March 27 (Bloomberg) -- Consort Medical Plc, the U.K. medical device company developing a new nicotine inhaling product with British American Tobacco Plc, is seeking to reduce its reliance on selling inhalers by investing in drug handling or diagnostic companies, said Chief Executive Officer Jonathan Glenn.
Consort Medical, based in Hemel Hempstead, England, has a bank loan of 100 million pounds ($151 million) available for acquisitions and shareholder support to raise more funds if it finds the right target, Glenn said.
Consort gets about 90 percent of its revenue from sales of inhalers used to deliver respiratory drugs and has diversified to add growth. Diagnostics and drug handling, where it would fill the devices with the pharmaceutical ingredient, are two areas under consideration, Glenn said.
“If we find the right deal, the capacity is there,” Glenn said in an interview in London today. “We always have the ability to go to shareholders as well if we found a deal that we felt was beneficial.”
Consort has a 19 percent stake in Atlas Genetics Ltd., which is about a year away from marketing a diagnostic test for chlamydia and gonorrhea that can be performed onsite at doctors’ offices, instead of in laboratories. Consort will manufacture the test cartridges for Atlas. Given that so-called point-of-care testing is a “hot space,” Consort may seek a similar equity investment to win another manufacturing contract, Glenn said.
The nicotine-inhalation device, which BAT has said may reach the market as early as next year, “remains an important upside risk to our forecasts,” wrote Numis Securities Ltd.’s London-based analyst Charles Weston in a note to clients today. Numis has a buy rating on the stock with a price target of 940 pence.
Last month, Consort Medical sold its King Systems division, which manufacturers products used to maintain breathing during anaesthesia, to Ambu A/S, for $125 million.
While devices for GlaxoSmithKline Plc’s best-selling respiratory drug Advair accounted for as much as half of earnings from its Bespak unit 10 years ago, the proportion is now less than 10 percent as the company supplies more than a dozen drugmakers, including generic companies, Glenn said.
“We’ve got an incredibly strong core business that we’ve spent a lot of time and effort diversifying,” he said. “If we can find a complementary acquisition that adds horizontally or vertically to what we’re doing, we’ll absolutely consider it. But we’re not in any rush.”
Consort Medical fell 1.3 percent to 769 pence in London, giving the company a market value of 225 million pounds.
To contact the reporter on this story: Makiko Kitamura in London at firstname.lastname@example.org
To contact the editor responsible for this story: Phil Serafino at email@example.com