AMRI's business risk profile 'weak,' says S&P

By Dan Stanton contact

- Last updated on GMT

Albany, New York-headquartered CDMO AMRI
Albany, New York-headquartered CDMO AMRI

Related tags: Manufacturing

A Standards & Poor analyst has rated contract development and manufacturer AMRI as ‘stable,’ but says it lacks the scale and breadth of offerings of its competitors in the CDMO industry.

S&P assigned a ‘stable’ ratings outlook to Albany Molecular Research Inc. (AMRI) on the back of the recent acquisition of Valladolid, Spain-based firm Gadea Pharmaceutical Group​, which it believes the firm will smoothly integrate.

But while the $174m (€160m) deal expands AMRI’s active pharmaceutical ingredient (API) and drug manufacturing capabilities and capacity, as well as geographic presence, analyst Arthur Wong believes the firm is still in a precarious position compared to others in the third-party drug discovery, development, and manufacturing industry.

“We view AMRI's business risk profile as 'weak,' given that it competes in a niche industry and against larger players with greater size, scale, and breadth of offerings, partially offset by the company's focus on more advanced manufacturing processes,”​ he said in a note.

But AMRI is also bolstered by its discovery and development services (DDS), the note continued, which allows the firm to enter into contracts with clients at an earlier part of a product lifecycle.

According to its 2014 annual report, AMRI’s revenues are made up of around 57 % API supply, 12% drug product manufacturing and 31% from DDS.

“Our rating outlook on AMRI is stable, reflecting our expectation that the company will grow revenues mid- to high-single-digit area, in line with the contract research and manufacturing industries,”​ the note continued, adding that it is unlikely to upgrade the company over the next year.

AMRI’s second quarter 2015 results are set to be released on August 4.

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