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Dechra aiming to make the US a pet subject
SALES at Dechra Pharmaceuticals continue to soar as people prioritise treating sick pets.
The group, which has its Dales manufacturing facility in Skipton, beat market expectations by reporting like-for-like revenues up 9.5 per cent in the six months to the end of December, hitting about 141m.
Dechra is gearing up for growth in the US with the imminent launch of a key drug, Vetoryl.
The drug, which treats Cushings disease in dogs, has already proved popular in the US ahead of its launch on Sunday at the North American Veterinary Conference in Florida, it said in a trading update ahead of its interim results.
Sales to US distributors reached $700,000 (471,000) by the end of December – as a distributor tried to steal a march on its rivals.
Dechra is targeting sales of between $7m to $8m in the first year of the drug's launch, growing to about $20m once it is established.
"America is going to be interesting for us as we're just about to launch a major product (Vetoryl) there," said chief executive Ian Page. "It treats safely and efficaciously a disease that really was a very difficult disease to manage. We've got support from all the leading experts."
Launching Vetoryl in the US will be the culmination of five years' hard work. The group had to gain US Food and Drug Administration (FDA) approval, a laborious process which required additional clinical trials. The drug is already sold in the UK and Europe, and can increase a dog's life expectancy by two to three years with a daily dose.
Dechra has also recruited staff to strengthen its sales and marketing and technical support teams ahead of the launch.
Dechra is also targeting growth in Europe, with cat hyperthyroid treatment Felimazole, Malaseb antibacterial shampoo and an analgesic injection all scheduled for launch by the summer.
Dechra acquired Danish veterinary products firm VetXX for 65.2m early last year. VetXX is now fully integrated and rebranded to Dechra Veterinary Products Europe, it added. Including the VetXX impact, overall sales were up 23 per cent, and the pharmaceutical division's sales grew 146 per cent.
Thanks to the acquisition, Dechra is also growing in the pet foods market, with new and tastier products planned.
Despite the economic downturn, Mr Page said he is confident of the group's growth.
"There is a slowdown within the markets and the veterinary market will slow," he said.
"But ours are critical care medical products – they actually treat diseases.
"The pet is seen as part of the family and it's one of the last areas that will be sacrificed."
Although the group has seen market growth in its services division slow recently, sales there were 7.5 per cent higher than last year at about 136m.
The group's Dales manufacturing operation, which employs about 200 people making own-branded veterinary drugs as well as drugs for humans via third-party contract manufacturing, gave a "solid" first half performance, thanks to an increase in production.
The group said trading for the full year was in line with expectations and added: "We remain confident that our strategy and development pipeline have positioned the group to respond resolutely to challenging times.
"The group's cash flow remains strong, our banking facilities secure and balance sheet robust; we therefore remain optimistic about the group's future prospects."
The weakening value of sterling against both the dollar and the euro is also helping the group, and should become more pronounced as sales abroad grow, Mr Page added.
WHAT THE ANALYTS SAY
Robin Speakman, analyst at Shore Capital, said: "The progress of pharmaceuticals in the USA and continental Europe is clearly on track.
"Dechra remains a well managed defensive company in current economic times."
Analysts at brokerage Brewin Dolphin said: "The strategy of diversifying into the value-added area of branded, licensed pharmaceuticals is amply bearing fruit, to the extent that the pharmaceutical division now accounts for over 70 per cent of group underlying earnings.
"Given a healthy product pipeline, growth in this area we feel is strongly underpinned. The group also has a leading position in the veterinary distribution market and, whilst not totally immune to an economic slowdown, the end market is in structural growth mode."
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