Shares in Galen Holdings rallied today after the company announced the purchase of rights to a pre-menstrual syndrome drug called Sarafem, boosting its position in the lucrative U.S. women's healthcare market.
Galen, which also sells hormone replacement therapies, said the $295 million deal with U.S. drugs giant Eli Lilly would boost profits from day one, leading analysts to raise their forecasts for the current financial year onwards.
"They've got the three things people were looking for - a fit with the existing product base, a decent price and good patent protection," said Jack Gorman, an industry analyst at Davy Stockbrokers.
Galen's shares, at 10 o'clock this morning, increased by 8.3 percent higher at 536 pence sterling, valuing the business at about 980 million pounds sterling (EURO1.55 billion). Analysts estimate that as many as three million women in the United States are affected by severe discomfort before or during their periods.
Drug companies have only recently taken steps to make products specifically to address the problem. Sarafem, which is protected by patents until 2007, was launched by Eli Lilly in 2000 and generated $85 million of sales in 2001, meaning Galen paid around three-and-half times historic revenues for the drug.
Galen and Eli Lilly entered into a separate agreement under which the U.S. firm will continue to manufacture Sarafem for Galen for the next three years.
Galen, which also makes acne cream and contraceptives, has transformed itself into a pure products company over the past year, selling its services businesses to focus on treatments for skincare, urology and women's health problems.
Chairman John King said Galen was still looking to make more acquisitions, particularly in dermatology, where it does not have its own research and development interests. Galen's shares have fallen by as much as two-thirds this year after studies showed a link between some hormone replacement therapies and cancer.
However, King said there had been no noticeable impact on Galen's sales, repeating that its treatments were not directly implicated in the research findings.