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Alliance Pharma deal an important step towards internationalisation, says City research house

The latest addition to the Alliance Pharma medicine chest represents an “important step to the internationalisation of the group”, according to a City research house. 

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The latest addition to the Alliance Pharma (LON:APH) medicine chest represents an “important step to the internationalisation of the group”, according to the City research house Hardman & Co.

Alliance said last week it will pay US$11.5mln to acquire full ownership of obstetric drug Syntometrine from Swiss giant Novartis.

The speciality pharma group already owns the UK rights to the treatment, which is used in the final stages of labour.

However, Syntometrine sells in around a dozen other major territories, including Australia, South Africa, Malaysia and New Zealand.

Hardman is predicting Alliance’s overseas revenues will rise to around 30% of total sales in 2014, compared with just 18% last year.

Analysts point out the deal uses the blue-print that underpins company’s success – acquiring prescription drugs that require little or no marketing, but generate a solid revenue stream.

Outside the UK Syntometrine generates sales of US$3.2mln. 

Adjusting for inventories, Alliance has paid 3.5 times turnover and 5.5 times earnings for the product, specialist small-cap broker FinnCap said.   

“We believe is a fair price and in line with the multiples we have seen historically for such acquisitions.” 

At 11.30am, the shares were little changed at 37.9 pence, valuing Alliance Pharma at £94mln. In the past year the stock has increased in value by a third.

Quick facts: Alliance Pharma PLC

Price: 62 GBX

AIM:APH
Market: AIM
Market Cap: £328.77 m
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