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Clinigen Group PLC: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Clinigen: The £1bn AIM company that’s still growing

Under former chief executive Peter George and his successor Shaun Chilton, Clinigen has been transformed via a series of well-judged, quickly integrated and cash generative acquisitions
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INVESTMENT OVERVIEW: CLIN The Big Picture
Clinigen listed with a market capitalisation of £135mln; it is now worth £1.2bn

Clinigen Group PLC (LON:CLIN) is one of those rarities on AIM – it’s a billionaire. In fact, out of the 950 or so companies listed on the junior market, just 11 of them have a market cap with ten digits.

The speciality pharma and services group listed its shares on AIM towards the end of 2012 for 164p each, valuing the company at £135mln.

Those same shares change hands for almost 1,000p now; not a bad return on investment.

Back when it floated, Clinigen provided clinical trial supply services and sold a number of niche products, the most valuable of which was an oncology drug called Foscavir.

In its first full year as a listed company, its revenues were £123mln, giving underlying profits of £20mln.

READ: Clinigen agrees £150mln takeover of Quantum Pharma

Under former chief executive Peter George and his successor Shaun Chilton, it has been transformed via a series of well-judged, quickly integrated and, crucially, cash generative acquisitions.

It is now the market leader in the supply of drugs for clinical trials and the distribution of unlicensed pharmaceuticals.

Both of those are little-known niches in the pharmaceutical supply chain, but together represent a US$7.5bn-US$12.5bn per annum opportunity, according to Berenberg.

Drug supplier

In terms of unlicensed pharmaceuticals, Clinigen’s Global Access division sources medicines for pharmacists where supply isn’t necessarily straightforward.

For example, the drug may not be approved or marketed in the country or there could be a local shortage.

Pharmacists could opt to go to grey or black markets but run the risk of buying inferior or counterfeited products. It makes more sense to use an international supplier like Clinigen though, which can guarantee its supply chain.

Clinigen counts most of the world’s top 25 pharma companies as its customers and has exclusive supply arrangements for more than 100 drugs.

READ: Clinigen raids Horizon as it adds another drug to its medicine cabinet

The firm doesn’t just ferry other companies’ drugs around the globe, it uses that supply chain to sell speciality drugs which it has acquired along the way.

It’s spent tens of millions building up its portfolio and recently added two more niche medicines to its portfolio, buying one each from Horizon Pharma and Novartis.

Still growing

Updating on its recent trading, Clinigen told investors revenues for the year ended June 30 grew by 27% on a constant currency basis, while gross profit advanced by 16% on the same measurement. Underlying earnings (EBITDA) are likely to grow at a faster pace than gross profits.

The group said the commercial medicines arm continued to deliver “excellent growth”, which helped offset a weaker showing from the clinical trial services business, which strengthened in the second half.

WATCH: Clinigen sees significant opportunities with latest acquisitions

Two key acquisitions made during the year just gone – Quantum and IMMC - are bedding in well, Clinigen reported.

Chief executive Shaun Chilton said: "With a strong balance sheet and cash generative business model, our strategy remains to drive growth across our portfolio organically, by making acquisitions and through geographic expansion."

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