UK contract pharmaceutical manufacturer and distributor Intercare Group has reported 2002 turnover of £275.1 million (€406m), an increase of 27 per cent year-on-year, and pretax profits of £24.6 million, up 15 per cent. The results were in line with market expectations, although performance in the company's manufacturing division was mixed, according to analysts at ING Financial Markets.
Intercare chairman Ken Harvey noted that the company "has had a successful year, and the outlook for the future, both in the short term and long term, is very promising. As a result of a number of highly successful acquisitions made by the group in recent years, particularly in the pharmaceutical manufacturing sector, we are now well-positioned to capitalise on the many opportunities for growth within the supply chain sector of the pharmaceutical market."
Manufacturing sales increased 64 per cent to £61.3 million (€90.6m) in 2002, with most of this growth driven by a full year of contributions from Federa and Veramic, all of which were acquired in 2001. Intercare has effectively built its manufacturing capabilities by acquisition over the last two years, most recently adding France-based LCO Sante, a leading European contract manufacturer of active ingredients for hormone and biological products. This unit was acquired in October 2002 for £33.3 million.
Intercare also reported that the building of a new facility in Brussels, Belgium, operating under the Federa banner, has progressed well during 2002 and remains on target to start operating in mid-2004. The expansion, at a cost of some £17 million, will increase Federa Belgium's capacity by around 80 per cent.
On the downside, the lower margins achievable in these contract-manufacturing businesses, in comparison to its UK-based Martindale unit that specialises in manufacturing branded generics, pegged operating profits at the division back to a 15 per cent increase. Martindale has seen sales increase more than 18 per cent over the last two years, when the overall UK market has grown less than 14 per cent.
Meantime, Intercare's generic and branded drug distribution business saw turnover up 16 per cent to £207.2 million in 2002.
Looking to the future, the company's chief executive, John Parker, predicts continuing strong financial performances at the group as the demand grows in the pharma industry for outsourced drug development and manufacturing. Key events in the year ahead are approval to expand production at Federa France, due in April, and US Food and Drug Administration approval of LCO Sante's facility for hormone manufacturing, opening up the American market.
The ING analysts expect Intercare to achieve revenue growth of around 20 per cent in 2003, driven by a near doubling in contract manufacturing turnover due to a full year of contributions from LCO Sante.