Alliance Pharma

Speciality drug company Alliance Pharma has lifted annual pre-tax profits 134% to £5.7m and is looking for further acquisitions. 

The Chippenham-based company, which backs a range of established products with proven markets, increased sales 44% to £31.2m in 2009, helped by anti-inflammatory treatment Deltacortril, bought from Pfizer in 2007, which pushed up sales fourfold to £8.5m. Chief executive officer John Dawson says Deltacortril’s growth reflected a resumption of full production after previous technical constraints and is unlikely to be repeated this year, but he hopes Alliance’s takeover of Cambridge Laboratories’ trade and assets in February will at least maintain the pace.

Bought for between £14.3m and £16.4m, the Cambridge assets include products in bladder cancer immunotherapy, oral gel for mucositis caused by chemotherapy and a treatment for Hodgkin’s Lymphoma. Dawson says 15 Cambridge products are well established and need little marketing, while three which do need selling are in oncology (cancer) and show 18% annual long-term growth.

Elsewhere, Alliance’s Forceval multi-vitamin product grew sales 15% to £2.3m, with particular strength in China, and Nu-Seals, its enteric-coated low-dose aspirin, upped sales in the Republic of Ireland 24% to £5.8m, helped by a weak sterling. In August, the company bought two brands, nausea treatment Buccastem and Timodine, a triple action anti-inflammatory, anti-fungal and anti-bacterial skin cream. 

Alliance reduced bank debt by £3.5m to £21.7m last year and cut the ratio of bank debt to earnings before interest, tax, depreciation and amortisation from four to 1.9. Having raised an oversubscribed £7.5m at 26p to help fund the Cambridge deal, Dawson argues the company has access to finance for another appropriate acquisition.

Recommended by Growth Company Investor at 4.38p last year, Alliance shares have now reached 35p. Hold on.