Alliance Pharma PLC's (LON:APH) acquisition of a raft of products from Sinclair Pharma last year is looking increasingly a very clever move.
Helped by the new products from Sinclair, sales last year rose by 102% to £97.5mln while profits were up by a similar amount to £22.2mln with cash flow also strong.
Focus now will be on a handful of core brands, including scar reduction treatment Kelo-cote, Alliance’s first £10mln brand and macular degeneration treatment Macushield.
Buy & build paying off
Alliance has grown through a buy and build strategy that has seen 33 businesses, products or product licenses acquired over the past 18 years at a cost of over £200mln.
Kelo-cote grew sales by 24% in 2016 with China its largest market, while MacuShield’s sales rose to £5.3mln from £3.5mln.
Overall, the products bought in from Sinclair generated sales £43.8m, while the remaining Alliance portfolio saw sales rise 13% to £53.7mln. The dividend for the year rose by 10% to 1.21p.
Currency tailwinds
There was some help from the pound’s weakness, but this was reduced at the profit level.
Finncap forecasts annual growth over 2016-2020 in sales, underlying profits [EBITDA] and EPS of 8%, 10% and 11%, respectively.
Buy is its initial recommendation with a 65p price target.
"The enlarged business creates further opportunities to leverage its distribution capabilities, best illustrated by the in-licensing of the European rights for Diclectin."