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Hammer focused on gothic horror, and revived horror in the late 50's by remaking the classics in colour (obviously a simplistic view).
However, by the time the 70's came along, horror had evolved. Focus was now on a grittier, more realistic horror movie, especially focusing on the horror perpetrated by humans against fellow humans. There was less interest in "monster movies". Hammer did not evolve with this, and as such declined.
Also, Hammer placed a lot of emphasis on their popular franchises - eg Dracula and Frankenstein (and to a lesser extent, The Mummy). I guess these could only offer so much.
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