Judging by the relentless decline in its share price, investors are losing patience with the situation at Sinclair IS Pharma, and November's £11m disposal of Mysoline, a prescription-only medicine that treats certain types of epilepsy, essential tremors and seizures, is the cue for us to remove our longstanding buy recommendation from the shares.
True, part of the reason for the share price fall – it has more than halved so far in 2011 – is beyond the control of Sinclair's management. The company does a lot of business in the eurozone, including its peripheral countries, and sentiment has turned at a time when there is a squeeze on sales of over-the-counter medicines, which are ultimately tied to consumer spending power.
However, the more pertinent problem is whether the merger of Sinclair and IS Pharma has really delivered any value. And the disposal of Mysoline to its French distributor, Laboratoires SERB, removes approximately £1.7m of cash profits from the business at a time when the combined group is still making losses – more than £11m at the last results.
