Cambrex recorded double-digit sales growth in the first quarter as the API producer overcame problems it faced a year ago.
Close to double-digit year-on-year revenue growth was caused, in part, by a client fixing a supply chain problem that suppressed sales of an active pharmaceutical ingredient (API) 12 months ago .
Higher volumes of generic APIs, increased output of a recently approved product and the impact of foreign currency also contributed to the uptick. Partially offsetting these gains were lower custom development and drug delivery shipments, plus cuts to pricing in several categories.
Lower pricing also affected margins. However, higher production volumes at lower costs, coupled to the increase in sales, offset the impact of pricing and gross margin expanded to 28.3 per cent. Income from continuing operations was $2.9m (€2.0m), up from $1.7m a year ago.
Pricing pressures also affected controlled substance revenue but Cambrex is looking to expand in the sector. Speaking in a conference call with investors Steven Klosk, CEO of Cambrex, said a niche controlled substance will launch towards the end of 2011.
New products will drive growth at Cambrex in coming years. Generic APIs launches will play an important role, as will growth of the finished products business and products in late stage development.
Cambrex is also focused on currently patented products. By using its scientific ability Cambrex plans to improve manufacturing processes for on patent products. In doing so Cambrex will add value to clients, said Klosk.
In November Cambrex acquired a 51 per cent stake in India-based Zenara. The Hyderabad plant is now manufacturing a product for a client who asked to up volumes in the first quarter.
Focus for now is on this client but Cambrex is also looking to win more contracts. Klosk said the plant has enough capacity to support multiple clients in multiple markets without extra investment.
Shares in Cambrex closed down 1.71 per cent at $4.60 on Friday.