AMRI posts loss, but forecasts 23% contract rev growth in Q4

By Gareth Macdonald

- Last updated on GMT

Related tags: Food and drug administration

API maker AMRI cited arbitration costs, efforts to address a US FDA warning letter and acquisitions as key factors in Q3 loss, but predicted that large-scale contract manufacturing business will drive final quarter gains.

The firm’s operating loss for the three months ended September 30 totalled $15.2m (€11m) which, despite a 6 per cent increase in revenue for the period to $50.6m, is an increase on the $106,000 deficit it posted in Q3 2009.

Spokeswoman Andrea Schultz told Outsourcing-pharma that much of the increase was due to a reserve taken out by AMRI in relation to a contract dispute with Borregaard Industries.

Last month​, the International Centre for Dispute Resolution (ICDR) ruled that AMRI had “wrongfully and improperly repudiated and cancelled a purchase agreement​” in 2009 and award the Norwegian supplier $8.7m.

The other main factor in AMRI's Q3 performance was, according to Schultz, was the production slow-down at its sterile fill-finish facility in Burlington Massachusetts, which received a US Food and Drug Administration (FDA) warning letter in August​.

Aside from these issues, Schultz said that the acquisition of Wales-based Excelsyn, in February​, and US firm Hyaluron in June​ had increased operating costs in the third quarter and also contributed to the quarterly operating loss.

Large-scale gains

AMRI’s contracting revenue increased 8 per cent to $42.9m as gains made by its large scale manufacturing business, up 20 per cent to $21.9m, offset flat discovery services performance and a 6 per cent drop in the contribution from its development and small-scale production unit.

Schultz said the discovery and development market continues to migrate to low cost options outside the US, adding “Toward that end, AMRI continues to aggressively build out its sites in these locals to meet that demand.

That being said…we are seeing some signs of stabilization for US demand as evidenced by an up-tick in requests for RFPs, an indicator that the drop we've been experiencing may be bottoming out and that we could expect to see an improvement in 2011​.”

She also cited AMRIs large-scale manufacturing business as another positive, explaining the increase was largely due to its European acquisitions and, despite the current FDA issues, its parenteral plant in Burlington.

And AMRI expects this pattern to continue in Q4 and is forecasting contract services revenue for the period to be in the $40m to $43m range, which is up some 23 per cent on the comparable period in 2009.

Schultz explained that: “We are forecasting essentially flat revenue in discovery and development-small scale, however a significant increase in large scale, primarily due to higher commercial API production as compared to last year as well as the benefit received from our acquisitions​.”

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