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Amersham plc sales for the first six months totalled £812m, with
both Amersham Health and Amersham Biosciences growing sales at 7%.
This followed an increase in sales of 9% in the second quarter after
a 5% growth in the first quarter. Trading profit was £252m, up 9%.
Investment in R&D was £87m down 1%. Excluding investment in disease
profiling, which was discontinued in December 2001, R&D spend was
up 4%. Operating profit was up 15% at £165m.
Net cash flow from operations before exceptional items was £134m,
up from £105m in the first half of 2001. Free cash flow was £60m,
following an increase in capital expenditure of £17m, compared with
£81m in the first half of 2001 which included £22m from asset sales.
Net debt increased to £259m at 30 June 2002, up by £234m from 31
December 2001, primarily as a result of the £704m purchase of Pharmacia’s
45% stake in Amersham Biosciences. This acquisition was financed
through the issue of 57.5m new shares and drawing on existing bank
facilities and cash resources. Net interest expense was lower at
£4m.
Profit before tax increased by 15% to £159m. The impact of exchange
in the first half was neutral when compared with the same period
last year and, as previously indicated, is expected to have a small
negative effect in the second half. The purchase of the minority
stake in Amersham Biosciences contributed to a lower tax rate of
33.5% for 2002 compared with 34.7% in 2001. This has been restated
for the introduction of the new accounting standard on deferred
taxation, FRS 19. Earnings per share before exceptional items and
goodwill amortisation increased by 19% to 15.5p. The Board has approved
an interim dividend of 2.65p per share, up 13%.
After exceptional items and goodwill amortisation, profit before
tax was £144m, up from £137m in the first half of 2001, and earnings
per share were 14.9p up from 13.6p.
Strategic business developments
The convergence of technologies in medical diagnostics, therapeutics,
life sciences research and information technology is driving new
approaches to the study and treatment of disease. In keeping with
this development, Amersham has undertaken a number of strategic
acquisitions and collaborations in 2002 to add value to existing
products and underpin its strategy for exploring all aspects of
the emerging field of molecular medicine:
January – Amersham Health
announced a collaboration with Pfizer, the world’s largest pharmaceutical
company
January – Amersham Biosciences
acquired filtration companies AG Technology and InnovaSep Technology
March – Amersham plc acquired
45% of Amersham Biosciences, taking it to full ownership
May – Amersham Biosciences
acquired a controlling stake in informatics company Cimarron
May – Amersham Health extended
its network of imaging research centres, Imanet™, to include the
world-leading PET
centre in Uppsala, Sweden
July – Amersham plc acquired
Motorola Life Science’s CodeLink™ pre-arrayed slides business
July – Amersham Biosciences
announced a collaboration with the Sloan-Kettering Institute
Amersham Health
 |
| |
1H 2002
£m
|
1H 2001
£m |
CER growth
% |
Actual rate
growth
% |
|
| Sales |
479 |
458 |
7 |
5 |
| Trading profit |
183 |
167 |
10 |
10 |
| R&D |
(43) |
(40) |
7 |
8 |
| Operating profit |
140 |
127 |
11 |
10 |
|
In the first six months of 2002, Amersham Health achieved sales
of £479m, up 7%. Trading profit was £183m, an increase of 10%, and
after R&D expenditure of £43m, up 7%, operating profits were £140m.
The operating margin increased to 29.2% from 27.7% in the first
half of 2001. This increase was the result of good sales growth
of higher margin patented products and strong manufacturing efficiencies,
partially driven by stock building ahead of the transfer of production
to the newly expanded Amersham Health facility in Cork, Ireland.
Amersham Health continues to invest in the supply chain to improve
its efficiency. Benefits from the new primary production line at
Lindesnes, Norway, commissioned in the second half of 2001, have
already begun to come through. In June, an additional £46.5m investment
was approved to increase the production capacity for key intermediates
used in this primary production.
Excluding Japan, sales of medical diagnostic products grew 13%
to £362m with double-digit growth in X-ray, magnetic resonance imaging
and radiopharmaceutical products. In Japan, sales fell 8%, following
a reduction in in-market prices as a result of the Japanese government’s
biennial pharmaceutical price review. The number of diagnostic procedures
in Japan continues to grow and the margin impact of the sales reduction
has been significantly offset by lower royalty payments to third
parties.
In X-ray diagnostics, sales were £172m, up 11%, with Visipaque™
sales of £44m, up 18%, and sales of Omnipaque™ up 9% to £117m. Strong
sales in magnetic resonance imaging were driven by Omniscan™ which
grew 16% to £46m. The radiopharmaceuticals diagnostic business grew
11% to £134m driven by continued excellent growth of Myoview, with
sales up 25% to £64m. Further investments have been made in Amersham
Health’s network of radiopharmacies in the US, with five new radiopharmacies
being opened this year.
The US market for prostate cancer brachytherapy
seeds remains competitive, leaving therapy sales down £4m to £33m
in the first half of the year. However, sales of RapidStrand™ grew
strongly in both the US and Europe.
Portfolio development
The first six months of 2002 saw progress in a number of areas of
clinical development. NC100668, a molecular diagnostic for the detection
of thrombus
formation, moved from phase I to phase IIa.
After a satisfactory review of Sonazoid™ phase IIb studies for
ultrasound detection of liver disease, consultation with the regulators
in the US and Europe is underway to discuss the size and scope of
phase III trials required for global registration.
Amersham Health’s joint venture in Japan, Nihon Medi-Physics (NMP),
is pursuing two additional clinical phase III trials for fluoro-deoxyglucose
(FDG),
the main radionuclide used in positron emission tomography (PET)
imaging.
Visipaque™ phase III trials are underway in the area of computed
tomography angiography, an evolving non-invasive technology for
blood vessel examination, and a clinical phase IV trial has begun
to study renal
safety in patients with impaired kidney function.
The Parkinson’s disease diagnostic, DaTSCAN™, is being investigated
for potential use in diagnosing Lewy body, a specific form of dementia.
Clinical trials may commence within the next few months. Dementia
with Lewy body affects some 200,000 patients in Europe.
Amersham Biosciences
|
| |
1H 2002
£m
|
1H 2001
£m |
CER Growth
% |
Actual rate
growth
% |
|
| Sales |
333 |
325 |
7# |
2 |
| Trading profit |
80 |
72 |
11 |
11 |
| R&D |
(44) |
(44) |
1 |
- |
| Operating profit |
36 |
28 |
25 |
28 |
|
# Comparable growth excluding disposed business.
Sales for the first half of the year were up 7% to £333m. Trading
profit grew by 11% to £80m, benefiting from reduced litigation spend.
As planned, the rate of growth in R&D was lowered to 1% following
significant investment over the last three years in discovery systems.
Operating profit grew 25% to £36m.
Protein separations
Protein
separations is the market leader in chromatographic systems (instruments,
software and reagents) for the purification of proteins on a laboratory
and manufacturing scale. Sales for the first half of 2002 were £131m,
up 12% and operating profit was up £3m to £48m. The good growth
in protein separations continues to be driven by the increasing
number and volume of biopharmaceuticals
on the market, and the focus on protein research. New products launched
in the first six months included ÄKTA™3D for automated high throughput
protein purification, and Plasmid Select for purification of plasmids
on a laboratory and industrial scale.
In January, Amersham Biosciences acquired AG Technology and InnovaSep
Technology, broadening its protein separations capabilities into
filtration, an adjacent step to chromatography
in biopharmaceutical manufacturing and thus a natural strategic
fit. The integration of these companies is progressing well and
the first order for a full downstream processing system, encompassing
both chromatography and filtration, has already been received.
Discovery systems
Discovery systems provides high throughput systems to improve the
effectiveness of life science and pharmaceutical R&D, as well as
a broad range of laboratory research tools and technology to purify,
detect and analyse biological molecules. Sales in the first half
of 2002 were £202m, up 3%, held back by some caution over spending
in the pharmaceutical sector for capital equipment, particularly
in the US. The operating loss was reduced by £5m to £12m. This improvement
resulted from a slight reduction in R&D and reduced litigation spend,
offset in part by the investment in Cimarron and a restructuring
charge taken in the first half for the re-balancing of R&D.
Discovery systems includes three application areas of genomics,
proteomics
and bioassays.
Genomics was driven by good sales of sequencing
reagents and of TempliPhi™, the DNA
template preparation kit. The genomics market is changing rapidly,
with a shift from gene sequencing to the study of gene function
and genetic variation. Amersham Biosciences is well positioned to
play a key part in this, with its strengths in sequencing, genetic
amplification and array technology. Proteomics saw good sales of
reagents, particularly for 2D gel electrophoresis
systems. The Ettan™ Maldi-TOF Pro, a new easy-to-use mass
spectrometry system developed for the generalist life science researcher,
was launched. In bioassays, the IN Cell Analyzer, the cell-based
screening system that enables researchers to observe directly the
effects of a potential new drug on living cells in real time, has
received excellent reviews, and is due to be launched later this
year.
Outlook
Amersham plc remains on track to meet full year targets.
Amersham Health is expected to continue to achieve good sales growth
in medical diagnostics, excluding Japan, for the remainder of the
year. Sales of bulk product to Japan are expected to decline at
a similar rate as that seen in the first half with particularly
low sales in the third quarter due to order phasing. Operating margins,
before exchange impacts, are expected to be slightly higher in 2002
than in 2001, after the strong first half performance.
In Amersham Biosciences, the good visibility in our order book
due to commissioning of new customer plants is expected to accelerate
sales in protein separations in the remainder of the year. Sales
growth in discovery systems is expected to show modest improvement
in the second half of the year benefiting from sales of new products
introduced during the first half. Operating margins, before exchange
impacts, are expected to improve by up to two percentage points
for the year prior to modest dilution from the Cimarron and CodeLink™
acquisitions.
Shareholders will be updated on Amersham plc’s third quarter sales
progress on 28 October.
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