With sales of CHF 135.4 million during the first six months of this year, the Siegfried Group achieved a 12.4% jump over 2009 (15.4% in local currencies).

Active pharmaceutical ingredients (API) & intermediates earned CHF 103.9 million, a 14.5% increase over the previous year, while the business with finished dosage forms grew by 5.8% to CHF 31.5 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) of the core business (without inhalation) were CHF 17.2 million (CHF 17.1 million in 2009) or a 12.7% margin; EBITDA grew by 11.2% in exchange rate adjusted terms. The Siegfried Group reported a CHF 2.3 million net loss of the core business for the first half of 2010.

The company is practically debt-free after issuing CHF 80 million mandatory convertible notes that were successfully placed this past May. Siegfried now has the necessary financial means to implement the new corporate strategy.

As previously reported, the inhalation technology business is the object of negotiations with third parties by Siegfried, which are already at an  advanced stage. The goal is to find a strong industrial partner; Siegfried will report on the results of negotiations in the near future.

"We've reached two important goals by achieving a capital increase and improving our capacity utilization levels," says Dr. Rudolf Hanko, CEO at Siegfried. "In addition, compared with our industry, our facilities generate attractive margins and a positive cash flow. This is a promising foundation for the implementation of our strategy and continued progress in our operations."

Significant progress with active pharmaceutical ingredients (API)

Significant progress was made with revenues from APIs and intermediates. In a challenging market environment characterized by clients focused on optimizing the supply chain, Siegfried achieved a 14.5% sales increase.

In order to replace key products before patent expiry, Siegfried strives to update and rejuvenate its pipeline for APIs and intermediates. We expect the U.S.-company Arena to receive FDA-approval for Lorcaserin soon, an API currently under development in Zofingen.

Sales of APIs for analgesics and opiate derivatives, also known as ‘multi-client products' continue to grow, which also has a positive affect on capacity utilization at the Pennsville, NJ (U.S.) facility. Siegfried signed a supply contract for opiate derivatives with a large vendor in U.S. and is currently supporting the registration process. Approval by the U.S. regulatory authorities is expected by 2012. Commercial deliveries will commence at that time.

Finished dosage forms also growing

Sales of finished formulated drugs, supplied mostly to generics clients, showed some growth. Siegfried noted sales of CHF 31.5 million, 5.8% more than the previous year, which helped alleviate the enormous pressure on generics prices by the public authorities of almost all countries.

Faced with the continued price erosion in the generics market, Siegfried expects to maintain positive results in the longer term only through the introduction of new products.

Strategy implementation on schedule

During the first half year 2010 Siegfried has established the necessary foundation for a quick implementation of our strategy, which centers on marketing combined products (synthesis of APIs and productions of finished dosage forms). This requires an adjustment to the company's asset base; the corresponding talks are now taking place. In addition, Siegfried plans to add to the operations for API production with an Asian facility. This will help increase the attractiveness of our market offer.

Outlook

Siegfried expects improved revenues for the whole year and forecasts a net profit in the core business at the end of the year.

"The reorganization of Siegfried progressed well over the past 12 months. Key is a clear unique selling proposition, our attractive market offer and increased competitive strength," says Dr. Markus Altwegg, chairman of the Siegfried board of directors. "We intend to maintain the pace to be able to profit from our new strategy already by next year."