Demand for large scale manufacturing, which grew 10 per cent, drove a five per cent upturn in contract revenues. In total, discovery services, small scale production and commercial manufacture generated $40.7m but AMRI still posted an operating loss of $6.0m.
This loss was underpinned by increased operating costs, as a result of $8.0m restructuring and impairment charges, and a four per cent drop in total revenues. The dip in total revenues is the result of $4m milestone payments from Bristol-Myers Squibb in the second quarter of 2009.
Revenues from discovery services were flat, at $11.5m, while development and small scale manufacturing rose year-on-year by one per cent to $8.2m. In a conference call to investors Thomas D'Ambra, CEO of AMRI, broke these results down by geography.
D'Ambra said AMRI has experienced increased interest in its overseas services but this has been offset by soft demand for its operations in the US. However, D'Ambra the US is seeing a potential turnaround and is optimistic the market will return to growth in the future.
AMRI has seen a significant increase in interest in its Singapore operations, which provides chemistry discovery and development services. This has been partly driven by the transfer of services for Merck & Co from the US to Singapore.
In response to this AMRI is planning to double capacity at the Singapore site in the fourth quarter, said D’Ambra. Development of the Singapore operation, coupled to earlier expansions at sites in India and Hungary, is intended to accelerate growth of revenues from overseas.
D’Ambra said that overseas operations have benefited from the integrated chemistry and biology offering. This package has seen biological testing drive growth in the chemistry business.
In the second quarter AMRI closed the acquisition of Hyaluron, a provider of sterile fill and finish services, and D’Ambra outlined plans for the business. The unit contributed around $1m to the large scale manufacturing business in the second quarter and AMRI has started cross-selling.
Growth of the business will be supported by pull-through from other units at AMRI, which will in turn gain clients from Hyaluron. D’Ambra said that Hyaluron outsources a number of tasks, such as analytical work, which AMRI can handle.
Furthermore, AMRI plans add high potency capabilities at Hyaluron. AMRI manufactures highly potent active pharmaceutical ingredients (API) and having fill/finish capabilities for these compounds at Hyaluron should benefit both businesses.