Earnings at Catalent jumped in the second quarter as rising demand for its oral technologies offset weakness in sterile injectables.
In the second quarter sales of Zydis, a fast-dissolving formulation, shot up by 40 per cent to drive strong performance across the oral technologies business. EBITDA (earnings before interest, taxes, depreciation, and amortisation) was up nine per cent as the unit continued its solid start to 2012.
Matthew Walsh, chief financial officer at Catalent, told investors Zydis was the “standout performer” in the oral technologies business and growth is expected to continue in the near term. Demand for Zydis rose as a result of existing contracts and Walsh said the pipeline for new products is “robust”.
The gains made by the oral unit, which accounted for four-fifths of total EBITDA, more than offset weakness in other areas of the business. In terms of EBITDA, the sterile technologies segment was the only unit to fall year-on-year.
A 28 per cent drop in EBITDA was attributed to an anticipated decline in volumes from one product. Catalent also suffered from a shortfall in non-flu demand and Walsh said efforts to lessen reliance on these products are “a little behind” expectations.
Packaging was the other area of weakness at Catalent but it grew its EBITDA despite falling sales. The unit faces competition in North America, where weak volumes and pricing hit results, and the March fire at its Corby, UK facility disrupted European operations. Catalent is doing well overall though.
After growing EBITDA by 37 per cent since the end of fiscal 2009 analysts are starting to question if Catalent’s owners have an exit strategy. “At this point I would prefer not to discuss anything related to IPOs (initial public offerings)”, Walsh said in responses to questioning on the topic.