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AMRI considering further cost cutting actions in US, CFO says

By Nick Taylor , 20-Jun-2012
Last updated on 20-Jun-2012 at 11:38 GMT

AMRI is considering further cuts to its US operations as it prepares for the loss of Allegra revenues in 2015.

In the past year AMRI has closed its Hungary site, mothballed a US facility and ended internal R&D, but further restructuring is still possible. The cost-cutting is expected to focus on US operations.

We are looking at some further things to do on the US side, potentially,” Mark Frost, chief financial officer at AMRI, said at Wells Fargo Securities Healthcare Conference. AMRI is cutting costs to ready itself for the loss of Allegra (fexofenadine) patents, which generate $35m (€28m) a year, in 2015.

To make sure AMRI is profitable without revenues from Allegra Frost said the firm is looking “to take out a little more structure, maybe another two to four per cent”. Exact details of the restructuring are yet to emerge but Frost said AMRI will take the actions over the next year.

Deals with Merck & Co, the US National Institutes of Health (NIH), and Eli Lilly, where AMRI now has 54 insourced scientists working, means Frost is forecasting double-digit growth at the discovery unit.

Large-scale manufacturing could hit a similar growth rate if one of the client compounds approaching commercialisation is approved and AMRI is contracted to handle production of the launch quantities.

The weakness is early development. “One area…that concerns us still is early development. So that could derail some of our growth. We’re not predicting big growth but we actually could see it going backwards if the early development space doesn’t change much,” Frost said.

Discovery expansion

While AMRI is considering cost cutting in the US it is adding to its operations in India. The facility in Hyderabad is now handling custom library synthesis work previously done in Hungary and is hiring staff to strengthen its chemistry capabilities.

Frost said the hiring of two medicinal chemists, from GVK Biosciences and Aurigene, is part of a push at AMRI to offer the same level of quality, oversight, and expertise at each of its facilities, regardless of location.

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