Date: Wednesday 11 Sep 2013
LONDON (ShareCast) - Thanks to lower costs and slow and steady sales growth, drug investor Alliance Pharma made a strong start to the year.
With sales up 4% to £22.8m in line with expectations, profits before tax 29% higher at £6.8m were ahead of analyst forecasts thanks to a product mix producing lower costs.
Chairman Michael Gatenby said: "The strong start to 2013 augurs well for meeting full year expectations.
“We are energetically pursuing additional growth through further acquisitions, supported by strong UK and international teams, a good flow of opportunities, healthy cash flow and ample headroom in our funding facilities.”
Sales grew in the period despite any contribution from bladder cancer treatment ImmuCyst, due to a plant regulation production problem, and will not going to come back into the sales stream until 2014, while specially coated low-dose asprin Nu-Seals faced increased generic competition and Ashton & Parsons Infants' Powders suffered production constraints.
Nonetheless, revenues were buoyed by a flattering sales peak in cycle of its cyclical toxicology product and would be ‘significantly’ in the second half and beyond.
The period saw the UK launch of MolluDab, an ‘exciting’ treatment for viral skin condition molluscum contagiosum acquired with Beacon Pharmaceuticals in 2011. House broker Numis believes this will be a niche product in the dermatology portfolio and has forecasted sales of £0.3m in full year 2014.
Management said they awaited details of the industry's new five-year pricing agreement with the UK government, Pharmaceutical Price Regulation Scheme (PPRS), which is expected to become effective from January 2014.
"This is likely to have some impact on pricing, but now affects less than a half of our total sales."
Management added they expected to benefit from continued growth in the existing portfolio in 2014, with the full year impact of the acquisition of obstetric drug Syntometrine and the return to the market of ImmuCyst.
However, new legislation on reference pricing and generic substitution in Ireland is expected to have an impact Nu-Seals sales and the toxicology product will be in its cyclical downswing.
Numis analyst Dave Hyman said there has been no industry update on PPRS so he had maintained previous forecasts of an 8% impact in 2014 and highlighted that the 50% of Alliance's portfolio would hit only on the less punitive voluntary basis.
Shares in APH were down 4.5% to 35p at 12:12 on Wednesday.
OH
35.40p
