Vet products group on course, despite first half supply setback

Vet products group Dechra Pharmaceuticals said trading for the first half of the year is in line with expectations, in a markets update today.

But it warned that the balance of trading will be more second-half weighted than is typical for Dechra.

It said this was due to trading being adversely affected by supply problems, predominantly in the first quarter. Significant progress has been made and the supply issues have been largely mitigated, it said.

Dechra has its manufacturing base in Skipton, North Yorkshire, and its head office in Northwich, Cheshire.

Highlights in the six month period to December 31, 2019, included an increase of around seven per cent in group net revenues, while European pharmaceuticals net revenue growth was around 13%. North American pharmaceuticals net revenue declined by approximately two per cent.

Dechra said this was due to the supply issues problem, and is also due to a strong comparable period last year that benefited from exceptional sales of Zycortal as a result of a competitor being out of stock.

The Venco and Caledonian acquisitions, in December 2018 and October 2018, respectively, have performed ahead of expectations, while an asset purchase agreement was signed post period end for the acquisition of a major otic product, Osurnia.

The acquisition of Ampharmco completed on August 28, 2019, and the integration plan is well under way, said the group.

On January 6, 2020, Dechra announced it had reached an agreement to acquire the assets of Osurnia, a major product for the treatment of otitis externa in dogs with a turnover of $31.2m for the 12 month period to December 31, 2018.

Completion of the acquisition of Osurnia is conditional on approval of Dechra as a suitable buyer by the European Commission and the Federal Trade Commission in that context.

Today’s statement said: “We are already present in the otitis externa space with a number of products and our range of ear cleaners.

“The addition of Osurnia will allow us to offer an extended range of solutions for veterinarians to manage otitis externa and offer the best treatment for the pet, taking into consideration the veterinarians’ clinical preference and the owners’ lifestyle.

“Dechra’s expertise in this arena will bring a lot of added value to otitis externa management for veterinarians.”

Chief executive Ian Page said: “Overall, our progress in the first half has been satisfactory and demand for our products remains strong.

“Trading in Europe was good, while North American growth, as expected, was constrained but should now resume as we return to normal supply chain inventory levels.

“Our recent acquisitions are integrating well, and we were pleased to reach agreement to acquire Osurnia. We, therefore, remain confident in our prospects for the second half and for the year as a whole.”

Dechra will announce its interim results for the period on February 24.