Alliance Pharma (APH:AIM) delivered a strong organic performance in 2017, driven by sales growth from products under its International Star brand, Kelo-cote and MacuShield.
The company, which acquires and licenses pharmaceutical and healthcare products, is one of our top stock picks for 2018.
In the year to 31 December 2017, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 3% to £26.8m.
Sales of scar reduction treatment Kelo-cote rose 34% to £13.3m, while revenue from macular pigment supplement MacuShield jumped 38% to £7.3m.
US tax reform and a material reduction of business in Kelo-Stretch with Sinclair Pharma (SPH:AIM) helped earnings per share soar 58% to 6.1p.
‘EXCITING PROSPECTS’ FOR HEAD LICE TREATMENT
Head lice treatment Vamousse is the most recent addition to the International Star brand after being acquired from TyraTech (TYR:AIM) last year. Alliance Pharma believes Vamousse has ‘exciting prospects’ and the product provides a foothold in the US market.
The pesticide-free product is expected to take advantage of the global head lice treatment market, worth $370m and forecast to grow between 5% to 8% every year.
Alliance Pharma says trading is also supported by its ‘bedrock’ and ‘local hero’ products, which rose 5% from to £48m in 2017.
This was despite lower sales for some of the firm's top products due to re-branding issues over at Sinclair, but revenues from this portion of the portfolio are expected to recover this year.
Approximately 45% of sales are from bedrock products, which are too small to attract competition and do not require promotion to maintain meaningful sales. Local hero products, comprising 35% of sales, are niche products that perform well in select territories.
GOOD PROGRESS WITH DICLECTIN
Alliance Pharma continues to work with the Medicines and Healthcare Products Regulator Agency (MHRA) concerning issues around Diclectin, a treatment for nausea and vomiting arising from pregnancy. This prevented the approval of Diclectin in the UK in July.
Numis analyst Sally Taylor says good progress made in resolving issues with the treatment is encouraging.
She believes Diclectin could be a ‘significant product’ for Alliance Pharma, forecasting potentially over £20m in peak sales if it is approved. Following approval, the treatment could be launched in the UK and EU by the end of 2018.
