In Focus: Cyprotex sees benefits in big pharma outsourcing
MOVES by big pharma companies to outsource more of their drug discovery work could prove to be a boon for Cyprotex, according to chief executive Dr Anthony Baxter.
Speaking after the company announced a pre-tax profit of £201,340 on an 18.4% increase in revenues to £5.92m, Baxter said that trading conditions throughout 2010 had remained difficult . This was partly due to the fact that big pharma firms like Pfizer and Glaxosmithkline are reducing the drug discovery work carried out in-house in favour of buying smaller drug development firms or licenses.
While this spells bad new for employees of major pharma firms such as the 2,400 people threatened with unemployment as a result of Pfizer’s plan to shut its Sandwich facility in Kent, it could provide opportunities for Cyprotex to continue to broaden its customer base.
“Many of the smaller firms don’t have their own in-house ADME or toxicology facilities so they will have to outsource.”
Baxter hailed the quality of the US-based Apredica business acquired in August last year, stating that its “high-content toxicology” offer had now been installed into its new Macclesfield laboratory, offering an unrivalled range of services to clients – for which it can charge a premium.
He also said that the Apredica facility offered much-increased increased capacity
“There’s room to grow on that site and it’s a prime area for us to expand”.
Cyprotex’s shares finished the day 2.5% lower at 4.75p, giving the firm a market cap of just over £10.6m.
Shawn Manning, an analyst at Cyprotex’s in-house broker, Singer Capital Markets, maintained his buy recommendation on the stock, which he suggested has an “intrinsic value” of around 12p.
“Importantly, 2010 represented the company’s third successive profitable
year, and going forward we expect to see continuing growth,” he said.
He added that the bulk of this growth is expected to come from its Apredica business.
“Our model currently expects accelerating revenue growth of 40%, with US sales as the key driver (i.e. growth of just 5% excluding the US).”
