Medeva Beats Expectations At Half Year

Medeva of the UK achieved sales of L107 million ($166.43 million), an increase of 34%, pretax profits of L22.1 million, up 70%, and an increase of 29% in earnings per share to 4.9 pence for first-half 1994. The results were ahead of expectations and the company's share price soared when the news reached the City. The share price reached 151 pence, up 23 pence. Medeva's share price plunged last year from 216 pence to 116 pence when the company made a profits warning based on difficulties that arose from its businesses in the USA (Marketletters passim). These now appear to have been dealt with.

Of the 34% increase in sales, 22% came from organic growth, according to Dennis Millard, Medeva's finance director. Underlying growth in prescriptions was strong, up 35%, and there was an increase in market share, for example, respiratory products marketed by Medeva's Adams unit in the USA were ahead 9%. Some of the growth resulted from price increases, and Mr Millard said that the company now has a more balanced inventory pipeline.

The primary contributor in the first half, however, was the strong sales growth of methylphenidate, a treatment for hyperactivity which is manufactured by Medeva's US unit MD Pharmaceutical. Methylphenidate sales more than doubled, representing 60% of the group's total sales growth, commented Mr Millard. The exceptional performance of methylphenidate was due to an increase of around 35% in prescriptions written, improved market share, higher average prices and a more balanced throughput into the distribution chain.