Cambrex posted a 23 per cent drop in operating profit in the second quarter as a dip in net revenues was compounded by higher costs.
Industry and economic issues continue to affect Cambrex, leading to net revenues dipping by two per cent to $58.2m (€44.1m). Cambrex also recorded a rise in costs and operating expenses, resulting in operating profit falling to $6.9m
Unfavourable foreign exchange was detrimental to revenues. Another significant factor was lower demand for certain larger. This is partially attributable to supply chain disruption at a client’s facility.
Pricing also continues to be an issue. Cambrex said that lower pricing of active pharmaceutical ingredients (API) and a renegotiated contract extension for certain drug delivery products affected results. This impacted on gross margin, contributing to a decline.
Gross margin was also affected by unfavourable product mix and inefficiencies related to the ramp-up of the new addition to the Cambrex production plant in Milan, Italy.
Amid the current difficulties, Steven Klosk, CEO of Cambrex, identified a number of positive trends. Orders of generic API are stronger than 2009 and requests for proposals for clinical stage products has also shown a positive trend.
Cambrex is also encouraged by the prospects of its recently acquired biocatalysis business, Cambrex IEP. The unit has closed its first long-term licensing deal with a large pharma client and its “capabilities and technologies have been favourably received” by clients, said Klosk.
Demand for controlled substances also increased and cash flow for the quarter was positive. Cambrex is looking to build on these positives by securing new drug delivery supply deals, launching generic products and cutting costs throughout the business to mitigate price declines.