Medeva men quit to be consultants

IAN Gowrie-Smith and David Lees are quitting their respective roles as joint deputy chairman and finance director of Medeva, the small but ambitious drug company.

However, they have both signed three-year consultancy deals worth at least pounds 986,000 and pounds 630,000 respectively to advise Medeva on acquisitions. The arrangements are through a company they have jointly established, Brightstone Consulting.

In addition they will each receive pounds 30,000 compensation for loss of office. Mr Gowrie-Smith will also become a non-executive director. He came in for heavy criticism from shareholders last year, subsequently stepping down as managing director, after the company lost its star rating following problems in two of its US subsidiaries.

Bernard Taylor, Medeva's chairman, said the move reflected a shift away from acquisitions, Mr Gowrie- Smith's forte, and towards managing the core business. 'In the first few years we were acquisition-driven. We started with nothing and acquisitions were all we had. But now we've increasingly had to start managing,' he said.

Mr Taylor said Medeva would nevertheless continue to make some acquisitions to fill gaps in its product portfolio and geographic spread, and had scope to spend up to pounds 100m. Following last April's pounds 95m rights issue, Medeva's gearing dropped from 65 per cent to net cash of pounds 11m.

In the year to the end of December, pre-tax profits rose 28 per cent to pounds 46.1m on sales up 39 per cent to pounds 200.4m. However, the rights issue meant earnings per share dropped 4 per cent to 11.8p. The proposed final dividend is 1.8p.

Underlying sales growth was 20 per cent. Exchange rates were responsible for a further 8 per cent growth, while acquisitions added about 11 per cent to turnover.

Research and development expenditure, at pounds 11.8m, was small compared with the rest of the drugs industry. Medeva's strategy has been to piggy-back bigger groups, buying the smaller, potentially successful products that they find marginal.

The shares ended up 7p at 155p.