Akorn's potential for growth despite contracting blip
For the period, pharmaceutical contracting manufacturing operations generated revenue of just $2.1m (€1.3m), down 19.2 per cent on the comparable three months last year.
Under its five year deal with Bioniche, Akorn will be responsible for the manufacture of two injectable drug products, details of which have not been released, on the former’s behalf.
The second contract, which was announced earlier this month and will run for ten years, will see Akorn produce several injectable drugs at its facility in Decatur, Illinois. The operation is expected to generate revenue of between $4m and $5m a year, roughly equivalent to 10 per cent of the firm’s 2007 turnover.
Vaccines key catalyst for growth
Overall however, Akorn remained upbeat about its performance despite the drop in contracting earnings. The firm argued that the decline had been offset by an 82 per cent leap in revenue to $21.2m that helped reduce its operating loss to $2.6m, roughly half that recorded in the second quarter in 2007.
Among the most interesting developments in the period was the growth of Akorn’s vaccines business. The firm reported that shipments to distributors had accelerated in the quarter and added that the burgeoning hospital unit dose Td (tetanus and diphtheria) vaccines business had continued to grow.
In addition, since the end of the period Akorn has been awarded a US Centers for Disease Control and Prevention (CDC) contract to produce and distribute its range of Td vaccines for the wider population.
Speaking at the Illinois-headquartered group’s presentation, CEO Arthur Przybyl said that: “The results of our second quarter begin to demonstrate why vaccines are an important, strategic business segment for us. The incremental revenues and gross profit from vaccines are the catalysts for generating positive cash flow in the second half of 2008.
“We continue to expect significant, near term product approvals in our Ophthalmic and Hospital Drugs and Injectables business segments. We believe recently announced agreements in our Contract Pharmaceutical Manufacturing business segment may serve to further increase revenues and gross profit in the second half of 2008 and beyond. Finally, we look forward to several expected product launches, beginning in July 2008, for our Akorn-Strides Joint Venture,” he added.
