Jubilant sees profits and contract services revs fall in Q3

16-Feb-2011 - Last updated on 16-Feb-2011 at 12:13 GMT

Indian CRAMS firm Jubilant Life Sciences had an unhappy third quarter of fiscal 2011 with profits falling despite gains in generics and API manufacturing.

The contract development and manufacturing services (CRAMS) firm’s net profit for the three month period ended December 31 plunged 56 per cent to INR440m ($9.6m)

Revenue for the period fell 10.2 per cent. However, last year’s figure included a INR1bn contribution from the agri chemicals and performance polymers business Jubilant hived off as Jubilant Industries Limited last December.

Without the contribution from agri chemicals and polymers Jubilant’s third quarter revenue was slightly higher than in the year earlier quarter, climbing 0.5 per cent on a life for like basis to INR8.7bn,

Life science products made the biggest contribution with sales climbing 13 per cent to INR7bn, driven by 24 per cent growth of its generic products revenue on gains in the solid dosage formulations sector.

Revenue from Jubilant’s drug ingredients manufacturing business also grew in the quarter, climbing 11 per cent year-on-year on higher demand for active pharmaceutical ingredients (API).

In contrast, Jubilant’s contract services business, which includes its manufacturing, drug discovery and development and hospitals operations, saw revenue fall 32 per cent to INR2.4bn.

And, even excluding the INR55m Jubilant earned in the year-earlier period from the production of H1N1 influenza vaccine components, Jubilant’s contracting revenue was still INR24m lower this quarter.

In a press release Jubilan managing director Shyam Bhartia attributed the contract services business decline to a “slowdown” in orders due to recent Big Pharma consolidation, regulatory delays to client’s new product approvals and a fall in demand for vaccines.

Bhartia went on to say that the drop in revenue “is not a true representation of the current environment,” adding that the firm has signed new contracts for life science ingredients, CMO and discovery work and generic production.

Generic outlook

Looking forward, Jubilant forecast growth in its products segment driven by the drug sector’s growing use of outsourced manufacturing as well as the launch of new generic pharmaceutical products, APIs and nutrition ingredients.

The firm also predicted revenues and margins for its contract manufacturing and discovery and development services will grow in subsequent quarters as a result of new contracts and a wider recovery of demand in the biotechnology sector.

Jubilant did not respond to Outsourcing-pharma.com’s request for more information.