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Mayne's bumper profit reaps benefit of US acquisition

Glenn Freeman  |  26 Aug 2016Text size  Decrease  Increase  |  
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Mayne Pharma (ASX: MYX) on Friday reported record growth across its business for fiscal 2016, including $37.4 million in net profits after tax, up 379 per cent on fiscal 2015.

The strong performance in the US by its $855-million Doryx acquisition, made in February 2015, was a key contributor to this result, as was the launch of generic drug Dofetilide.

The acquisition achieved a 100 per cent return on investment in the first week, according to Mayne Pharma's chief executive officer, Scott Richards.

"And 10 weeks after the June launch, it holds a 44 per cent share of the total US market," he said.

Mayne's underlying net profit, which removes costs associated with the acquisitions, was up 237 per cent to $45.2 million.

"Sales uplift was driven by new product launches and growth of the existing portfolio ... key franchises were BAC, dofetilide, oxycodone and methamphetamine," said Mark Cansdale, Mayne's group CFO.

Revenue across the company's Speciality Brands Division, which includes Doryx, topped $77.8 million in fiscal 2016, up more than 340 per cent on 2015.

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Its Mayne Pharmaceutical International (MPI) division saw more modest profit growth, up 7 per cent to $7.8 million. Sales revenue of $33.7 million was up 6 per cent across the division.

In specific MPI segments, Australian sales grew 11 per cent, on the back of new product launches, while sales declined 10 per cent across the division's operations in the rest of the world.

According to Cansdale, these losses were driven by competitive market conditions, particularly in Korea and Vietnam.

On the balance sheet, Mayne held $48 million in cash at the end of fiscal 2016, with net debt increasing $27 million over the year.

Mayne reported $28.6 million in research and development spend for fiscal 2016--more than 75 per cent of this was directed towards generic programs.

Its Generic Products Division (GPD) saw revenue growth of US$77.8 million, up 60 per cent during fiscal 2016.

Having transitioned into a vertically integrated business, which both develops and distributes pharmaceuticals and treatments, direct distribution of generic products now represents around 80 per cent of segment sales--with Dofetilide the most prominent example.

While declining to provide specific guidance for fiscal 2017, Richards indicated research and development would continue to be a key focus into 2017, forecasting $40 million of R&D expenditure.

"Today we have more than 40 products in various stage of development in the US and a further 10 here in Australia," he said.

Four new products are due for launch in the first half of fiscal 2017, having already been approved by the US Federal Drug Administration.

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Glenn Freeman is Morningstar's senior editor.

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