scale manufacturing is “primarily attributable to a strong API business, particularly at our India and UK operations, along with continued growth at our Rensselaer [New York] facility,” Michael Nolan, AMRI CFO and treasurer, said in a conference call last week.
For the second quarter of 2013, the company expects its large scale manufacturing will grow by 20% to $30-31m, at the top end its predictions, Nolan said.
New and extended multi-year API supply agreements “provide a base on which to build new and recurring business,” Dr. Thomas D’Ambra, chairman, president and CEO of AMRI, said in the call. An API contract from early April with a specialty pharma company that requested anonymity will help support the commercial launch of several oncology drugs, Dr. D’Ambra said.
The company’s “discovery services” contract revenue for the first quarter was $11m, an increase of 13% from $9.7m in 2012, which Nolan said “reflects growth in our medicinal chemistry business, including a full quarter of insourcing business with [drugmaker Eli] Lilly offset with lower biology revenue.” AMRI is currently developing 22 compounds in Phase 3 trials as part of its contracts, as well as 51 others in Phase 1 and 2 trials.
Dr. D’Ambra noted the problem of excess capacity in early development services, but pharma companies’ Phase 3 pipelines “are strong overall” and the FDA’s high level of drug approvals in 2012 is expected to continue this year.
“I think you’re going to see more virtual [drug development] companies,” Dr. D’Ambra said. “The opportunity for outsourcing companies like AMRI is tremendous and at the same time, the days of a lot of new start-ups is over," so the industry is going to be largely controlled by the companies that exist today.
Development and small scale manufacturing contract revenue for the first quarter was $9.1 million, a decrease of 7% from $9.8 million in 2012, which was consistent with expectations and comes because of a “particularly strong [quarter] in 2012 as a result” of some rollover of planned 2011 revenues, Nolan said. He added that the company closed its research and development center in Bothell, Washington, which was first announced in November 2012, and is transitioning to Singapore and Albany, NY, Nolan said.
“The company maintains its revenue outlook for the year of $205-$213 million, reflecting growth at the top end of up to 12%,” Nolan added. AMRI also predicts “strong cash flow” in 2013, he said.