Alliance Pharma is on the ascent
2018 has been a year of major progress for Alliance Pharma (APH: AIM). Recent developments, including a significant acquisition and marketing authorisation for a new product, are further transforming the company, enhancing its international growth prospects and reinforcing the company’s position as a rising star in the European specialty pharma sector.
2018 has marked the appointment of Peter Butterfield as Alliance’s CEO. Peter knows the company well, having joined in 2010 as an executive director at the time of Alliance’s acquisition of Cambridge Laboratories, where he had worked for five years. His early career was at the pharmaceutical giant Glaxo Smith Kline (GSK).
In welcoming him to the role of CEO, John Dawson, the founder and former CEO who led Alliance for 20 years, said that Butterfield’s ‘career path has been impressive, and his capabilities give the board the utmost confidence that, as CEO, Peter will be highly effective in driving the company forward’. Dawson, who brought the company to AIM in 2003, has remained with Alliance as a non-executive director.
Founded in 1998, Alliance has evolved through a successful buy-and-build strategy in which 35 acquisitions have been completed over 20 years to create a profitable, cash generative specialty pharma business with a progressive dividend policy. Recent acquisitions have given Alliance a significant international footprint. The company has direct sales in the UK, Europe and the US and an extensive distributor network with the result that its products are sold in around 100 countries worldwide.
The company’s product portfolio comprises around 100 products, ranging from prescription medicines to wellknown consumer healthcare brands such as Ashton & Parsons Infants’ Powders and Lypsyl.
INTRODUCING… ALLIANCE PHARMA A specialty pharmaceutical company based in Chippenham, Wiltshire.
This year, the momentum of the company’s buy-and-build strategy has continued apace, and, in June, Alliance announced a major brand acquisition: the £60m purchase of exclusive marketing rights to Nizoral, a medical anti-dandruff shampoo, in the Asia-Pacific region. The rights, which were acquired from Johnson & Johnson, extend to more than 15 countries including Japan, Thailand, South Korea and China.
A well-known and clinically respected brand, Nizoral recorded sales in the APAC region of a sizable £18.5m in 2017. The brand significantly increases Alliance’s presence in the APAC region, which is Alliance’s fastest-growing region worldwide.
Nizoral is Alliance’s fourth International Star brand, the term the company uses to describe a handful of key products which have strong international or multi-country growth potential.
Other products in the portfolio, which have good sales potential in individual countries or in a small number of countries, are called Local Heroes. Finally, Bedrock is the term used for products that have stable sales and do not require or justify marketing expenditure. The cash generation from these Bedrock products is invested in the marketing of growth products and contributes to dividends for shareholders.
Nizoral joins Alliance’s three other International Star brands: Kelo-cote for scar reduction, MacuShield for macular degeneration and Vamousse for the treatment and prevention of head lice. These International Star brands are the company’s high growth drivers – for example in Alliance’s half year trading update issued in July, Kelo-cote sales were reported as up 88% in the first half of 2018 at £10.9m.
ANOTHER BRAND ON THE WAY
And there’s another potential International Star brand on the way: Xonvea, a proven product for the treatment of nausea and vomiting of pregnancy. Back in January 2015, Alliance in-licensed the UK marketing rights to the product from the Canadian company Duchesnay Inc; the following year these rights were extended to a further nine European countries including Germany, France and Italy.
In July this year, the Medicines and Healthcare products Regulatory Agency, the UK healthcare regulator, granted marketing authorisation for Xonvea. Alliance expects to launch Xonvea in the UK this autumn and then to seek marketing authorisations in continental Europe.
There is currently no licensed treatment for nausea and vomiting of pregnancy in the UK. Market research reveals a large unmet medical need for such a treatment. It is estimated that the condition affects almost 700,000 women each year in the UK alone, where peak sales of Xonvea are estimated at about £10m. Once available across Europe, total peak sales of Xonvea are estimated at around £40m.
ALTERED GROWTH PROSPECTS
Xonvea is the most studied medicine in pregnancy with a proven efficacy and safety profile from use in more than 30 million women over more than 30 years.
Research analysts at Hardman & Co (whose reports can be found at www.hardmanandco.com) commented in a recent report that: ‘The acquisition of Nizoral, the recent purchases of Vamousse and Ametop, and the UK approval of Xonvea, are changing APH’s growth prospects considerably.’
Peter Butterfield: Alliance Pharma CEO