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.