- Catalent on Tuesday reported revenues for the three months ending in March that fell 2% below what the CDMO posted in the same period last year, reflecting weaker performance from its Softgel business unit and the effects of an accounting change.
- In particular, an ongoing global shortage of active pharmaceutical ingredient for ibuprofen reduced Softgel segment earnings by $2 million, adding to a hit that now totals $14 million in Catalent's financial year to date. A shift in how Catalent recognizes revenue, meanwhile, impacted reported revenues from its clinical supply services business.
- Catalent lowered the top end of its revenue forecasts for 2019. The manufacturer sees growth ahead, however, raising its long-term outlook from between 4% and 6% revenue growth to between 6% and 8%.
Catalent is weeks removed from making a $1.2 billion bid to buy Paragon Bioservices, a contract developer and manufacturer of gene therapies, in a deal set to boost Catalent's long-term growth.
The CDMO has invested heavily in expanding its drug delivery offerings, both biologics and specialty as well as oral therapies. The two segments are performing strongly, with the former serving as Catalent's fastest growing for the first three quarters of its financial year.
Elsewhere, though, Catalent isn't seeing the same growth. Between its Softgel and clinical supply units, net revenues are $135 million lighter year to date than in the prior year.
Catalent's mixed quarterly results for January to March
|YOY revenue change||Excluding FX|
|Biologics and specialty drug delivery||4%||5%|
|Oral drug delivery||9%||12%|
|Clinical supply services||-25%||-23%|
Catalent says the ibuprofen supply shortage that has affected Softgel is improving, and expects supply to stabilize soon. Prescription volumes for the unit are also expected to rebound.
"We're again hopeful that we should be returning back to some normalcy, although we don't expect a big snap back, if you will, from refilling the shelves," said Catalent CEO John Chiminski on the company's quarterly earnings call. "But we certainly don't expect to be surprised again by API shortages on ibuprofen."
Catalent's financial year runs from July 1 through June 30.
For clinical supply, Catalent has switched from recognizing revenue on a net basis rather than the gross basis it used previously — a shift made to be in accordance with new accounting standards. Excluding that change, revenues for clinical supply would be up 2% versus the prior year.
Looking further out, Catalent expects its acquisition of Paragon, which is expected to close later this quarter, to drive both revenues and adjusted earnings higher.
Shares in Catalent fell 4% following announcement of earnings, but have since risen by a little less than 2%.