Galen shares rise by 3.81%

SHARES in Galen Holdings increased by 3.81% yesterday after the company announced better-than-expected results in its final quarter.

Fourth-quarter profits jumped almost sevenfold as demand increased for its birth control and premenstrual syndrome pills.

Net income increased to $33.9 million, or 18.4 cents a share, in the three months ended September 30, from $4.9 million, or 2.7 cents, in the same period last year.

Revenue more than doubled to $138.7 million.

Sales benefited as more doctors prescribed estrostep and loestrin, oral contraceptives Galen bought from Pfizer Inc for $359m in March, and sarafem, an antidepressant for severe premenstrual syndrome it purchased from Eli Lilly & Co for $295m in December.

Craigavon, Northern Ireland-based Galen has spent almost $800 million on buying female healthcare products.

Goodbody analyst Ian Hunter, who rates Galen shares a buy, said: “They finished their programme of bringing products on board and managed to keep costs down,” The figures indicate that annual gross and operating margins are 82% and 43%, respectively. “With strong margin growth, operations generated $207.8m in cash over the year, $70.7m in the fourth quarter.

“This has helped offset the borrowings used to purchase products through the year to such an extent that net debt (Goodbody definition) has fallen to $298.8m against our forecast of $358.2m,” added Mr Hunter.

The Goodbody analyst says the quarterly results reflect stronger than forecast momentum in core product lines.

Galen chief executive Roger Boissonneault said he expects revenue to increase about 16% in 2004 to $500 million as the company promotes its acquired products and introduces a new formulation of its ovcon contraceptive.

It may also acquire another product next year to increase its line of dermatology therapies, Mr Boissoneault said in an interview.

The company almost doubled its US sales force to 400 people, divided between women’s healthcare and dermatology.