CBM
#I think, <UNK> ---+ sorry, <UNK>, this is <UNK> ---+ <UNK> <UNK>, here, it's more to do with timing of when these projects fall.
So you're right.
If you take the $15 million out, move it out, you're at $55 million and then you allow for normal maintenance CapEx, and then the difference is really, yes, whatever we do spend at Pharma 4 during the year and then just the projects across all our sites.
Yeah.
No, <UNK>, we're not changing at all our commercial strategy to focus on late stage and already approved commercial products.
That's really the base, the mainstream of our innovator strategy to grow that product category.
But you're correct in characterizing Cambrex high point as what we hope will be a good pipeline by working on earlier stage projects that will then hopefully progress through to the point where we can do a tech transfer to our larger scale plant and scale them up.
Definitely in addition to.
Yeah.
Right now I think our modus operandi there is to have a regular dialogue with the board about overall capital structure and how we want to spend that capital and we'll continue to have that dialogue.
To date they prefer to keep as much dry powder available to go after M&A deals and we see it, obviously, we haven't done any big deals so we'll continue to revisit that with the board and, obviously, report publicly if our plans change.
Well, the way we look at it, obviously, we'll produce as much product as our customer needs.
We were able to grow our business non or x at large product double digit so we've put in place capacity that I think allows us to do that, <UNK>.
But as we said based on the strength of the market, we're going to need to invest more organically going forward.
<UNK>, this is <UNK>.
Maybe just another angle on that.
It's a big product and so when you refer to crowding out, I think you made comments over the past couple of years of not being able to as aggressively pursue some opportunities or actually win some opportunities that we felt would either our---+ or ours to lose.
I think that through 2016, there was still an element of that with respect to our commercial opportunities and as we've commented in recent quarters we're trying to invest to get ahead of that curve while acknowledging the life cycle of the products that are already in our plants and kind of make sure we intelligently put capital in that reflects that.
So I think the short answer to your question is yes there probably was a little bit of crowding out but we think it was starting to subside as we start to get ahead of the capacity curve here a little bit or plan to soon.
Yeah, It's a variety of factors, <UNK>.
The quarter definitely ended up a bit better than we thought with respect to costs.
Manufacturing variances, FX, everything contributable to sales up a little bit production capacity was---+ actual production was up a little bit---+ and so there was no one factor and we were a bit pleasantly surprised by the outcome of the margins also.
I think just I'd add 44% is exceptionally high.
So we ---+ the year 42% is probably more representative of what we would expect going forward.
Thank you
Good morning <UNK>.
Yeah.
It's right now we're looking at that as mid-single digit billions in the nature of those revenues would be it's virtually all profit.
Just by virtue of it falling into other revenue, meaning it's not a normal (inaudible) ---+ that we're manufacturing with costs of goods sold against it.
It's some other kind of arrangement profit share take or pay or what not.
So we have a couple of arrangements this year that we think will fall into that category and traditionally there's been a negligible ifference between the two but we thought it made sense to not ignore that, obviously,---+ potentially important revenue to us.
So that's kind of the story line there.
We would expect to see some revenues there going forward and I won't---+ obviously, we're not in a position to talk about what it's going to be in 2018 and beyond but we would expect to see some revenues there.
Potentially, yes, and potentially yes to the second question also.
No.
<UNK>, I was specifically referring to the opiates market.
And it was really more of a general macro comment about, there's a lot of attention in the United States today on the opiates market.
And so I used the word really constrained in a macro sense.
We'll continue to try to enter that market with the two products that we've introduced and we're sampling and we're looking at other products for that market as well.
Well, historically is a big word, so let me narrow that down a bit.
In the early 2000s there was dramatic price declines in the high single digits, some years in double digits.
In recent years we've seen 1% to 3% price reduction there is so yes we think it's in line with recent history and will continue to be in line or at least that's our current expectations based on our discussions for pricing in 2017.
So, this year as <UNK> said we are looking at 2% to 3% and its the usual mix of tiered pricing arrangement---+ contractual step downs and negotiated prices
Yes.
I think ---+ this is <UNK>, David.
That's a good question.
What we've seen over the years and I think some other API producers that we compete with have seen and talked about this a bit, occasionally we have an opportunity to make an API and perhaps it's there's not a high volume demand for it in return for manufacturing the product that at some scale you get the opportunity or you can take the opportunity to participate in the downstream profits on the product when it's commercialized.
And so like some of our competitors and just naturally opportunistically will take a look at those opportunities when they arise and we have one of them on board now and we'll consider them in the future adding additional arrangements like that if they arise and make sense.
Yeah.
<UNK>---+ the only thing I would add is we're talking about generic APIs
I would ---+ I would say that probably 80% or so are what we would characterize as late stage, something in that range.
We are definitely aggressive about winning both the late stage and the commercial for obvious reasons.
I would say in general, the industry data would show about 60% to 70% of the Phase 3s would carry through to get approved.
If they're ---+ the drug goes into registration, it's quite a bit higher.
If you ask me about Phase 2s, it's probably about 25%.
So that's more or less the agreed upon industry data
I don't know.
Sometimes we get less lucky it seems.
So maybe ---+ maybe the odds are with us going forward that it will be high.
I'm kidding you.
I think over a period of time it's about that.
This is <UNK>, David.
No.
I don't think that's naturally the case.
I think the larger they are, the more opportunity you have to improve the margin over time through manufacturing efficiencies and batch size adjustments and all those kinds of things that come with good manufacturing.
But on a price per unit basis, our best customers tend to be the small to mid sized folks who are playing you off their own internal capacity.
And so you sometimes don't need to be as aggressive to win those opportunities.
But it vary from opportunity to opportunity, and ---+ but I would say that it's not necessarily true that the larger opportunities are more lucrative on a per unit basis
Venture a guess can often be conflated with guidance.
So let me just clarify that, it's my job to root out, analyze, and evaluate if there's something out there that we can do to strengthen the Cambrex brand and we want to make sure we had some dedicated, dare I say senior resources to do it and hopefully I'll bring some value there but I'm not going to go out on a limb and say that it's likely we'll do something, obviously, we'd love to do something if it made sense
Thank you David.
Ashley, If there's nobody in the queue I think we can wrap up the call and thank everybody for their call at this point and look forward to speaking to all of you next quarter.
Thank you.
