A 45 per cent year-on-year surge in antiviral revenues helped AMPAC Fine Chemicals (AFC) increase sales in the quarter. However, the unit continues to post losses, a little less than $1m (€0.77m) in the second quarter, and the resurgence of anti-viral sales was offset by weakness in the oncology sector.
AFC is suffering as demand for a key oncology API (active pharmaceutical ingredient) is cut by generic competition. Validation of new commercial oncology products is underway but it will take time for sales to ramp up.
“Due to the timing of revenues in fiscal ’12 from these new products are not anticipated to overcome the declines in revenue from our mature oncology products”, Dana Kelley, chief financial officer of AMPAC, told investors in a call to discuss first quarter results.
Despite weakness in oncology AFC is still predicting it will become profitable in the second half of the year. In the first half of 2012 AFC halved its operating losses and expects further margin gains to push it into profitability in the next two quarters.
Improved capacity utilisation and efforts to boost efficiencies are expected to drive the margin expansion. “We have implemented solid recycling for a number of our products, which not only reduces costs, but also provide benefits to the environment”, Joseph Carleone, CEO of AMPAC, said.
Sales growth is also needed. AFC inked a five-year extension to its deal manufacture a CNS (central nervous system) API. The CNS product has gone off-patent but Carleone said the innovator has kept “significant market share” and has chosen AFC as its main API supplier.