Clinigen Scratches a Niche - Sales Surge 86%

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I believe that if you’ve got a niche, you should scratch it.  That is exactly what specialty pharmaceutical Clinigen has done, and it seems to be working out quite nicely.  The relative newcomer to the London Stock Exchange (25 September 2012), witnessed a 10.9% jump in its share price following release of its interim results for the six months ending 31 December.

The company’s share price rose 23.0 pence to 234.0 in trading today.  Clinigen entered the LSE at 176.00 back in September, rising to 193.0 by 4 October, and really, it has never looked back, evidence that the group that was formed in 2010 has the right product at the right time at the right place.

The shares rose on a highly commendable report that included an incredible 86% increase  in sales from £32.7 million to £61.0 million.  Underlying profit jumped 53% from £6.3 million to £9.7 million.  Underlying EBITDA rose 48% from £7.1 million to £10.5 million.  Earnings per share rose 64% from 5.5 pence to 9.0.  It certainly didn’t hurt that the board also announced its maiden dividend of 0.6 pence per share.

Clinigen operates throughout a medicine’s clinical life cycle, from Phase 2 clinical trials to the end of patent and beyond.  The company is comprised of three divisions:  Clinical Trials Supply (CTS), Global Access Programs (GAP), and Special Pharmaceuticals, each serving a different segment of a drug’s life cycle rather than a traditional market sector.

The CTS division sources and supplies licensed products for clinical trials, pretty much as it name says.  It maintains global storage and provides global distribution.

The GAP division arranges for an delivers early access to medications prior to licensing or commercial launch through special Named-Patient and Expanded Access programs on the front end of the life cycle, while providing withdrawn or discontinued medicines available through it Mature Product Access program.

The Specialty Pharmaceutical division actually acquires drugs used in hospitals that have been divested by large pharmaceuticals.  Pharmaceuticals, being a highly competitive, new-product-driven business, produces an end-of-life cycle where there remains a demand, yet a demand too small to be lucrative for the manufacturer to continue providing.

Many small companies have matured by applying this kind of strategy.  Aftermarket manufacturers and sellers of obsolete automobile parts are a good example of addressing the post-mortem demand for those who own classic and antique cars.  In many cases, end-of-life cycle companies are the savior of the original manufacturer for whom that phase is simple too costly for those larger companies to serve.

CEO Peter George emphasized the synergies of the three specific-niche divisions.  He said, “One plus one plus one is greater than three.”  Words wisely spoken.

And now, if you will excuse me, I have to go scratch a niche.


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