Alliance Pharma made it clear prior to these results that generic competition to anti-inflammatory product Deltacortril was eroding sales quickly, so a 65 per cent slump in the product's revenues to £4.7m was hardly a surprise. Of more interest was the 13 per cent rise in undeprlying sales (excluding Deltacortril) and management's ongoing efforts to diversify the sales mix. Three acquisitions brought in 10 products at a cost of £6.5m in 2012 and, with £13m headroom on borrowing facilities, expect more this year.
The growth illustrates the paradox that without the Deltacortril windfall – no one expected demand for an anti-inflammatory drug to be so strong – the company would not have been able to expand its product portfolio, particularly the acquisition of Cambridge Laboratories for £16.4m in 2010. Other products contributing to organic growth include Hydromol (acquired in 2006) to treat eczema and ImmuCyst for bladder cancer that together with Gelclair increased sales by 10 per cent.
Chief executive John Dawson said the main medium risk for Alliance was in Ireland where a mooted change in the regulatory system could trigger more competition for its Nu-seals aspirin product. Pharmacists will be encouraged to substitute a generic for a branded medicine, which analysts forecast could cause a 33 per cent drop in Nu-seals sales of £5.1m, if and when a competitor enters the market.
Broker Peel Hunt forecasts EPS of 3.4p (2011: 3.6p).
ALLIANCE PHARMA (APH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29.5p | MARKET VALUE: | £71m | |
| TOUCH: | 29-30p | 12-MONTH HIGH: | 37p | LOW: 26p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 18p* | NET DEBT: | 42% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 18.2 | -3.2 | -1.98 | nil |
| 2008 | 21.8 | 2.4 | 1.55 | nil |
| 2009 | 31.2 | 5.7 | 2.37 | 0.30 |
| 2010 | 49.8 | 12.8 | 3.96 | 0.57 |
| 2011 | 45.9 | 10.7 | 3.62 | 0.75 |
| % change | -8 | -16 | -9 | +32 |
Ex-div: 13 Jun Payment: 12 Jul *Includes intangible assets of £66m, or 27p a share | ||||
