Enaleni upbeat on generic drugs

Mon, 28 Aug 2006

Durban-based pharmaceutical group Enaleni Pharmaceuticals, which listed on the JSE last year, on Monday reported a 188 percent rise in headline earnings per share to 12.4 cents for the six months ended June from 4.3 cents a year ago.

On a diluted basis, HEPS rose to 12.2 cents from 4.3 cents before.

No dividend was declared as currently all earnings are used to repay debt and fund acquisitions and growth opportunities.

Revenue rose to R371.1-million from R87.4-million before, while profit before interest and tax increased twelvefold to R93.1-million compared with R7.5-million in 2005. Profit for the period jumped to R53.3-million from R5.7-million before.

Generic pharmaceuticals strong

The company said conditions for the generic pharmaceutical sector continue to remain positive.

The business generated good cash flows producing R55.3-million from operating activities in the period and in line with the group's growth strategy, these cash flows have been deployed to repay debt and fund growth in the two operating divisions.

Enaleni said that it has made considerable progress in bedding down its acquisitions. Enaleni is experiencing strong top-line growth, and intends to extract further synergies between all the businesses, it said.

Enaleni CEO Trevor Edwards said the results reflect the group's excellent operating performance as well as the successful integration of generics pharmaceutical company Cipla Medpro, which is now the major contributor to revenue and profitability.

"Our other acquisitions, including FirstPharm and Bioharmony, the Cape Town-based vitality and wellness company, have also been integrated smoothly. We are looking forward to a very positive second half," he said.

Enaleni acquired Cipla Medpro for R1.2-billion in November 2005 in one of the largest deals ever in the domestic pharmaceuticals industry.

Strengthing substantially

Apart from substantially strengthening its pharmaceutical business, the acquisition formed the start of Enaleni's relationship with India 's Cipla Limited, the largest generics producer in India and a world leader in generics research, innovation and production.

The Enaleni group is well positioned to capitalise on the government pharmaceutical tenders to be awarded in 2007. The value of the tenders in the generic drugs market is estimated at between R3-billion and R4-billion over a two-year period, it noted.

Enaleni said it would be competing for a substantial portion of this opportunity, aiming its efforts at one billion rand of the tender. The future value of the ARV market is estimated at R4-billion over the next three years.

"The company has a formidable basket of ARVs available, which should position it as a significant player at the next round of tenders," it said.

FirstPharm, which was acquired in the second half of 2005, is being integrated into the group's pharmaceutical division and is contributing positively to operating performance.

The group noted that in terms of the acquisition agreement of Cipla Medpro, further capital of between 100 million and R300-million will be required to settle the vendors of Cipla Medpro by end May 2007, should Cipla Medpro contribute profit before taxation in excess of R150-million for the year ended December 2006.

The group is currently in the process of raising the necessary long-term funding to fund these payments, it said.

Looking ahead, the group said in November 2005 it had forecast sales of R731-million for 2006 and profit before interest and tax of R178.5-million.

"The group is trading in line with the forecast. Trading in the second half of the year is traditionally better than in the first period," it said.

As approved at the group's annual general meeting in June, the company intends to change its name to Enaleni Cipla Pharmaceuticals Limited.

The new name acknowledges the evolving structure of the group and the significant contribution that Cipla Medpro makes to the group's sales and profit.

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Source:- http://business.iafrica.com/news/967308.htm