Cardinal gives best bang for the buck

By Kirsty Barnes

- Last updated on GMT

Related tags Cardinal health Pharmacology

Cardinal Health has taken the contract manufacturing crown after
being honoured with a prestigious award from Frost & Sullivan
in recognition of its ability to provide biopharma firms with a
high quality service, while still remaining extremely competitively

Cardinal Health is the biopharma industry's largest contract manufacturing organization (CMO) and also offers the broadest range of manufacturing options through its Pharmaceutical Technology and Services Division, which focuses on oral dosage drugs, and sterile and topical products.

In addition to manufacturing, Cardinal also offers packaging, as well as supply chain and logistics services, enabling it to provide a 'one-stop-shop' solution service to pharma firms of all sizes.

"What differentiates Cardinal Health from numerous other CMOs is its ability to move beyond typical manufacturing services and offer unique solutions to its clients,"​ said Frost & Sullivan Research Analyst Barath Shankar.

"In addition, Cardinal Health holds more than a thousand patents and applications in drug delivery technologies that enable biopharma companies to relaunch their existing products using these novel delivery technologies, helping revive late life-cycle products."

Frost & Sullivan's "2006 Best Bang for the Buck Award" will boost the spirits of Cardinal as it claws its way back from a string of disappointing financial results after battling with ongoing underperformance in three out of four of its business divisions, including the contract manufacturing Pharmaceutical Technology and Services Division.

While this division's oral manufacturing operations have remained stable, damage is being caused by production problems in the firm's sterile manufacturing operations in Albuquerque, New Mexico.

The problems stemming from the Albuquerque plant date back to when Cardinal first bought the facility in 2004. Originally it was a clinical site and Cardinal converted it into a manufacturing site.

"We underestimated the problems we would encounter with such a conversion. We didn't realise it would be so difficult,"​ Jason Strohm, investor relations, Cardinal, told​ in an earlier interview.

"We have underperformed for quite some time at this plant, sterile manufacturing is a difficult process and we are making a lot of investments to turn this situation around and make the business profitable as soon as possible."

"We are confident this will happen because demand for these types of services remains high and we will continue to see a strong pricing environment, although I am hesitant to predict when at this point, as we have predicted incorrectly for the last three quarters."

Investments at the site include refurbishment, retraining of staff with new standard operating procedures (SOPs) in place, and a new general manager, head of finance and head of compliance.

Moving forward, the company is now in the process of implementing a series of business reshuffles and cost cutting measures in order to revitalise its flagging profits - meanwhile it will rule from its new-found throne.

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