Snow can't thwart Dechra's bright outlook

PET drugs company Dechra Pharmaceuticals posted a 30 per cent leap in adjusted first half profits and said recent heavy snowfall has not dampened its full-year outlook.

The group develops and makes drugs and food for animals through its pharmaceuticals arm, plus supplies drugs and services to the veterinary industry through its services arm.

"January was a little disappointing because we had dreadful weather in the UK... So footfall for veterinary practices was very poor," said chief executive Ian Page.

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"But we do expect the second half to show an improvement over the first half." Dechra reported an adjusted pre-tax profit of 13.7m for the six months to the end of 2009, compared with 10.5m a year earlier. Revenues grew 6.7 per cent to 184.8m.

On average, analysts expect pre-tax profit of 26.2m for the full year, on revenue of 374.9m.

Dechra has its Dales Pharmaceuticals manufacturing plant in Skipton, where it employs more than 200 people.

The group said the plant increased third-party manufacturing by 2.9 per cent on a year ago.

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Dales is now preparing for an inspection by US regulators, which if successful, would allow it to make drugs for the lucrative US market. It hopes to apply for the audit by the summer.

"The facility and structure of the building is fantastic," said Mr Page.

"We are always spending money on the facility. It (the audit) is a paper chase."

Dechra said its pipeline of new drugs, which includes five novel products, is progressing well. An equine gel, Equidone, has been submitted to US regulators for approval.

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Dechra added it continues to expand in the US through sales of its flagship Vetoryl drug. The drug, which treats Cushings disease in dogs, was launched a year ago in the US and is now sold in 7,000 vet practices.

Sales of Vetoryl hit $2.5m over the period, the bottom end of expectations. Dechra said this is down to slow diagnosis of Cushings disease by US vets, which it is combating with education.

"We have got it into 25 per cent of US vet practices over a year – we're very pleased with what we've achieved," said Mr Page. "It's just going to take us a little longer to achieve market penetration."

The group also raised its interim dividend by 10 per cent to 3.3p per share.

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"Slow progress in Vetoryl is perhaps the only real blip in the results, however, we feel this is merely a timing issue and our view on the overall market potential remains the same," said analysts at Investec.