AFT Pharmaceuticals Limited Analysis

Overview

AFT is a growing multinational pharmaceutical company that develops, markets and distributes a broad portfolio of pharmaceutical products across a wide range of therapeutic categories which are distributed across all major pharmaceutical distribution channels: over-the-counter, prescription and hospital. AFT's product portfolio comprises both proprietary and in-licensed products, and includes patented, branded and generic drugs.

Performance

The following information was extracted from AFT Pharmaceuticals Limited's annual report, released on 23 May 2024:

AFT Pharma reports growth and global expansion

AFT Pharmaceuticals (NZX:AFT, ASX:AFP) today reports financial results for the six months to the end of September 2023 showing continued strong growth led by sales of over-the-counter medicines in Australasia and rising demand in International and Asian markets.

HIGHLIGHTS

• Half-year operating revenue up 27% to $84 million, lifted by 24% growth in product sales and royalties across all channels and territories and $2.0 million of licensing income.
• Sales in International and Asian markets (excluding licensing income) rise 94%.
• Operating profit of $3.3 million down 6% following ongoing significant investment in research and development and marketing; spend is weighted toward 1H 24. EBITDA of $4.1 million down 8%.
• Net profit after tax increases 17% to $1.8 million;
• Maxigesic® IV approved by the US FDA in October following on from the approval of Maxigesic Rapid in March, setting the stage for launches into the world’s largest healthcare market in the next calendar year.
• Approval in November of Crystaderm® for sale in China, the world’s second largest healthcare market, setting the stage for a launch next calendar year.
• Near term rolling twelve-month stretch revenue target of $200 million in sight, underpinned by strong ongoing demand, product launches and the Maxigesic commercialization programme.
• FY 24 guidance for operating profit of $22 million to $24 million unchanged.

FINANCIAL RESULTS

Revenue from the sale of existing products, new products and product royalties grew by 20% to $186.9 million from $155.8 million, with the company’s family of Maxigesic pain relief medicines and the Australian over the counter (OTC) business making the strongest contribution.

Growth has also been supported by ongoing investment in product marketing including the launch of Maxigesic tablets and the intravenous dose forms in the UK (marketed as Combogesic®) and our E-commerce platforms.

Total revenue, which included licensing income of $8.5 million, rose 25% to $195.4 million from $156.6 million in the prior year. The majority of the licensing income came from a milestone payment of circa $6 million from the US licensee Hikma Pharmaceuticals following the launch of Maxigesic IV in February.

Operating profit rose 23% to $24.2 million from $19.7 million in the prior year. The result was in line with guidance issued in February 2024, but lower than our initial guidance of $22 million to $24 million which excluded the Hikma license income, due principally to slower than expected Australian sales from newly launched products and our decision to accelerate our investment into important growth projects utilizing proceeds of the Maxigesic IV milestone payment.

Meanwhile, we saw what we believe is a short-term reduction of margins in Australasia due to some overstocking and subsequent price discounting of some key high margin lines, stronger sales of lower margin products plus some stock write offs including some one off’s dating back to the pandemic.

EBITDA of $26.2 million was 22% higher than the $21.4 million in the prior period, while net profit after tax increased 46% to $15.6 million from $10.7 million.