AMRI reports net loss of US32m in 2011

Anticipates returning to a period of contract revenue growth in 2012

Global contract services organisation AMRI increased revenue in 2011 by 5% to US$207.6m, but reported a net loss of $32.3m. This figure was less than half of the net loss reported in 2010.

Total contract revenue for the full year was $169.6m, an increase of 4% from 2010.

Contract revenue for Discovery Services in the year was $38m, a fall of 22% from $48.7m in 2010.

This contrasted with contract revenue for Development/Small Scale Manufacturing, which rose by 4% to $36m, and for Large Scale Manufacturing, which increased by 20% to $95.6m.

Royalties from allergy medicine Allegra for the full year were $35m, consistent with $34.8m in 2010.

AMRI’s chairman, president and ceo Thomas D’Ambra said: ‘2011 was a year of significant challenge for AMRI. The disruptions and reorganisations going on within many of our large customers coupled with a difficult financing environment for small companies contributed to softer demand throughout the year than we had anticipated. Several areas of the company delivered good growth, but this was overshadowed by ongoing weakness in others.’

He added that in reaction to changes in the marketplace, AMRI has taken steps to improve its operating structure, reduce non-core expenditure and establish new opportunities for growth.

The firm signed several multi-year agreements across all of segments, most notably a five-year agreement with the US National Institutes of Health (NIH) and a six-year agreement with Eli Lilly, both focused on AMRI’s discovery business.

The firm stopped all internal r&d activities directed to new compounds and is now focusing on partnering or out-licensing all existing compounds in its proprietary pipeline.

D’Ambra said AMRI is hopeful that one or more of these compounds can be as successful as an agreement with Bristol Myers-Squibb, which generated an additional $3m in milestone revenue in 2011, and $33m since AMRI signed the agreement in 2005.

In Q4 the firm took action to reduce overheads further in its US operations, which combined with the restructuring of r&d activities, will reduce operating expenses by $10–$11m a year. There are also additional opportunities for cost reduction at AMRI’s Hungary operations going forward.

‘As we enter 2012, we anticipate returning to a period of contract revenue growth and improved operating performance as a result of the strategic initiatives we undertook in 2011 and that are ongoing,’ said D’Ambra.

‘We are actively pursuing additional opportunities with existing and new clients to enter or expand multi-year outsourcing and insourcing agreements, and we believe that many of our efforts over the past year have strengthened customer relationships and put AMRI in a position to return to growth, while improving our ability to more effectively manage the business.’

For 2012, AMRI expects contract revenue to range from $176m to $186m, an increase of up to 10% compared with 2011.

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