JM to exit pharma?

In a pre-close trading update for the financial year ended 31 March 2021, Johnson Matthey (JM) CEO Robert MacLeod revealed that: “We have commenced a strategic review of Health, as we continue to focus resources to maximise value for our shareholders”.

Full results will be announced on 27 May but it is known that Health, which offers API custom manufacturing services, controlled substances, catalysts and generics, generated sales of £223 million, about 5% of the total sale. The division’s full-year operating performance is expected to be above the prior year.

“This reflects continued progress with our new customer contracts for APIs used in generic opioid addiction therapies and our work with innovator customers, particularly the supply of an immuno-oncology drug linker to Gilead,” MacLeod said. 

JM was pleased with its progress, he continued, particularly in the second half of the financial year after Catalysts and other automotive-dependent businesses took a hit from the COVID-19 pandemic. Group operating performance is expected to be around the top end of market expectations and the company has continued to implement its growth strategy.

Perhaps significantly, JM is actively using cashflow from more established businesses to invest in new, sustainable technologies “that will enable decarbonisation and enhance circularity”, with battery materials, fuel cells and green hydrogen technologies to the fore and growing fast. It may ultimately see the pharma-related businesses as sale assets to fund further growth in these fields.