DSM's third quarter financial results are paving the way for the company's transition to a life sciences and material sciences company.
Operating profit was up €5m from the previous year's third quarter to €214m ($310.6m) with the pharmaceutical products cluster showing an operating profit of €33m.
Last month, the company announced the conclusions of its previously announced plan to overhaul the business and carve out non-core businesses with a stronger focus on life sciences (nutrition and pharma) and material sciences (performance materials).
According to the Netherlands-based company, the pharmaceutical products' operating profit was lower than in the third quarter of 2006 because of planned shutdowns in the custom manufacturing business and the phasing-out of the Roche contracts.
The previously announced carve out of the anti-infectives business was based on the fact it was struggling, but third quarter results show a spike in operating profit following the increased prices for penicillin and related products. The price increases resulted from the shortage of penicillin in the market caused by temporary curtailments of domestic production in China.
Net sales for the Pharma business were up 20 per cent from the third quarter of last year at €260m.
"We increased volumes and selling prices across our businesses which have driven a good performance by DSM in the third quarter. We are on track to achieve our objectives for the year and with the acceleration of the Vision 2010 strategy already underway, DSM is well-placed to achieve its transformation to a life sciences and materials sciences company," DSM chairman Feike Sijbesma said.
Meanwhile, the company announced yesterday it was expanding its service offerings to include formulation development and clinical trial manufacturing for solid dosage form products.
"This expansion of services will have significant value-added benefits to our customers in terms of reducing cost and accelerating time to market as they will be able to avoid the high cost of tech transfers required for commercial launch by conducting development, CTM and commercial manufacturing all at DSM's Greenville, NC facilities," DSM Pharmaceuticals president and business unit director Terry Novak said.
The service will include reformulations for line extensions and controlled and modified release formulations.