Despite losing an interim £900,000, Alliance Pharma should make a full-year profit, says chief executive John Dawson.

Dawson, the biggest single shareholder of out-of-favour AIM counter Alliance, attributes the first-half loss, on flat sales of £7.8 million, to supply problems inhibiting production of Posidorm, the company’s flagship product for treating sleeplessness without adverse side effects or addictive problems. He says these problems are now being ironed out, pointing out that second-quarter sales contributed £4.8 million to the total, though Alliance still needs to find itself a production partner for Posidorm.

Serial investor Nigel Wray is a backer of Alliance, which acquires good drug brands being discontinued by the big pharmaceutical companies. The Chippenham-based company, which has a £3.5 million bank overdraft, buys these brands with bank backing, which Dawson says is in place for new suitable deals.

Alliance has 60 per cent of a joint venture in China for Forceval, which provides vitamin and mineral support for malnourished people and is widely supplied to pregnant women in the People's Republic. Dawson argues this could be the bridgehead for wider incursions into this huge potential market.

Another product, Hydromol, which alleviates dry skin associated with eczema, is enjoying particularly fast growth, says Dawson, who also suggests a new cost cutting drive could eliminate £1 million of annual overheads. He adds that the company's New Seals stroke and heart attack prevention product, with 80 per cent of the Irish market, has recovered from the temporary price-cutting imposed but later lifted by the Dublin government.

Alliance has teamed up with a pharmacy sales company to persuade pharmacists to recommend Forceval and Hydromol over the counter. Floated at 16p six years ago, Alliance shares have fallen from 20.5p two years ago to 7.75p today and are a recovery punt.

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Alliance Pharma	AIM	£7.49m	4.62p	0.00p
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