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Meldex's united front

Created:
18 July 2008
Written by:
Richard Hemming

Meldex chairman Jim Murray has said that his company is rethinking its geographic expansion strategy after its request for the issue of 100m shares was rebuffed by shareholders at its annual meeting on 26 June. And both he and chief development officer Steve Martin sought to play down reports of a boardroom rift at the healthcare company in an exclusive interview with Investors Chronicle.

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Our article yesterday, based on information from an individual familiar with events, stated that opinion within the company about future strategic direction was becoming increasingly polarised. You can read the full account in More rebellion at Meldex. These revelations followed news that that Mr Martin had made an approach to the board to "explore the possibilities of making an offer for the company".

Today, however, both men were stressing unity. Dr. Murray, who is also one of the co-founders of pharma giant Shire, said that the central tenet of Meldex's strategy is to expand geographically utilising its portfolio of products (which neither he nor Mr Martin knew the exact number of; its latest annual report says it has over 150 marketed products).

"People assume acquisition of other companies is totally focussed on products. It's not, it's geographical growth and personnel," he said.

Dr Murray added that the group's intended expansion into France in the short-term and the US in the longer term has been put on hold, because it failed to secure shareholder approval to issue more shares at a stormy annual meeting late last month (see Rebels win out at Meldex)

"Melbrosin products have a natural place in a major market like France, and when it is possible to (expand there) we will, but the limitations from the AGM have made us rethink that part of our strategy," he said.

Why the bid?

Both men spent the majority of the interview stressing their unity and close relationship, but when Mr Martin was questioned as to why he was proposing to front a bid to take over the company, he said that it was simply a "personal decision" taking into consideration his position as a director of Meldex. When pushed, however, he added: "There is no split within the board. There is a strategy which I have been involved in, so read into that what you like."

However, this might be a case of: look at what I do, not what I say. If Mr Martin is content with the company's direction, why is he seeking to take control of it himself? And what would he do differently if he succeeded?

In response to whether he would retain the services of his chairman, and chief executive Richard Trevillion, Mr Martin said: "I haven't said I would be breaking up the team. I am looking for options to be able to move the company forward. In order for the company to grow it needs to look at other options."

Perhaps Mr Martin's most telling statement was his belief in the company's polymer delivery X-gel technology, which he has been developing. X-gel allows liquid to be turned into pills.

"The strength of Meldex is the application and potential application of its technology. But technology for technology's sake doesn’t do anything," he says, "In order to go from A to B it needs to have the appropriate people with experience who can deliver into infrastructure, which at the moment is at a basic level."

Differences remain

Both men essentially seemed to be suggesting that people and marketing muscle are important. But it's hard to avoid the impression that there are fundamentally differing opinions about what the company is for. What is the best way for Meldex to develop? Is it to acquire the marketing clout its products need, or is it to focus on the development of the products alone, and entrust the marketing to a bigger partner - either via a marketing agreement, or a sale of the company? What is the company's unique selling point - its intellectual property, or its marketing nouse? There's certainly a wide spread of views among shareholders, and bulletin boards have been buzzing with debate about recent developments.

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