December 17, 2010 / 12:47 PM / 8 years ago

UPDATE 2-Patheon posts loss, sees rise in demand

* Q4 share loss $0.01 vs EPS $0.06 in year-before quarter

* Q4 revenue up 1 pct at $177.7 mln

* Says industry trends are favorable for 2011 (Adds details, comments from conference call, share moves. In U.S. dollars unless noted)

TORONTO, Dec 17 (Reuters) - Contract drugmaker Patheon Inc PTI.TO posted a quarterly loss on Friday as costs rose, but it said industry trends point to a brighter outlook.

Patheon posted a net loss from continuing operations of $1.8 million, or 1 cent a share, in its fourth quarter, compared with net income of $4.6 million, or 6 cents a share, a year earlier.

Patheon, which provides contract development and manufacturing services to the pharmaceuticals industry, said revenue rose about 1 percent to $177.7 million.

A $5.6 million, or 7.5 percent, rise in revenue from its European commercial operations was offset by a $5 million, or 7.2 percent, decrease in revenue from its Puerto Rican and Canadian operations.

Earnings before interest, taxes, depreciation and amortization, were $28.6 million, versus $27.6 million in the year-before quarter.

Selling, general and administrative costs were up 14 percent to $28.4 million, the company said.

Patheon did not provide any forecasts, but said the global pharmaceutical industry is slowly increasing its pace of outsourcing production and development activity.

“2011 outlook remains favorable, encouraging quote backlog activity from which we expect Patheon to win historic proportion of contracts,” wrote Versant Partners analyst, Douglas Loe, who has a “buy” recommendation on Patheon shares and a stock-price target of C$5.00.

Toronto-based Patheon’s shares, which have fallen more than 14 percent this year, were down 2.21 percent at C$2.21 on the Toronto Stock Exchange at midday on Friday.

“We believe we are well positioned to win a meaningful share of new business being generated of new outsourcing business, and are encouraged by the uptick in demand in both of our businesses,” interim Chief Executive Peter Bigelow said during a conference call with analysts.

Bigelow replaced former CEO Wesley Wheeler, who left the company early this month, on an inetrim basis. [ID:nSGE6B00N8]

“The leadership change was not precipitated by a strategic change in philosophy or strategic direction,” Bigelow said.

The company said it was still absorbing losses from its Puerto Rico business, as the consolidation of its manufacturing operations there was taking longer than expected

$1=$1.01 Canadian Reporting by Solarina Ho, additional reporting by Arnika Thakur in Bangalore; editing by Peter Galloway

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