BioPharma segment tarnishes Cambrex 2Q

- Last updated on GMT

Related tags: Active ingredient

Cambrex has recorded a gain in the second quarter of this year,
with growth in its Bioproducts and Human Health segments. The
performances overshadow the company's troublesome BioPharma
division, indicative of a market for outsourced manufacturing of
biological drugs.

The company, which provides contract production and development services for pharmaceutical and biotech companies attributed a sales increase of 3.6 per cent to higher reimbursements for labour and materials partially offset by lower suite and process development fees.

Figures for the second quarter 2005 were $11.7 million (€9.6 million) compared to $11.2 million in the second quarter 2004.

However, Biopharma's gross margin decreased to -5.2 per cent from 8.5 per cent in the second quarter 2004. The company attributed the unfavorable mix of higher labour and materials reimbursements and lower suite and process development fees for this result.

"Until we benefit from more commercial scale production, sales growth is expected to be somewhat unpredictable quarter to quarter,"​ admitted John Leone, Cambrex​ president and chief executive officer.

The admission is a stark indication of the contract manufacturing environment in which Cambrex is a main player. While regulatory delays and hold ups at its customers have hit Cambrex significantly, such delays are part and parcel of the contract manufacturing environment.

The fact that Cambrex has had to downgrade the long-term value of the unit is a discouraging sign, given the oft-repeated view that biological production capacity is in such short supply, and suggests that the competition for available contracts is getting fiercer.

The company's Human Health sector, which consists of small molecule Active Pharmaceutical Ingredients (APIs), advanced intermediates, imaging chemicals, and fine custom chemicals - reported a sales increase of 4 per cent to $66.5 million. The increased sales may reflect higher volumes of branded and generic APIs and advanced intermediates.

"Custom development revenues doubled in the quarter; a positive indicator of future growth,"​ said Leone.

The wider pharmachem sector has undergone recent difficulties with lower gross sales of generic APIs, pharmaceutical advanced intermediates, and fine custom chemicals. This was partially offset by increased sales of certain branded APIs. Products, such as the Alzheimer's disease drug memantine (sold by Forest Laboratories as Ebixa) and certain other cardiovascular and central nervous system APIs, showed continued growth.

Cambrex's Bioproducts segment, which includes products and services for research and therapeutic applications, reported sales of $38.0 million, in the second quarter 2005 - an increase of 12.7 per cent

The company pointed out that this represented the ninth consecutive quarter of double-digit sales growth reflecting stronger demand and higher pricing.

Second quarter 2005 Bioproducts gross margin decreased to 50.9 per cent from 55.3 per cent in the second quarter 2004 primarily due to higher allowances for doubtful accounts and higher production costs partially offset by better volumes and pricing.

"Our new product investments continue to gain momentum. The new European media facility, recently opened Australian subsidiary, expansion of our efforts in India and acquisition of a rapid microbial detection business in 2004 have all contributed to the strong sales of our research products, media, rapid microbial detection products, and related bioservices,"​ said Leone

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