New acquisitions help Galen grow profits by 79%

Galen has posted bumper results for 2003 and said it will raise earnings by another 20 or 25 per cent over the coming year through a combination of acquisitions and organic growth.

The Craigavon-based drugmaker saw operating profits climb by 79 per cent to $187 million (€162 million) in the year to September, while turnover rose by 84 per cent to $432 million.

Earnings per share before goodwill and exceptional items was up 78 per cent to 85.2 cents.

The performance, which was ahead of analysts' expectations, was boosted largely by Galen's ambitious 2003 acquisition strategy. Galen executive chairman, Dr John King, described 2003 as a "transforming year" for the company.

The group spent a total of $650 million buying four products from Pfizer and Eli Lilly over the year, with all now contributing positively to the bottom line.

Dr King said Galen was confident of prevailing in its fight to protect the patent on one of its newly-acquired drugs - pre-menstrual treatment, Sarafem - when litigation on the matter begins today. The patent is being challenged by Teva Pharmaceuticals, which wants to produce a generic version of the drug.

Galen's total product revenues rose by 84 per cent to $432.3 million over the year, while organic growth was solid at 27 per cent.

Sales of Femring, the intravaginal menopause treatment launched by Galen in June, were hit by a study linking such products of this type to breast cancer but the company warned that it was still too early to draw conclusions on its potential.

Dr King said Galen was now in a position to consolidate its position as a pharmaceutical products operation, adding that Galen's focus was now on "four or five years down the road."

Referring to last summer's failed takeover move by US pharmaceutical firm, Barr, Dr King said such approaches would continue to occur "episodically".

"Clearly the Barr situation will not be the last, but the only thing you can concentrate on is running the business."

The amount spent on research and development at Galen rose from $20.6 million to $28.7 million over the year. In the last quarter, the company has made a new drug application for menopause treatment, Femtrace, and it expects to submit an application for a line extension of acne treatment, Doryx, early next year.

Approval of an application for a new version of contraceptive, Ovcon, is expected before the end of December.

He declined to expand on how much the group would like to spend.

Galen generated some $208 million in cash over the year, and closed the period with net debt of $253.3 million.

Its shares were solid after the results, closing 7.4 per cent ahead at 774.5p sterling in London, where they are mainly traded.

Galen will pay a dividend of 3.6p sterling per share for the year, up 20 per cent on 2002.