AMRI op income down 97% in Q2

By Nick Taylor

- Last updated on GMT

Related tags Amri Economics

AMRI’s adjusted income from operations plummeted by 97 per cent in Q2 as a result of lower demand for contract services, in particular development and small scale manufacture.

The company posted an adjusted operating income of $370,000 (€257,000), down from $11m a year ago. Part of this decline can be attributed to reduced demand for the company’s contract services.

Revenues for AMRI’s contract business declined by 16 per cent to $38.8m. Breaking this down the biggest drop was in the development and small manufacturing business, revenues of which fell by 47 per cent to $8.1m.

The scale of this decline has resulted in AMRI revising its financial guidance for the year. AMRI is hoping that its core contract business will improve in 2010 and believes it is well equipped to prosper when the market improves.

The firm has also enacted a number of cost cutting moves including, according to various media reports, the elimination of 40 jobs from its US workforce.

Thomas D'Ambra, CEO of AMRI, explained that the cost reduction initiatives that AMRI has implemented, and is continuing to do so, will help it realise “a more rapid return to profitability​”.

Despite these efforts to cut costs AMRI’s total operating expenses rose by four per cent in the quarter and spending over the first six months is also up. This increase can be attributed to a rise in the cost of contract revenue and increase R&D spending.

By maintaining its commitment to R&D in the face of economic challenges AMRI believes it can improve the manufacturing processes for several of its legacy products and its proprietary tubulin inhibitor compound, which is currently in Phase I.

Furthermore, the company is continuing its proprietary R&D and advanced its MCH-1 receptor antagonist programme into preclinical testing in Q2.

If these projects come to fruition they could help insulate AMRI from the variances in the contract market, which, although D'Ambra believes in the strength of the long term prospects, is currently struggling.

This decline extends beyond the development and small scale manufacture business, with the company’s discovery services revenues falling by 22 per cent. The one positive in AMRI’s contract business was an 18 per cent increase in revenues from large scale manufacturing, which generated $19.2m in Q2.

Related topics Contract Manufacturing & Logistics

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