Wall Street Transcript Interview with Albany Molecular Research, Inc. (AMRI) Senior Vice President, Administration and Chief Financial Officer Mark T. Frost

Wall Street Transcript

67 WALL STREET, New York - August 29, 2012 - The Wall Street Transcript has just published its Medical Research, Diagnostic Substances and Life Science Tools Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Health Care Consolidation Activity - Cost Reduction and Improving Efficiencies - Chinese CRO Growth - NIH Budget Uncertainty

Companies include: Albany Molecular Research Inc. (AMRI) and many others.

In the following excerpt from the Medical Research, Diagnostic Substances and Life Science Tools Report, the CEO of Albany Molecular Research discusses the outlook for his company for investors:

TWST: Would you begin with a brief historical sketch of the company and a picture of the things you're doing at the present time?

Mr. Frost: AMRI was formed a little over 20 years ago and was one of the first chemistry contract research organizations. Over time, we've changed a lot, and adapted to market changes. Today, we not only have a contract research organization, but we also have a world-class contract manufacturing organization. One of the key things we've accomplished is build a fully global footprint. We have research and manufacturing capabilities across the U.S., Europe and Asia.

TWST: Please tell us more about the manufacturing operations.

Mr. Frost: We're focused primarily on pharmaceuticals. We've worked with the world's large pharma firms, the world's smaller biotech/specialty pharmas, and increasingly these days, government and nonprofit organizations, such as Michael J. Fox's Parkinson's foundation or the Center for Huntington's Disease. We work with each client to discover a new drug, develop that drug for clinical trials, and hopefully, help the customer manufacture it and bring it to market, either in the final API form or the final drug product form - whether it's a solid tablet, gel or a liquid, through a bag or a vial or a syringe.

TWST: What's the outlook for AMRI at the moment?

Mr. Frost: We announced in our earnings release call a couple of quarters ago that we think we've reached an inflection point. We believe we've turned around the company and addressed the challenges we have encountered over the past three years, where our revenue stalled and we lost money. This result was primarily because of overcapacity in a number of our facilities. We've made some tough decisions to restructure ourselves. We took out about $16 million of cost over the last couple of quarters, and we think we're now on a path where we're growing again.

There are a couple of reasons for our positive view of the market. First, and the most important reason, is that the environment has changed for our large pharma customer. In the past, our most significant competition was large pharma's own internal resources, but because of generic challenges and patent expirations, large pharmas no longer have the same profit profile, so they've done what many other industries have done. They look at what they're good at, and what isn't strategic, they outsource.

Most of them have come to the conclusion, as we've seen in the evidence of closures and layoffs at large pharma, is that the process of designing, developing and manufacturing new chemical compounds is something you should outsource. As a result, we are optimistic that the amount of activities being outsourced by large pharma will grow in spite of flat R&D spend.

Another big reason for our optimism is pharma turning increasingly to academic institutions for their ideas. This is a positive development for AMRI because academic institutions are good at developing the original target idea, but not strong at the industrialization of how you design and optimize a drug. This is our strength. We've already established a couple of relationships where we're the anchor CRO for academically originated ideas including our NIH contract.

TWST: What's the competitive landscape like for AMRI, and what do you see as some of the company's competitive advantages?

For more from this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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