Johnson Matthey's decision to restructure its narcotic API business in light of increased UK competition has paid off, the company says.
For the third quarter 2013/4, the company reported an increase in sales of fine chemicals of 7% to £76m ($124m) on the same period last year, whilst operating profit too was much higher. Other financial details have not been revealed.
Johnson Matthey told in-Pharmatechnologist.com the main cause of the profit increase was the restructuing of its active pharmaceutical ingredient (API) business, which it said had offset the negative impact recent changes to UK rules on narcotic APIs had on it's business.
“It is a very controlled market but the Home Office relaxed this slightly which led to an increase in competition,” spokesperson Katharine Burrow told us. “We managed to maintain volumes but were forced to drop prices.”
This was specifically relevant for its Scotland-based API unit Macfarlan Smith as the price of bulk opiates – including codeine and dihydrocodeine – were particularly affected.
Therefore the firm “took a hit” at the end of last year financially, she continued, but has spent the past twelve months recovering through a restructure programme that is expected to save the firm approximately £5m for the full year 2013/4.
The restructure included a charge of £14.2m to write off a number of assets and also the loss of 30 jobs at the Macfarlan Smith site.
Furthermore, Johnson Matthey is currently in discussions with the UK Government regarding the regulator’s future intensions on importation of controlled substances but – according to its 2013 annual report - believes a whole scale opening up of the market is unlikely.