Sinclair Pharma has set its sights on older consumers, but its customers will need some spare cash.
Once focused on products to treat conditions such as acne and psoriasis, Sinclair has reinvented itself as a group specialising in aesthetic dermatology – in other words, injections to make people look younger.
Botox is the best-known brand in this field, but the global market is worth almost £3.5billion and there are many different products within it.
Radiant: Actress Gillian Taylforth had treatment with Sinclair’s Silhouette
Sinclair owns four: Ellansé and Sculptra stimulate collagen in the face to make it look plump; Perfectha is a long-lasting filler to reduce wrinkles; and Silhouette – used by 61-year-old EastEnders actress Gillian Taylforth – gives the impression of having had a mild face-lift, without the painful surgery.
Treatments can set patients back by £2,000 to £3,000, but the industry is growing at around 10 per cent a year and doctors – and their patients – are actively looking for alternatives to Botox.
Sinclair’s products are longer lasting and the company prides itself on training doctors to use them properly, minimising the risk of treatments going horribly wrong.
Midas looked at Sinclair in 2010, when chief executive Chris Spooner had just taken the reins (shortly after Jerry Randall left the business). The shares were 27¼p and Spooner was keen to make his mark, streamlining the company’s portfolio and expanding its presence in emerging markets.
The strategy had some success – sales and profits rose and the shares rose to a high of 47p in the summer of 2015. That year, however, Spooner was actively repositioning Sinclair away from medical products and towards pure aesthetics.
The move culminated in a £132million disposal of Sinclair’s medical business. The shares fell to 26p last year, but have since risen to 34p, as investors warm to Spooner’s latest plans.
Analysts expect sales up 32 per cent to £50million this year, hitting £63million in 2018. Core profits of £1.6million are expected in 2017, soaring to around £11million next year as the business gets into its stride.
Midas verdict: Sinclair Pharma shares have risen almost 25 per cent since 2010, but some shareholders may find the group’s change of direction unsettling. Unless they are in real need of the cash, they should hold tight for a while longer. The group is moving in the right direction and the stock should gain ground. New investors could also snap up a few.