McCarthy: Pharma is key to growth

The pharmaceutical sector is to play an increasinglyimportant role in Kerry Group’s continued growth in the coming years.

An easily overlooked area in its rapidly growing ingredients and flavours division, the supply of filler and coating ingredients for many of the world’s blockbuster drugs is a growing aspect of what the Tralee-based group is doing away from consumer foods. The pharma aspect makes up about 9% of Kerry’s ingredients arm, but that share is growing.

Speaking yesterday, on the back of a strong set of first-half financial results, Kerry chief executive Stan McCarthy said the growth in the pharma platform “warrants further investment”.

“We’ll continue to look at building our offering [in pharma] and we’ll continue to invest,” he said.

Much of Kerry’s work, in this regard, is taking place in its operations in India.

Much has been made of the strength of Kerry’s strong balance sheet and its ability to invest, overall, and Mr McCarthy was forthcoming in this regard.

He said that while acquisition activity was quite subdued in the first half of the year, there should be “significantly more” activity, for the group in the second half.

He said that while total spend will be well down on 2011’s €380m outlay; management will still probably spend around €250m by the end of 2012.

“We have a strong balance sheet and remain growth-orientated and focused on our investment and acquisition strategy,” Mr McCarthy said; adding that a “very high level of focus on emerging markets” will continue to be given.

Part of the secret behind Kerry’s relentless growth was evident at yesterday’s results briefing, with management hinting at never being fully satisfied with the success being achieved at a given time and always being hungry for more — Mr McCarthy coolly suggesting that the group would like growth to be better.

Despite this, Kerry is outperforming its peers, with first-half sales growth of 10%, at a time of economic decline and stagnant consumer spending.