SA pharmaceutical manufacturer Adcock Ingram has credited improved manufacturing output as well as sales and marketing strategies with driving strong interim results for the six months to 31 December 2021.
The Omicron variant of Covid-19 also played a role, driving increased demand for over-the-counter cold and flu remedies, with some flagship brands, including Allergex and Corenza-C, achieving double-digit growth.
On Wednesday the company reported an increase in turnover of 16% to R4.3 billion, and an increase of 25% in trading profit to R543 million.
Gross profit increased 17% to R1.5 billion and headline earnings per share (HEPS) increased by 30% to 242.3 cents. The board has declared an interim dividend of 104 cents per share, an increase of 30% over the corresponding period and in line with the increase in earnings.
Gross margin for the period improved from 34.5% to 35.0%. CEO Andy Hall said just over 50% of trade is foreign currency dominated, which means the strength of the rand has an impact.
Performance was further influenced by a favourable product sales mix, better factory performance and increased demand for over-the-counter products, Hall said.
Cash generation was driven mainly by improved demand for its OTC and consumer healthcare products, added Hall.
The consumer division showed growth across all its top brands, including Panado, the company's number one brand, which Hall says responded well to a marketing campaign linked to the Covid-19 vaccinations.
In addition to strong growth in cold and flu remedies, other flagship brands that achieved double digit growth included Citro-Soda.
"The Omicron variant helped us in that respect, since it often had symptoms similar to colds and flu," said Hall. The prescription division benefitted strong performance was due to the increase in elective surgeries when Covid-19 restrictions were eased, as well as the launch of 11 new products in calendar 2021 across different therapeutic areas.
The hospital division benefitted from the on-boarding of the Roche renal portfolio in February 2021, the addition of rapid diagnostic tests kits on behalf of Abbott Diagnostics and an infant nutrition range in the public sector from Sanulac.
In December 2021 the group received approval from the SA Health Products Regulatory Authority for the sterile eye drops facility, based in Clayville, Gauteng. Production of commercial batches has commenced.