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Clinigen Group PLC: THE INVESTMENT CASE

Clinigen fires on all fronts in strong half year

The company's update reveals a company in rude health
Clinigen fires on all fronts in strong half year
INVESTMENT OVERVIEW: CLIN The Big Picture
Clinigen seems to have found the formula for financial success.

Clinigen Group PLC (LON:CLIN) is firing on all cylinders as organic growth, a  new acquisition and currency movements all combine favourably.

Gross profit in the half year to December was up by 34% with the contributions of recent acquisition Link Healthcare and the clinical trial arm leading the way said Shaun Chilton, chief executive.

“Link Healthcare has achieved an outstanding performance, demonstrating the value of its acquisition by the Group, “ he said.

Link’s pro forma growth was 35% above a year ago and attributed to strong organic demand across all geographies allied to gains from the dip in the pound.

“Among the other divisions, Clinical Trials Services has again delivered a standout performance," said Chilton.  

"Managed Access and Specialty Pharma also delivered strong growth,” he added.

Going forward, the speciality pharma division expects to see the benefits of the ethyol licence transfer to US partner Cumberland in the second half while acquisition Totect will start to generate sales in the fourth quarter.

Talks over the lifting the restrictions on using Cardioxane also are moving forward.

“We are trading in line with our expectations and are well positioned to deliver good performances across all divisions in H2,” Chilton added.

 

THE COMPANY

Clinigen is essentially four different companies under one roof, although there are synergies between the component parts.

Clinical trial services essentially does what it says on the tin – it supplies drugs for clinical trials.

There is an ethical dimension to Clinigen in that it provides managed access and global access programmes for drugs, so it might find and distribute medicines for compassionate use.

Global access allows a medicine not yet commercially available, or is experiencing temporary supply problems, to be distributed to those in need.

Finally, Clinigen has a niche drugs arm (speciality pharma) for products that don’t fit into the portfolio of mainstream pharmaceutical companies. This business provided the strongest growth in the first half.

 

What the brokers say

N+1 Singer

“A solid first half update with the promise of more good news to come.”

No changes to forecasts of sales in the year to June 2017 of £385mln (£340mln) and profits of £60mln (£49mln) or the 895p target price.

Peel Hunt

Clinigen trades on 18  times next year’s earnings offering 9%/15% three year top line and earnings growth.

Pharma peers trade on 21 times for similar sales and profits profiles, so it is ‘buy’ for the broker with a 1,000p price target.

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