DSM saw some improvement for its CMO business in Q1 2012, but says the market will continue to be a challenge.
The Dutch firm’s pharma business – which combines the contract manufacturing unit DSM Pharmaceutical Products (DPPD) and the anti-infectives JV DSM Sinochem – saw revenues increase 7 per cent to €175m with sales increasing 20 per cent by volume.
DSM said the gains were ‘mainly’ due to higher revenue from DPP. Spokesman Herman Betten told Outsourcing-pharma.com that: "The CMO business (DPP) had in general higher volumes across the board. The pipeline has improved thanks to intensive marketing and sales work."
One result of this increased marketing activity is DSM's recent contract with Agenix, under which DSM became one of two firms - the other being Lonza - lined up to produce commercial supplies of the active pharmaceutical ingredient (API) talactoferrin if it is approved after ongoing Phase III cancer trials.
However, despite being signed this year the contract was not a major driver for DPP in Q1 according to Betten, who said: "The Agenix deal is important for DPP, but the major impact will only be seen after 2012."
He also said that the deal DSM signed with Indoco Remedies in January – which granted it rights to sell eight of the Indian manufacturer's APIs worldwide – had not made a significant contribution to Q1 revenues.
DSM also cited price increases at DSM Sincochem –formed with China’s Sinochem in late 2011 – as a driver organic sales growth in Q1. However, the overall impact on sales was negative as a result of the 50 per cent deconsolidation of DSM Anti-Infectives.
The firm added however that this negative effect had been “partly compensated for by the shift in reporting of the Maleic Anhydride and Derivatives business from corporate activities back into the Pharma cluster because DSM is no longer actively trying to divest this business.”
The positive news from DSM Sinochem – at least in terms of organic sales growth – contrasts with DSM’s other JV Percivia - with fellow Dutch firm Crucell - which just last month halted in-house development of biosimilars after the parent firms failed to agree on investments.
The DPP unit's performance in Q1 2012 is a marked improvement on the comparable period in 2011 when the firm reported a 14 per cent drop in sales and told Outsourcing-pharma.com that its CMO business and cost position was ‘out of step’ with the market .
But - while the gains were welcomed by DSM as being "the first signs of improvement" - comments made by the firm in March this year suggest that it will continue to look for partners to diversify its CMO business to reduce its reliance on Big Pharma customers.
The mixed results for DSM’s pharma business in Q1 were reflected in the firm’s outlook.
In a press statement DSM said that: “Business conditions in Pharma are likely to remain challenging, although DSM anticipates that it will make further strategic progress,” and predicted that EBITDA will be up slightly in 2012.