Population growth, an increased prevalence of disease and a lack of funding are some of the widely documented problems facing healthcare globally. Extracting costs is of the utmost importance, and as a way to achieve this, many medical professionals are gradually coming round to the importance of specialised, or interventional, medicine. BTG (BTG) has a growing portfolio of products targeting this space. In recent full-year results the group's interventional medicine division - one of BTG's three businesses, accounting for 38 per cent of sales - increased revenues by a quarter to £216m. But we believe one underperforming treatment in BTG's large interventional drug portfolio has claimed undue investor attention and created a buying opportunity.
- Large portfolio of speciality pharma products
- Improving margins
- Net cash position
- Discount to NPV
- Concerns about varicose veins treatment
- Falling licensing sales
However, we feel investors are ignoring BTG's attraction due to problems with Varithena. In 2014, the treatment - which allows for quick extraction of varicose veins - was touted as the group's major growth driver. But US sales failed to take off after the treatment was assigned an insurance code that meant patients would have to pay for it partly out of their own pocket. Varithena was therefore not heavily prescribed and revenue of just £4m was reported in the year to March 2017. But, come January 2018, Varithena should have a new insurance code, meaning sales are expected to pick up in the following year. Indeed, analysts at Jefferies think the treatment could reach peak global sales of $410m (£315m).