Puerto Rican ops hold back Patheon
pharmafile | September 16, 2009 | News story | Manufacturing and Production | Patheon
Canadian contract manufacturer Patheon has reported ‘disappointing’ third-quarter results, with a resurgence of problems at its Puerto Rican operations contributing to a drop in revenues of almost 16%.
The Toronto-based company, currently the target of a takeover bid by private equity firm JLL and a ‘white knight’ offer from Swiss CMO Lonza, also cited softer demand in its pharmaceutical development services (PDS) division and a weaker US dollar for the downturn.
Patheon recorded operating income of $3.7 million, well down from the $7.5 million reported this time last year, on revenues of $164 million.
The Puerto Rican operations have been dragging back Patheon’s performance since they were acquired in 2004, but a rationalisation plan which led to the sale of one loss-making plant in Carolina and the downsizing of another at Caguas returned the business to profitability in the fourth quarter of 2008.
That progress has now hit a roadblock, according to the company.
“Despite having customer product orders in hand, the Puerto Rico operations had difficulty releasing a sufficient volume of product lots due to efforts to optimise manufacturing parameters and difficulty meeting stringent release specifications for one product,” it said in a statement.
The firm says it has resolved the problems and should get production at the unit back on track by the fourth quarter. Overall, commercial manufacturing saw revenues decline 15.5% to $133 million.
Patheon also reported that its plant at York Mills in the US has been shut down as planned, with all operations transferred to its facility in Whitby.
Meanwhile, the PDS business – which handles activities such as formulation and analytical method development and clinical trial materials (CTM) manufacturing – had a tough quarter. Revenues fell 16.4% to $31.5 million reflecting “an industry-wide weakening of pharmaceutical development sending”.
Patheon’s management was tight-lipped on both the Lonza and JLL bids in a conference call to discuss the results. A company official said that that Lonza was carrying out its due-diligence and that Patheon was supporting that process. The firm has already rejected the earlier bid by JLL.
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