Catalent's Development and Clinical Service Offerings Drive Overall Company Growth

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The company said its DevClin business will continue to be an integral part of its long-term biologics business growth strategy.

Catalent said in a third-quarter earnings call on Nov. 3, 2015 that although all of its reporting segments posted revenue growth, the growth in its development and clinical services segment (DevClin) was the most significant, increasing by double digits.

The DevClin business includes scientific services and formulation and development services for molecules that the company eventually plans to commercially manufacture. Catalent attributed the revenue increase in this sector (an increase of 32% year-over-year) to "increased sales across the segment and a favorable shift in revenue mix within analytical services related to our oral solids development and manufacturing business." Matthew Walsh, CFO, said that the increased revenue on the DevClin side is indicative of increased R&D spending at pharmaceutical companies. He also said that further growth in this sector will be crucial for the company's overall long-term growth.

Walsh added that the formation of Catalent's new advisory board will help the company focus on building its biologics business further. He said that the new board "brings diverse expertise in biologics development and commercialization, new technologies, contract services, and a deep understanding of the key challenges facing biologics."

Mixed results in the medication delivery solutions segment
In Catalent's medication delivery solutions segment, its blow-fill-seal offering "continues to be one of our strongest performing businesses," posting double-digit revenue and EBITDA growth in the first quarter, Walsh said. This trend is expected to continue, he remarked: "Market fundamentals for blow-fill-seal remain attractive, with a robust new product pipeline and continued product mix shift to higher-margin products."


Although Catalent reported growth in its medication delivery solutions unit-growth that was primarily due to higher revenue from its blow-fill-seal technology platform and "revenue from the completion of project milestones within biologics"-the revenue growth was partially offset by decreased demand for sterile injectable products from its European prefilled syringe plant. The company reported a revenue decrease of 18% in this department year-on-year.

Source: Seeking Alpha