Bioglan to test mood with pounds 200m flotation

BIOGLAN, a fast-growing pharmaceuticals company, is to come to the stock market next month through an institutional placing that will value the company at more than pounds 200m. The flotation will make Terry Sadler, Bioglan's 50-year-old chairman and chief executive, a multimillionaire.

The company's reception by the City will be watched closely, as Bioglan is one of the first companies of a significant size to announce plans for a market listing since the stock market began to recover last month from its midsummer collapse.

Bioglan has a portfolio of 50 products which are sold in more than 100 countries. The company specialises in dermatology, a sector not dominated by any of the drug majors.

Dermatology accounted for 68 per cent of Bioglan's sales in the last reported full year. It also manufacturers generic drugs that have reached the end of their patented life.

The flotation is being handled by HSBC. It is expected to raise between pounds 10m and pounds 20m of new money, which will be used to reduce debt and finance further expansion. The exercise is also intended to give the company greater flexibility in negotiating future partnership and licensing arrangements.

About 20 per cent of the shares in the enlarged company will be available to trade immediately after the flotation. Terry Sadler holds 49 per cent of the existing shares in Bioglan, which will be valued at around pounds 100m.

Seven other directors control a further 7.7 per cent between them and six leading institutions, including Abbey Life, the Shell pensions trust and Electra investment trust, hold a further 32 per cent of the shares. They are all committed not to sell their shares for at least two years.

Bioglan has spent a total of pounds 40m on strategic acquisitions, including pounds 20m in the current year. The company's sales have risen from pounds 9.5m in 1995/96 to pounds 23.3m in 1997/98, and are expected to reach pounds 42m in its current year to 31 January 1999, including product sales of pounds 30m and a further pounds 12m from licences.

After spending of pounds 3.6m on research and development, pre-tax profits came in at pounds 2.1m last year. They are expected to reach pounds 2.7m in the current year, rising further to pounds 5.8m next year and pounds 12.4m - with earnings of 60p a share - in the year to January 2001.