Patheon Sees Revenue Increase in Q2 as CMO Business Thrives

By Zachary Brennan

- Last updated on GMT

Patheon Sees Revenue Increase in Q2 as CMO Business Thrives

Related tags: Revenue, Fiscal year, Generally accepted accounting principles

Canadian CMO Patheon’s second quarter revenues increased almost 40 percent as the company’s commercial manufacturing services revenues saw a similarly high rise over the same period from last year.

The year over year improvement was attributed primarily to improved operating performance and an impairment charge of $57.9m (EUR43.3m) in the same quarter in FY 2012. Top-line growth was driven by increasing customer demand and encouraged by revenue growth that the company hasn’t seen in the last five or six quarters, CFO Stuart Grant said in a conference call on the company’s results.

CEO Jim Mullen said the company’s acquisition of softgel specialist Banner Pharmacaps​ for $255M last year is “nearing completion​” and that Patheon expects to see a step-up in growth of Banner products. That acquisition also resulted in the shuttering of a Canadian manufacturing facility​, which is expected at the end of this fiscal year and could save the company as much as $8m per year.

Mullen said in the conference call that the company is winding down work at the Alberta, Canada manufacturing site and the company hopes to sell the facility. However, the company has plenty of CMO capacity for growth, he added.

We have about 350 products that we manufacture, and in any given year we see some decline in the number products​,” Mullen said. “At the same time, we’ve got new products coming in and this has increased over the last few years​.”

He also noted that the strongest sector right now for Patheon manufacturing is in the specialty pharma sector, which includes biotech companies. Mullen added that a recent trend toward consolidation in the specialty pharma sector should not be disruptive to Patheon as companies usually keep their supply chain partners to avoid regulatory complications.

The bigger trend is what’s going to go on in big pharma and what they’re insourcing and outsourcing​,” he added. “But outsourcing will continue to grow​.”

Pharmaceutical development service revenues for the second quarter decreased $0.1m from the same period last year, which is a reflection of the sale of Patheon's clinical packaging business to Bellwyck Packaging Solutions in fiscal 2012, the company said. 

Meanwhile, Patheon’s consolidation of its sites in Puerto Rico has taken longer than expected and will extend into this calendar year, Mullen said.

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