Changing Cambrex

Citing risk and the high cost of acquisitions, contract manufacturer Cambrex says it is abandoning its plan to become a specialty therapeutics company and is instead turning its attention to developing its bioproducts business. As a result, John R. Leone will step down as president and CEO. Chairman James A. Mack will take over as acting president and CEO.

Leone was brought on in August 2004 to shepherd the move into specialty therapeutics. The first major step came two months later through an agreement with Ortec International to commercialize Orcel, a cell therapy for wound healing. Despite the change in direction, Cambrex says it remains committed to the drug.

The company will now focus on expanding its bioproducts unit, which accounts for roughly 31% of sales and is its fastest growing business, says a company official. The unit includes cell biology, molecular biology, rapid microbial testing, and cell therapy products.

Cambrex will also enlist an investment banker to explore strategic alternatives, which could include shedding assets. Vulnerable assets include the animal feed additives product line, which is produced in Charles City, Iowa, and European production facilities, says Dmitry Silversteyn, senior research analyst at Longbow Research.

The firm's biopharmaceuticals business, which accounts for about 10% of sales, has struggled since 2003 after losing the contract to manufacture Transkaryotic Therapies' drug Replagal and could also be at risk. "We find the future of the biopharma unit unclear," says JP Morgan analyst Jeffrey Zekauskas.

Silversteyn, however, notes that Cambrex has significantly expanded the number of projects in the biopharma pipeline.