In an unusual decision for normally cash-hungry drug groups, Bioglan, which was incorporated in 1932 and has subsidiaries in five countries, cluding Germany and the US, may not raise any new money when it floats.
Terry Sadler, who joined the company as chairman and chief executive in 1985, transforming it from a vitamin group to a drug delivery specialist, said Bioglan was profitable and would not need to seek new money unless it wanted to make more acquisitions, a possibility in the US.
"We have always generated enough cash internally to fund our research. We are an unusual combination. We're UK-based, we invest heavily in research and we're profitable," he said.
Since Mr Sadler joined, the company has raised finance only once, pounds 10m with private investors last year.
The company manufactures and sells a range of prescription drugs to treat skin conditions like acne and psoriasis, but is investing in potentially lucrative drug delivery technologies.
The group, which employs 170 people, more than doubled pre-tax profits to pounds 1.4m on turnover 53 per cent ahead to pounds 15m in the year to January. When Mr Sadler joined the group was turning over pounds 94,000 and employed three people.
Mr Sadler, who owns 56.8 per cent of Bioglan's shares, said a flotation would increase the group's attraction to big drug partners: "We want to benchmark the company. There is a tendency for big pharma companies to take a public company more seriously." Hitchin-based Bioglan already has licensing agreements with major drug groups, including Merck and Novartis. Though the company currently makes its money from manufacture and sale of skin creams like Metrogel for acne and Cocosis for scalp diseases, it is investing around pounds 3m a year in novel drug delivery technologies. Mr Sadler plans a significant rise in R&D spend to around pounds 17m over the next three years: "Making drugs which are easier to take has vast potential. Poor compliance is one of the biggest problems facing any pharmaceutical company trying to sell its drugs. There is a great need for methods which make taking drugs less painful and disruptive." The company is focusing on novel protein delivery technology, the most difficult and competitive, but potentially most lucrative drug delivery market. Important proteins like insulin or human growth factor currently cannot be taken by mouth as they are broken down by the stomach and have to be injected instead. Bioglan's biosphere technology enables molecules to be applied to the skin and released over two weeks. He expects the company's most advanced product, a gel used with antiviral drugs, to reach market by 1999. "Drug delivery companies work with existing drugs, not new chemicals. Time to market is quicker," said Mr Sadler.
Mr Sadler said a flotation would also increase stock liquidity, though he said he did not intend to sell more than "a minium" of his own holding: "We want to reward investors and employees for their support. But we are all in this company for the long term. There is no question of us cashing in and getting out." Shareholders in the company, which is being advised by Hoare Govett, include Abbey Life Assurance and Shell Pensions.