What Alliance Pharma does:
Over the past 20 years, the group has made over 35 acquisitions, which include healthcare and pharma businesses and rights to products.
Alliance has a clutch of so-called “star” brands, which are managed and marketed centrally and sold internationally.
These include: Lice treatment Vamousse; Kelo-cote, a scar reduction product; MacuShield, a supplement recommended by eye experts and anti-fungal shampoo Nizoral.
The company runs its business across three broad regions: Europe, where the company sells a combination of prescription and OTC products; the newer US business, where it is focusing on the promotion of Vamousse; and the fast-growing Asia Pacific business, which has a tilt towards dermatology.
How it’s doing:
Alliance tripled its dividend for 2020 and said the new year started well as it integrates the substantial acquisition of Biogix and eyes other opportunities to add to its portfolio.
The AIM-listed company, which focuses on the acquisition and licensing of pharmaceutical and healthcare products, has proposed a final dividend payment of 1.074p per share for the past year, giving a total dividend of 1.610p compared to 0.536p a year ago.
This follows a year when sales of consumer healthcare brands improved to partly offset a decline in prescription medicine as routine treatments were delayed as a result of the coronavirus pandemic.
Sales of Kelo-cote, for scar prevention and treatment revenues, were up 12% and Nizoral, a medicated anti-dandruff shampoo, rose 4% to contribute to a 1% increase in overall consumer healthcare see-through revenues to £93mln.
But a 12% fall in prescription medicine to £44.5mln led to statutory revenues falling 4% to £129.8m.
Underlying profit before tax, excluding the costs of the Biogix deal and non-cash impairments, increased 2% to £33.5mln, while reported pre-tax profits fell 58% to £13mln.
What the boss says, Peter Butterfield chief executive
“Through maintaining good control of our operating costs, we have continued to deliver a resilient underlying operating performance and our free cash flow has also remained very strong, enabling us to pay down more of our debt than expected ahead of completing the Biogix acquisition,” he said.
“This strategically significant acquisition bears testament to our ability to continue to deliver on our longer-term growth strategy, notwithstanding the global pandemic.”
What the broker says
Alliance Pharma has transformed its exposure to consumer healthcare over the last 5-6 years, something that the market is overlooking says broker RBC.
Almost three-quarters of Alliance’s revenues now come from consumer healthcare with superior growth to legacy prescription products and helped by a playbook of internationalisation, new distribution channels, packaging and line extensions.
The switch has also reduced the exposure to risk from government pricing and regulatory decisions.
Revenues should grow by 8% over the next four years driving profits up by 12% a year, with more if the company flexes its balance sheet fully.
“Outperform with a 106p price target” is the broker’s view.