ProStrakan posts £31.5m loss on £105.2m revenue

City Editor

Thursday 21 June 2012

PROSTRAKAN posted a £31.5 million pre-tax loss for last year, a period in which it was acquired by Japanese conglomerate Kyowa Hakko Kirin.

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tim sharp

Revenues at the Galashiels-based pharmaceuticals company rose 5.2% to £105.2m in 2011.

Within this, product sales rose 12.2% to £99.9m but licensing and royalty revenues fell from £11m to £5.3m after the absence of a major licensing payment received the previous year.

This reduced licensing income combined with a 32% rise in distribution costs, after an expanded sales force and drug launch costs, pushed ProStrakan to a loss before exceptional items of £14m for the year, against a £1m deficit in 2010.ProStrakan also took a hit from a number of one-off items, most notably an £8.3m bill for professional fees, insurance costs, payroll accruals and option charges as a result of the KHK transaction. This dragged the final pre-tax loss to £31.5m.A change of lender in January 2011 cost the firm £3m, while early repayment of its debt, triggered by its £292m acquisition by KHK, led to another £5.1m of costs. The company also booked a £1.4m charge on disposal of its urology business in December.Finance director Allan Watson wrote in his report to the accounts: "2011 was a significant year in the further development of ProStrakan as it became part of the Kyowa Hakko Kirin group of companies."He said: "Looking forward, Prostrakan plans to continue to focus on driving revenues and profits in its key operating areas of Europe, US and through its network of partner companies."Product sales grew well in 2011 and that trend is expected to continue, particularly in the areas of oncology support through the key strategic brands – Sancuso and Abstral."While growth in the near term will be generated by the performance of ProStrakan's current portfolio of products, ProStrakan development teams are already liaising closely with their KHK colleagues on bringing the exciting pipeline of products being developed by KHK in its core therapeutic areas to market in Europe and the US."ProStrakan has a particularly strong presence in the European drugs market although it launched into the US in 2007.ProStrakan said its Abstral pain drug for cancer patients saw strong growth in Europe. Global sales rose from £17.3m to £27.4m.It reported that its US business had recovered from supply problems with Sancuso, a patch designed to tackle nausea in chemotherapy patients. Sancuso's sales rose 38% to £9.4m.During the course of 2011, ProStrakan brought its American sales team in-house.Tom Stratford, son of ProStrakan's co-founder, became chief executive in September, having worked for the company since 1997.The highest-paid director at ProStrakan received £1.2m for the year, including £800,000 in share-based payments.ProStrakan delisted from the London Stock Exchange in April 2011.It is one of a number of Scottish headquartered companies lost to takeover recently. That number includes Robert Wiseman Dairies, pharmaceutical company Axis-Shield and Forth Ports.

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ProStrakan posts £31.5m loss on £105.2m revenue

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