As the biotech industry blooms, Cambrex
Cambrex announced today that it has retained Bear Stearns
Today's disclosure comes just weeks after Cambrex disclosed that it would scuttle plans to transform itself into a specialty therapeutics outfit, and that then-CEO John Leone would step down. At that time, Cambrex noted that it would concentrate resources on developing business in its Bioproducts segment, which focuses on research products. Meanwhile, Biopharma and the company's third unit, Human Health, would receive "appropriate resources" to keep their market positions.
The Biopharma unit's poor performance appears to defy larger trends. A recent report on biomanufacturing from research group BioPlan Associates projects that biopharmaceutical manufacturing will grow 48% over the next five years. But a closer analysis shows why Cambrex is hurting.
First, large biotechs seem to be expanding their own capacity rather than outsourcing to firms like Cambrex. Genentech
Second, there is anecdotal evidence that foreign competition is gaining ground. Bristol-Myers Squibb
Finally, the BioPharma segment was probably not helped by former management's focus on remaking the company into a specialty therapeutics firm. Under the circumstances, the company has made the right decision in reevaluating its options. For now, though, investors shouldn't expect much from Cambrex.
For related stories:
High-tech. Biotech. Nanotech. If it's on the cutting edge, chances are it's covered in Motley Fool Rule Breakers ' search for the next ultimate growth stock. To join the hunt, sign up today for a free 30-day trial subscription.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.