AMRI's expansion binge pays off for CMO

AMRI CEO William Marth

New York-based CMO AMRI ($AMRI) has seen its contract manufacturing grow big time after picking up a number of competitors. CEO William Marth says after its latest deal for a Spanish specialty drugmaker, that growth should carry through the year.

The Albany-based company this week reported that contract revenue for Q2 grew 39% to $85.2 million, from $61.5 million in the same quarter a year ago. That was more than 95% of its total revenue for the quarter of $89.5 million, which was a 31% bounce from the $68.2 million in Q2 last year.

The CMO industry is in the midst of a consolidation as major drug companies search out contractors with global reach and multi-specialties. AMRI has jumped on that bandwagon and last year picked up Wisconsin-based API maker Cedarburg, then sterile injectable drugmaker Oso Biopharmaceuticals Manufacturing. It followed those deals by snatching two facilities from drug development specialist Aptuit this year to fill in some gaps in its capabilities. Those all fed into the most recent report.

Since the quarter closed, however, it finalized a $174 million deal for Gadea Pharmaceutical Group, a privately held company based in Valladolid, Spain, that makes specialty APIs and sterile injected drugs. Marth said that deal, along with cost cutting, should be a winner in H2 for AMRI.

"Notably, recent acquisitions, combined with the cost reduction initiatives and efficiency efforts we've made to date, are contributing to continued strong contract margin performance," Marth said in a statement. "The recent addition of Gadea Pharmaceutical Group will significantly expand our capabilities in technically complex active pharmaceutical ingredients and will extend our reach into many new markets. Based on our strong pipeline of business and the addition of Gadea, we remain confident that the positive trends we are seeing will continue in the second half of the year."

- here's the earnings release

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