The company's operating loss of €17.2m is a large stretch from the €5.2m loss the firm reported in the first half of 2006, as is the comparable pre-tax loss.
Galapagos spent nearly four times as much on R&D in the first half of this year and the cost of sales also shot up. The firm also incurred restructuring costs of €2.7m as it "works to integrate the companies obtained last year," as well as a resultant doubling of administrative costs - these were the reasons given for the profit drop by chief financial officer David Smith in an analyst conference call today.
As part of a post-acquisitive consolidation in its services division, the firm has been actively making staff reductions at its Paris operations, which is now "largely completed," as well as transferring its UK activities in Cambridge to Saffron Walden and moving operations in Heidelberg to Basel.
Smith said that the restructure, designed to "streamline" and "reduce cost base" in the segment, is expected to bear fruit in 18-24 months time.
Meanwhile, Galapagos' for the first half of this year increased 140 per cent to €26.3m, including €4.6m in milestone payments.
Galapagos attributed this primarily to the "organic growth of BioFocus DPI as well as the acquisitions of the Discovery Partners International (DPI) operations in July 2006, and of Inpharmatica and ProSkelia in December 2006".
The company's services division BioFocus DPI showed a year-on-year growth of 95 per cent, which was also attributed largely to the acquisition of the activities of DPI and Inpharmatica, the firm said.
Even so, organic growth was only 12 per cent, slightly lower than the 15 per cent that Galapagos had hoped for, although Smith said that despite this they were happy with the growth as it was in line with their peers.
Despite this, the segment loss for BioFocus DPI over the first six months of the year was €2.6m, compared to a €2.4m profit in the comparable 2006 quarter.
Smith confirmed that some of the businesses in the Biofocus DPI unit were loss-making although would not identify which ones.
However, the firm indicated there was no room in this division for business that are "not profitable" and said it is hoping the segment will break even by the end of the year, excluding restructuring costs.
Meanwhile, this week BioFocus DPI entered into its third drug discovery contract with AstraZeneca, worth €680,000, this time to undertake work for its US operations, which builds upon the previous work it is doing for the UK-based drug firm in Europe.
This latest deal will involve BioFocus DPI performing medicinal chemistry, computational chemistry and supporting biology and absorption, distribution, excretion, metabolism, toxicity (ADMET) services for AstraZeneca's infection discovery programme based in Boston, US.
Under a second programme initiated in April 2007, BioFocus DPI is performing chemistry and supporting biology and ADME services for an AstraZeneca's hit-to-lead programme in Europe.
"We now have a global relationship with AstraZeneca, working with several sites based in Europe and the US," said Galapagos' CEO, Onno van de Stolpe.
