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Alliance Pharma happy with two-pronged strategy

“It’s a blended model of highly cash generative assets and top line growth”

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Alliance Pharma plc’s (LON:APH) strategy is two-fold says Peter Butterfield, chief executive.

Acquisitions, where the group has made 35 over 20 years, but also organic growth.

WATCH: Alliance Pharma reports strong growth as it launches UK's first prescribed drug for morning sickness

“It really is a dual-pronged approach,” he told Proactive.

The business splits into five so-called ’star’ brands, which are promoted and where Alliance has usually has good licence rights around the world.

These star brands are the ‘crown jewels’, managed and marketed centrally and sold internationally and now number five.

Lice treatment Vamousse, Kelo-cote, a scar reduction product and MacuShield, a supplement recommended by eye experts were recently augmented by anti-fungal shampoo Nizoral and Xonvea, a pregnancy nausea treatment.

Aside from the international stars, Alliance has local brands which are very important as they are the cash generative part of the business, says Butterfield.

They do well in one or two - three territories and are promoted, but to a much lesser degree than the international star brands.

“It’s a blended model of highly cash generative assets and top line growth,” says Butterfield.

Xonvea has just been launched in the UK and Butterfield is eyeing sales of £10mln annually.

Alliance also has rights in nine other European countries.

Vamousse, too, brought with it a US office, an area Alliance has yet to make much of an impact but now it has a bridgehead says Butterfield.

READ: Alliance Pharma sales rise as star brands perform

More acquisitions seem a certainty.

“We are always on the look-out,” says Butterfield, but the next few months are about embedding Nizoral and Xonvea and making sure they're working.

Xonvea has been on sale in Canada for forty years.

“We know preganac y nausea affects around 40% of women in a way that impacts their quality of life.

“That is a significant burden and having a licensed treatment here in the UK will be good for healthcare professionals.”

Nizoral, meanwhile, was one of three acquisitions within a seven month period from December to June.

“We are really pleased to have this.

It a was a great asset for Johnson & Johnson in the Asia-Pacific region.”

Alliance has been in China since 2015 when it acquired Kelo-cote from Sinclair.

“Nizoral adds to that and can become a very significant product for us in a very fast growing and dynamic area of the world”.

Underlying performance on track

Unexpected costs with the interims have unsettled the share price recently, including complying with new anti-counterfeiting measures across Europe.

Butterfield says the company has also been building up stock in the event of a Brexit meltdown, though he believes the fact that a good proportion of its products are manufactured in the country they are sold will help Alliance.

The underlying performance was 4% revenue growth, which was ‘broadly where we expected to be,’ he adds.

“Organic growth from the topline brands with the local products underneath working well.”

At 63p, Alliance is valued at £327mln.


Quick facts: Alliance Pharma PLC

Price: 73.7 GBX

Market: AIM
Market Cap: £390.91 m

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