Galen founder cashes in to buy clinical trials business

Allen McClay, the multimillionaire founder of Galen, the Northern Irish female healthcare group, has bought back part of his old company and sold £65m of Galen shares to help pay for the deal.

Mr McClay, the 70-year-old bachelor who set up Galen in 1968, is paying £130m for its Craigavon-based clinical trials business, which provides drug packaging and testing services to big pharmaceuticals firms. He topped an auction of at least five bidders, and City analysts said Galen received more from the sale than analysts had been expected.

The placing savaged Galen's share price, which closed down more than 10 per cent at 512.5p. Mr McClay sold 13 million shares at 505p each, reducing his stake in Galen from 17 to 10 per cent.

Mr McClay stood down as non-executive president of Galen last year. He has already funded a £25m buyout of Galen's small-scale drug manufacturing business this year, as the company divests its pharmaceuticals services divisions to concentrate on making and selling its own products.

The clinical trials business he is taking over had sales of £41m in the last financial year, accounting for 22 per cent of the group total. It leaves Galen with just one remaining pharmaceuticals services division, the much smaller clinical software business, which it also intends to sell.

Galen has been building sales of its hormone replacement and skincare products, which include Estrace, an oestrogen cream, and Doryx, for acne.

Figures for the three months to 31 March showed record turnover of £53.7m, up from £43.2m in the same quarter last year, while pre-tax profits more than doubled to £7.6m. Wholesaler stockpiling of some products in the previous quarter led some analysts to express concern that the quarter-on-quarter growth was lower than previously.

Roger Boissonneault, the chief executive, said the proceeds from the sale of the clinical trials business would be used to fund further acquisitions. "It is no secret that our sales force has spare capacity to take on additional products in urology and dermatology."

He added that the company had "the intellectual horsepower" to add products outside its core areas of hormone replacement, contraception and skincare and said the company would take an opportunistic approach to purchases.

The company is famed for its intra-vaginal ring, which has been launched in the UK for use in hormone replacement therapy. The product is being considered for regulatory approval in the US and Europe.