Dechra Pharma drops despite positive half-year update

A half-year trading update from animal health group Dechra Pharmaceuticals showed growth was strong in America and solid in in Europe.

North American pharmaceuticals delivered revenue growth of 51% in the six month period to the end of the calendar year, 57% at actual rates.

Europe's growth was a more sedate 4% if excluding the October acquisition of Genera, with currency headwinds dragging this to a 3% decline at the reported level.

Including Genera, whose integration is 'on track', group revenue grew 15% at constant exchange rates, 10% at actual FX levels.

Growth in Europe was from pet treatments, or companion animal products (CAP) as the company likes to call them, with livestock products up 7% and signs of recovery in several markets in diets.

In North American pharmaceuticals, which since the middle of the last year includes Canada for the first time, the strong growth was on the back of strong starts for dermatology, endocrinology and ophthalmic ranges and a continued investment in sales, marketing and technical support.

Looking forward, a subsidiary in Austria began trading in January 2016, while the pipeline was strenghtened with US regualtory approval for Zycortal in December and two antibiotics for the food-producing animal products (FAP) market gaining EU approval in the last quarter.

Also, Dechra revealed it had earlier in the week acquired 100% of Mexican veterinary pharmaceuticals company Laboratorios Brovel for $5m cash on completion and a further $1m on registration milestones for Dechra's products in Mexico.

Broker Numis said the Mexican animal health market is significant in both bovine and poultry. "This acquisition provides a platform to register products to launch in Mexico with a view to launch throughout LatAm later."