BASF API biz boosts Siegfried in H1, but IT integration costs hit profits

By Gareth Macdonald contact

- Last updated on GMT

Siegfried's St Vulbas site in France - acquired from BASF last year (source Siegfried)
Siegfried's St Vulbas site in France - acquired from BASF last year (source Siegfried)

Related tags: Active pharmaceutical ingredients, Active ingredient, Pharmacology, Basf

Siegfried Holding AG has attributed a surge in API sales to the drug ingredients business it bought from BASF last year, but says that integration costs hurt profits.

The Swiss manufacturer reported sales of CHF353.6m ($367m) for the six months to June 30, which is up 76.2% on the equivalent period last year. It said active pharmaceutical ingredients (API) revenue had “more than doubled​” but did not give a figure.

Siegfried’s finished dosage form business – which it described as “not affected by the BASF transaction​” – saw a 16% sales increase.

The firm bought most of BASF’s API business last year​ in a deal that added 100 ingredients to its portfolio and three manufacturing sites to its network.

The cost of integrating the acquired businesses weighed on Seigfried’s net profits, which fell 30.4% to CHF14m in the period.

Integration

The firm said that integrating the former BASF sites in Minden, Germany, Evionnaz, Switzerland and St. Vulbas, France had been “extremely demanding, especially concerning IT” ​adding that all three were connected to its own SAP system earlier this month.

It predicted that work will “pave the way to energetically take advantage and utilize the defined synergies, mainly in terms of overhead, processes, procurement and maintenance” ​adding that “Positive profit contributions are expected to take effect from 2017​.”

Outlook

Siegfried predicted that sales – both APIs and finished dosage form – for the full year will be CHF700m and said that its “earnings performance to improve steadily​.”

This is in keeping with a forecast in March when it predicted that sales will grow 40% and EBITDA would be around CHF100m.

China plant

The forecast comes a few weeks after Siegfried was granted operating approval for a site in Nantong by the Chinese Environmental Protection Bureau.

The facility - which will make APIs and pharmaceutical intermediates according to spokesman Peter Gehler - will help drive growth.

"Siegfried is now in a position to take advantage of this essential cornerstone of its global production network. The fact that a Western supplier operates a production facility in China enjoys recognition in the market. Customer interest is large, and the facility repeatedly hosts visiting delegations​."

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