www.alliancepharma.co.uk
Alliance Pharma plc is a United Kingdom-based pharmaceutical company. The Company is engaged in the development, marketing and distribution of pharmaceutical products. Its brands include Nu-Seals, Forceval, Hydromol, Deltacortril, Symmetrel, Syntocinon, Naseptin, Syntometrine, Synacthen and Slow-K.
Alliance Pharma’s interim results demonstrate strong underlying sales growth
Shares in Alliance Pharma (LON:APH) improved 5.2 per cent to 29.8 pence each by lunchtime on Wednesday after interim results from the speciality pharmaceuticals firm showed it increased its first half sales to £24.4 million from £23.4 million in H1 2010.
Operating profit for the first six months to June 30 was £7.8 million, compared with £9 million in H1 2010, while pre-tax profit was greater at £7 million (H1 2010: £6 million). Earnings per share came in at 2.21 pence (H1 2010: 1.79 pence) while the firm also declared a 47 per cent increase in its interim dividend to 0.25 pence per share.
The firm said that results for H1 2011 had inevitably been affected by the slowdown in sales of its Deltacortril enteric-coated gastro-resistant tablet that is used for a wide range of disorders; Deltacortril is facing increased competition after Teva launched a rival product product last autumn. But Alliance pointed out that the results show how profits it has enjoyed from Deltacortril during the past two years have been put to good use, with the firm investing in expanding its brand portfolio while also reducing debt.
Dermatology and oncology portfolios are both growing well, Alliance added, which is reflected by underlying sales growth of 29 per cent.
The firm said that despite market changes affecting Deltacortril 2011 is “still expected to be the second-best year in Alliance’s history” since the underlying business continues to grow well.
“We are pleased to have delivered growth in sales and pre-tax profits in the first half of the year despite the additional Deltacortril competition,” said Alliance’s chairman, Michael Gatenby.
“The 47 per cent increase in dividend demonstrates our continued confidence in the long-term cash-generating ability of our business.”
Meanwhile, Alliance also announced another acquisition today, to add to its acquisitions of Anbesol and Ashton & Parsons in April. It has bought the UK marketing rights to six products from Beacon Pharmaceuticals for £2.4 million.
Alliance is funding the acquisition by drawing a loan from a £20 million revolving credit facility that it arranged in November 2010, bringing the current utilisation of the facility to £5 million.
According to Alliance, for the 12 months to 30 April the six Beacon products it has bought had combined sales of approximately £2 million and a gross profit of £0.9 million, with the bulk of these sales and profit relating to Rizuderm (a treatment for severe acne).
John Dawson, Alliance’s chief executive officer, said that the acquisition would be immediately earnings enhancing, while the firm continues to evaluate further acquisition opportunities that will complement Alliance’s organic growth.
House broker Numis Securities said it expects Alliance’s organic revenue growth to average in the low single digits in terms of percentage, with mid-single digit growth for earnings. “Layering on portfolio expansion (the company has completed 20 deals in the last 13 years) should drive earnings growth to sustainable double digits, marginally ahead of its global generic/specialty pharm peers,” the broker wrote in a research note today.
Numis, which expects earnings per share to be three pence this year and 3.1 pence in 2012, has set a one-year price target for Alliance’s shares of 37 pence.
