Cambrex yet to stem Biopharma bleed

By Kirsty Barnes

- Last updated on GMT

Related tags: Biotechnology, Active ingredient

Cambrex's Q2 results show that the life sciences firm is slowly
making a comeback after being crushed by a $140.3m (€116.7m) loss
in Q4, however, it has failed to completely stem the bleed from its
Biopharma unit, blamed for much of the company's woes.

The company reported a 6.4 per cent increase in sales revenue to $123.6m from $116.2m in the second quarter of 2005, attributed to a strong performance in its Human Health and Bioproducts segments.

"Our Human Health segment, part of which supplies small molecule active pharmaceutical ingredients (APIs) and advanced intermediates for use in generic drugs, is the primary driver for the improvement in sales, as the generics industry continues to boom,"​ Luke Beshar, executive vice president and CFO of Cambrex told

"The other part of this segment, that does contract manufacturing of small molecule APIs for branded drugs, is also outperforming in the market due to our new commercial focus on a few undisclosed niche areas."

Cambrex said its Bioproducts segment, which includes research products and therapeutic cell culture media, as well as contract cell therapy and testing services, performed well due to "higher sales in most product categories,"​ with the exception of therapeutic cell culture media, due to "seasonal downturn and timing of shipments."

The upturn in business from these two segments helped contribute to the firm's 5.7 per cent increase in profit margin to $9.6m, however, it was not enough to improve the company's profit margin, which remained unchanged at 7.8 per cent - the continual bleed from the company's Biopharma unit bore the brunt of the blame.

"The poor performance of the Biopharma unit is dragging the company's profit margin down,"​ said Beshar.

"This unit has a very fixed high cost base, 70 cents in every sales dollar drops to the bottom line, so when sales are down in this segment, it has a very big impact on our margin."

Cambrex's Baltimore-based Biopharma unit has struggled in its failure to offset the volume reduction resulting from the loss of a major contract in 2003 between Cambrex and Transkaryotic Therapies (TKT) to manufacture the drug Replagal, after its approval was rejected by the Food and Drug Administration (FDA).

The unit also suffered particularly from news last November from its client Nabi Pharmaceuticals that its StaphVax vaccine did not appear to prevent Staph infections in a phase III study involving dialysis patients, ceasing the development program of the vaccine.

Indeed, the current tendency of big biotech to expand its self-reliance and capacity, rather than opt for the contract biopharmaceutical manufacturing services that companies such as Cambrex offer, is not helping either.

Genentech for example will boost its production capacity by 200,000 litres by 2009 and Amgen is currently building in Rhode Island what is expected to be the world's largest mammalian protein manufacturing facility.

However, in a sign that things are looking up for the beleaguered Biopharma segment, Beshar said he expects it to finally break even in the third or fourth quarter, for the first time since 2003.

"We have been working hard over the last few years to make up for the volume of business that we have lost,"​ he said.

"We now have 94 per cent of our full year forecast for the unit already booked and expect the second half of the year to be substantially better than the first."

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