Galen's shares rise on healthy results

Shares in Northern Irish pharmaceutical group Galen added 3.5 per cent yesterday after the company released better-than-expected first-quarter results.

The Craigavon-based drug maker posted a 7 per cent increase in operating profits to $24.9 million (€23.1 million), ahead of analysts' expectations. Adjusted earnings per share (EPS) were up by 35 per cent to 12.7 cents per share.

Galen, which specialises in women's healthcare and dermatology, said revenues slipped by 11 per cent in the quarter ended December 31st to $68.6 million. This reflected the disposal last year of its pharmaceutical services division, leaving it focused on its higher margin products business where sales grew by 25 per cent. As a result, Galen's operating margin rose to 36 per cent from 30 per cent in the same quarter last year.

Galen reported strong performances from its core brands, including its oral contraceptive, Ovcon, which enjoyed sales of $12.4 million, a 30 per cent increase on the same quarter in the previous year.

Sales of its acne treatment Doryx were up by 27 per cent to $13.8 million, while revenues from its Estrace Cream, a hormone replacement therapy (HRT) product, were up by 12 per cent to $10.7 million.

According to Galen's vice-president of corporate development, Mr David Kelly, the company hopes to launch a new vaginal ring product, Femring, in the US in April.

Research and development costs during the quarter rose to $5.4 million from $4.4 million a year earlier. Selling, general and administrative costs remained high, at $22.9 million against $23.5 million during the same quarter last year, when the company still included the services business. Galen said this reflected an increase in these costs ahead of the Femring launch and costs associated with a recently-acquired drug, Sarafem, a type of Prozac used to treat premenstrual syndrome.

During the quarter, the business generated cash of $22.7 million. Along with cash generated from sales of Sarafem, the strong cashflow "puts Galen in a strong position to borrow funds to finance further acquisitions in our therapeutic areas," the company said.

Galen also announced plans to adopt the US dollar as the functional currency of the group. The move to report in the dollar rather than sterling better reflects the reality of its business, Galen said, noting more than 70 per cent of revenues were derived from the US.

The shares closed up 13.5 pence at 396 pence sterling in London while in Dublin, they added 15 cents to €5.95 as analysts described the figures as "a solid set of results".