Codexis posted a jump in pharma sales after the Lipitor patent loss drove an uptick in demand for its atorvastatin intermediate.
First quarter sales at the pharma unit grew 17 per cent year-on-year as Codexis benefited from the introduction of generic versions of Pfizer’s Lipitor (atorvastatin). Codexis sells an intermediate for atorvastatin and was boosted by the US introduction of generic alternatives to Lipitor in December.
“We have seen an increase in demand for [the atorvastatin intermediate]. But it’s one of our lower gross margin intermediates. So it adds nicely to revenues but it creates a mathematical challenge to increase the overall gross margin of the business”, Peter Strumph, interim CEO of Codexis, said.
Codexis could offset the margin pressures by continuing to expand its business with manufacturers of innovator products. Last month the US Food and Drug Administration (FDA) approved the use of a Codexis enzyme in the manufacture of a Merck & Co active and other deals are also underway.
Some of this business helped improve margins in the first quarter. “Within the innovator side we did have a nice mix of some of our more profitable products in the last quarter”, Strumph said. By adding new products to this portfolio Codexis hopes to continue growing its pharmaceutical business.
Strumph singled out intermediates for atorvastatin and hepatitis C, plus enzymes for the Merck drug, Januvia, as growth drivers for 2012. Buoyed by this business Strumph, who headed the pharma unit before becoming interim CEO, said the Codexis’ drug division will grow “for the foreseeable future”.
Despite the strong performance at the pharma unit overall sales were flat. Codexis also operates in the biofuels and bio-chemicals sector. Operating loss doubled year-on-year on higher research and development costs.