Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Clinigen: A billion pound AIM company that’s still growing

If you’re a pharmacist looking to get your hands on an unlicensed drug, there’s a good chance Clinigen can help
test tubes in a laboratory
As well as being a drug supplier, Clinigen also has its own portfolio of niche products

There aren’t many companies on AIM with a market cap in excess of £1bn but Clinigen Group PLC (LON:CLIN) is one of them.

The company is the market leader in the supply of drugs for clinical trials and the distribution of unlicensed pharmaceuticals.

Drug supplier

Both of those are little-known niches in the pharmaceutical supply chain, but together represent a US$7.5bn-US$12.5bn per annum opportunity, according to Berenberg.

In terms of unlicensed pharmaceuticals, Clinigen’s Global Access division sources medicines for pharmacists where supply isn’t necessarily straightforward.

For example, the drug may not be approved or marketed in the country or there could be a local shortage.

READ: Clinigen waves goodbye to former CEO

Pharmacists could opt to go to grey or black markets but run the risk of buying inferior or counterfeited products. It makes more sense to use an international supplier like Clinigen though, which can guarantee its supply chain.

Clinigen counts most of the world’s top 25 pharma companies as its customers and has exclusive supply arrangements for more than 100 drugs.

International expansion

Almost all of the Global Access sales come from Europe, but Clinigen has been beefing up its worldwide presence over the past couple of years.

It snapped up Australia and Africa-focused Link Healthcare back in 2015, while earlier this year it agreed a £150mln deal to buy out fellow AIM-listed specialty pharma Quantum Pharma PLC (LON:QP.).

READ: Clinigen set to snap up Quantum Pharma in £150mln cash-and-shares deal

WATCH: Clinigen acquires Japan’s biggest supplier of unlicensed medicines

At the time Clinigen said Quantum was a “sound cultural fit” which would “enhance [its] position as the global leader in ethical access to unlicensed medicines”.

In October Clinigen expanded its global footprint once again with the acquisition of International Medical Management Corporation – Japan’s largest supplier of unlicensed medicines – for an undisclosed sum.

Has its own drugs, too

Clinigen doesn’t just ferry other companies’ drugs around the globe, it uses that supply chain to sell specialty drugs which it has acquired along the way.

It’s spent the best part of £60mln to build up its portfolio, which currently consists of six niche, hospital-only drugs.

READ: Clinigen launches emergency oncology drug in US

By 2020, Berenberg reckons these drugs will generate a combined £47mln of gross profits, as Clinigen works on ‘revitalising’ the high-margin products and driving sales growth.

Berenberg reckons shares are worth £12, probably more

That may not sound particularly bullish given that the share price currently sits at around £11.77, but analyst Charles Weston concedes his valuation doesn’t factor in the potential for more M&A activity.

This is because it’s “tough to predict” when Clinigen will snap up its next company or product, so look out for upgrades if and when the company does open the chequebook.

“We are positive about Clinigen’s strong positioning within niches of the pharmaceutical market, but believe that valuation is up with events, and is already reflective of the organic growth that the company should be able to deliver,” wrote Weston in a note.

“Acquisition of specialty pharmaceutical products, which drives growth and return on capital or acceleration of the unlicensed medicines division would cause us to revise our thesis.”

Investors rewarded for strong year

Shareholders received a pleasant surprise when Clinigen reported its annual results in September.

The full-year payout grew in line with earnings per share, which advanced 25% in the 12 months to June 30, with investors netting 5p a share.

Elsehwere in the results, Clinigen reported a 21% increase in underlying profits (EBITDA) to £65.1mln on revenues of £302.2mln.

Cash generation was strong at £54.7mln, while net debt decreased substantially to £35mln from £68.1mln.

View full CLIN profile View Profile

Clinigen Group PLC Timeline

Related Articles

cancer cells in blood
July 17 2018
It’s been a tricky year for Redx, but it has come through it with a promising pipeline, cash in the bank and AstraZeneca’s former UK boss as its new chief executive
June 04 2018
While tricky, the last year has seen Abzena increase its customer engagement with its integrated discovery, development and manufacturing service offering
DNA sequence
July 12 2018
The cell therapy specialist also reported there had been industry interest around its main programmes

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use