UK pharmaceutical manufacturing and distribution company Intercare has posted a record set of results for the first half of 2003, with sales up 21 per cent to £156 million (€225m).
The company's manufacturing activities did well in the year, garnering a sales rise of 73 per cent to £51.3 million helped by the integration of LCO Santé, which was acquired in October 2002. Analysts at Nomura noted that underlying organic growth in manufacturing was 13 per cent. However, distribution was hit hard by exchange rate factors and adverse market conditions.
After a lacklustre 2002, Intercare's manufacturing division has picked up the pace, with Martindale making a particularly strong contribution. Helped by higher exports and competitor troubles in 'specials' (one-off products requested by pharmacies), Martindale is now working hard to increase its rate of new product development, find European partners and look for complementary acquisitions, thus allowing it to maintain momentum, according to Nomura.
Meanwhile, construction of a new contract manufacturing site in Belgium is proceeding to plan, and this is expected to become US Food and Drug Administration (FDA) compliant and to commence operations in 2005, following production and validation tests in the second half of 2004.
The first half of 2003 included a full six month contribution from LCO Santé in France. The company's new hormone manufacturing suite is now operational and is expected to become FDA compliant by mid 2004.
Market demand for pre-filled syringes from external customers remains strong, said Intercare, pointing out that this benefits its Federa companies in Belgium and France. In Belgium, Federa produces pre-filled syringes for flu and other vaccines, heparins and critical care products, while Federa France also produces heparin products.
In May, the Belgian authorities inspected the fridges in the new factory building and approved them for the storage of vaccines produced by Federa at its existing Brussels facility. Once the new factory is fully operational, equipment from the existing factory will be transferred across and the building sold.
Intercare is also seeking acquisitions in the manufacturing division, in order to add new technologies or strengthen existing customer relationships.
In distribution, pricing pressure meant that operating margins were down to 1.6 per cent versus 6.2 per cent a year ago, and Nomura now believes that Intercare may be better served by becoming a pure manufacturing player.
Ken Harvey, Intercare's chairman, said: "Going forward, the group will continue to focus its efforts on pharmaceutical manufacturing. Driven by continuing consolidation amongst the world's major pharmaceutical companies, demand for the outsourced supply chain services … continues to grow strongly."
He is expecting a particularly strong performance in the pre-filled syringe market, where Intercare is well positioned through its Federa operations. Overall, he predicted that the market for contract pharmaceutical manufacturing will rise around 10 per cent a year, with pre-filled syringes putting in above average growth.