I never know how to characterize drug developer Alpharma
Yesterday, Alpharma announced its fourth-quarter and year-end financial results. Revenue was up a measly 9% for the quarter, and gross margins contracted 500 basis points to 56% as a result of reduced margins in the API segment. With sharply higher R&D spending on its drug pipeline, operating income was flat for the year, and adjusted earnings came in at $1.25 a share for 2006.
In 2007, Alpharma is guiding for earnings per share in the range of $1.25 to $1.45. Of its three business segments, only the pharmaceutical division is worth getting excited about. The animal health and API segments can be counted on to produce boring but consistent earnings growth. In 2007, both of these divisions are expected to have top-line growth in the 6% to 8% range, whereas the pharmaceutical division is estimated to grow 15% to 20%.
Alpharma's goal of 40%-50% compound annual sales growth until 2011 for its pharmaceutical division seems ambitious, considering that there is a whole host of drug developers, like New River Pharmaceuticals
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