Dechra Pharmaceuticals turns in strong figures

Pet drugs firm Dechra Pharmaceuticals has managed to beat the economic downturn thanks to strong sales of its branded products.

The group, which has its Dales Pharmaceuticals division based in Skipton, said that sales of its branded products helped to boost profits by 15 per cent in the year to June 30.

Chief executive Ian Page said: “Although footfall through veterinary practices has declined and the general economic climate remains uncertain we are continuing to demonstrate solid growth in markets in which we trade.

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“Our branded product range, the focus of our key strategic objective, continues to grow strongly.”

The company, which develops prescription medicines for dogs, cats and horses, therapeutic diets for dogs and cats, and unlicensed medicines, shampoos and supplements, posted an underlying pre-tax profit of £30.1m in the year to June 30.

Revenues were 5.4 per cent higher at £389.2m.

Dechra is developing a number of new drugs for launch in 2013, starting with a product to treat lameness in horses.

“There’s a clear road map for new drugs,” said Mr Page.

“In 2013, 2014 and 2015, we would expect one new product a year at least.”

Collectively the new drugs will add between £25m and £30m in annual revenues.

Broker Peel Hunt, which has a “hold” rating on the stock, said the numbers came in just below its estimates.

“The majority of Dechra’s companion animal pharma business performed resiliently, with the more consumer exposed European diets business the key source of underperformance,” said analyst Stefan Hamill. Mr Page said the company’s products performed strongly in terms of revenues, although there was a lower margin on dietary products than the company had hoped for.

“The diet margin was down about two points,” he said.

“That’s due to raw material increases – fish protein and wheat prices have spiralled in the last 12 months.

“We took the strategic decision that we wanted to grow the top line rather than compensate by increasing prices too much,” he said.

Dechra is increasing its final dividend for the year to end-June to 8.4p a share, up from 7.25p a year ago.

Analyst Keith Redpath at FinnCap said: “The results were in line with our forecasts.

“Key products continue to grow, for example sales of vetoryl (used for the treatment of Cushing’s disease) are up more than 30 per cent and a number of new products have been approved or launched which should contribute to continued growth.

“We retain our ‘buy’ recommendation.”