It's rather late in the year for a pharmaceutical company to be reporting its 2007 earnings, but APP Pharmaceuticals
In November, it split off from its biotech group, Abraxis BioScience
After all this, it turns out 2007 was a pretty good year for the generic-drug maker. Revenue was up 11% and adjusted earnings per share, excluding one-time items, were up 16% compared to APP's portion of the old Abraxis BioSciences' 2006 results.
This year doesn't look quite as hot for the company. While revenue is expected to increase at least 13% this year, adjusted earnings per share are expected to be flat. The $1 billion of debt that APP was given in order to leave the remainder of the company with a cleaner balance sheet is certainly dragging down its bottom line through high interest payments ($12.4 million for the quarter).
Looking into the future, the company should be OK once it starts retiring that debt. It started manufacturing three products at its new Puerto Rico facility and eventually expects to transfer more than 40 products to that plant. New product offerings should round out the added production capacity. It currently has 30 Abbreviated New Drug Applications (ANDAs) pending with the FDA. As the utilization of the new plant increases, gross margins should rise a little.
The new facility has already come into play as APP was able to increase its production of heparin after Baxter's
Ultimately, although splitting off from the company's biosciences division should help APP better compete against Baxter and Hospira
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