Contract revenue for the three months ended December 31 , was $39.5m (EUR29.7), down 3 per cent on the comparable period last year, with the contributions from discovery services and small scale manufacturing declining 19 per cent to $9.5m and 26 per cent to $7.4m, respectively.
In contrast AMRI’s large scale contract manufacturing business - which produces a range of active pharmaceutical ingredients (API) and intermediates - brought in revenue of $22.6m, which is around 18 per cent higher than in the final three months of 2010.
CEO Thomas D’Ambra described 2011 as a year of ‘significant change for AMRI’ citing “disruptions and reorganizations going on within many of our large customers coupled with a difficult financing environment for small companies contributed to softer demand throughout the year than we had anticipated.
He added that: “Several areas of the company delivered good growth, but this was overshadowed by ongoing weakness in others. As a result of changes in the marketplace, AMRI has taken decisive actions to improve our operating structure, reduce non-core expenditures, and establish new opportunities for growth.”
These actions include the decision to halt all internal R&D and streamline its chemistry services operations in the US . More recently AMRI began a review of operations at its underperforming facility in Hungary .
Outlook
D’Ambra also predicted that new contracts AMRI has signed in 2011 –such as its discovery focused deals with the US National Institutes of Health (NIH) and Eli Lilly – will drive growth in 2012.
“We are actively pursuing additional opportunities with existing and new clients to enter or expand multi-year outsourcing and insourcing agreements, and we believe that many of our efforts over the past year have strengthened customer relationships and put AMRI in a position to return to growth.”
AMRI CFO Mark Frost – who is due to present at UBS 22nd Annual Global Healthcare Services Conference later this morning – was also cautiously optimistic about 2012.
“In the first quarter, we expect contract revenue to range from $37m to $40m. For the full year 2012, we expect contract revenue to range from $176m to $186m, an increase of up to 10 per cent versus 2011.
“We estimate contract gross margin for the year will range from 4-8% with improvement expected in each successive quarter.”