Recent Quarter Results: U.S.
Albany Molecular Research Inc. (AMRI) and Ampac Fine Chemicals, two publicly-traded U.S. fine chemical firms, came out with quarterly earnings this week. Both companies have good news to report.
Ampac, the fine chemical division of American Pacific Corporation, reported revenues of $44.2 million for its third quarter in fiscal 2013, ended June 30. This is an increase of 22% over the third quarter for 2012. Nine month revenues of $102.8 million for 2013 represent a 31% increase over the same period for 2012.
Meanwhile, AMRI saw a 19% increase in total revenue to $59.3 million, including a 20% increase in total contract revenue to $50.8 million for its second quarter ended June 30. Discovery services, development services, and large-scale manufacturing are all up for the quarter.
The results at both firms are in keeping with a continued improvement in business across the sector, which is energized to some extent by a shift in outsourcing contracts from China and India to the U.S. and Europe. Company results in the fine and pharmaceutical chemical sector are highly idiosyncratic, however. One big contract can make or break more than a quarter. We see projects in the works for a long time at both companies paying off, but both companies have also made some structural changes that may be showing up in revenues.
AMRI, for example, has launched a comprehensive services initiative called SmartSourcing that integrates chemistry, biology, discovery and development work. Ampac, meanwhile, has been working on manufacturing efficiency improvements. Both companies cite these measures in analyzing results.
Ampac also emphasizes product revenue, including development revenue associated with the completion of a validation campaign for an antiviral product in late stages of clinical trials, as well as an increase in revenue for products associated with commercialized oncology drugs.
Last week Cambrex, the other publicly traded U.S. firm in the sector, reported second quarter results—a 20.1% drop in sales to $61.6 for the quarter ended June 30 compared to the second quarter of 2012. The explanation comes down to product mix—Cambrex cites lower sales of controlled substances and generic APIs. The company also had an exceptionally strong first half in 2012, it explains, and it expects a stronger second half of 2013, with revenue from a major contract signed last August boosting results through 2014.
Always hard to draw conclusions from results in this sector, which is what makes it such a wonderful economic indicator of the pharmaceutical industry. But the rough narrative is that things continue to look up in the post-recession recovery in fine chemicals.