Chief Executive's Review

Consort Medical has again delivered growth and made good progress with its innovation and development pipeline.

Jonathan Glenn


Adjusted eps was 13.1% higher at


Good financial and operational performance across the Group

Consort has again delivered underlying growth across both its businesses. Bespak has seen continued revenue and EBIT growth and operational leverage. Aesica has delivered improved operating performance and achieved recent contract wins. The Group has made good progress with its innovation and development pipeline including the landmark master development agreement for Syrina®/Vapoursoft® and the launch of UCB's Cimzia® auto-injector.


  • Consort Medical has continued to deliver profitable growth on a reported basis with operating leverage yielding an 8.3% increase in EBIT on 6.2% higher sales
  • Underlying Group EBIT, at constant exchange rates, was 4.1% higher on 2.0% of sales growth
  • Bespak grew revenues by 3.3% and EBIT by 3.9% delivering a further 10bps margin improvement to 21.6%
  • Aesica recorded a significant improvement in operational performance with EBIT increasing by 17.7% and a further 60bps improvement in EBIT margin to 8.0%
  • Adjusted basic EPS 13.1% higher than FY2016 at 65.1p
  • Final proposed dividend increased 5.2% to 13.21p, reflecting the good financial performance and the Board's confidence in the Group's prospects
  • Net debt reduced to £92.6m (FY2016: £97.0m) with good cash generation following further investments in the business. Gearing (Net debt: EBITDA) reduced to 1.7x
  • Landmark deal for Bespak with the first full development agreement for Syrina® / Vapoursoft® device application with a leading global biopharmaceutical company
  • Successfully launched second Bespak injectable device with the UCB Cimzia® AutoClicks® pre-filled pen in the UK and other European markets
  • Launched AstraZeneca's Bevespi Aerosphere® in the US. Bespak awarded significant new multi-year agreement for the scale-up and supply of its proprietary pMDI valves and actuators
  • On course for double-digit operating margins at Aesica including contract extensions with one of Aesica's largest customers and additional new contract wins
  • Aesica now routinely supplying commercial product using the first semi-continuous processing line and technology installed at the Queenborough site. Discussions underway with a number of pharma customers to use this technology
  • Aesica is an early provider in serialisation services that is a growing requirement for pharma clients
  • Successful commercial unveiling of Syrina® AR 2.25 compact auto-injector

Summary of Financial Performance

Group revenue increased by 6.2% to £294.0m (FY2016: £276.9m). Bespak delivered growth of 3.3% to £121.1m (FY2016: £117.2m) while Aesica revenue grew by 8.2% to £172.9m (FY2016: £159.7m). The Group achieved underlying growth of 2.0% at constant exchange rates.

EBIT before special items increased by 8.3% to £40.0m (FY2016: £37.0m) and by 4.1% at constant exchange rates. This included 3.9% growth from Bespak to £26.1m (FY2016: £25.2m) which continues to deliver strong operating leverage on higher revenues. Bespak EBIT margin increased by 10bps to 21.6%. Aesica EBIT increased 17.7% to £13.9m, with EBIT margin growing 60bps to 8.0% reflecting improved underlying operating performance.

Special items before tax were £13.7m in the year (FY2016: £21.0m), largely comprising charges associated with the acquisition of businesses with: £13.0m of amortisation of acquisition-related intangibles (FY2016: £13.1m); £0.2m of advisory and acquisition costs (FY2016: £1.4m) and £0.5m of reorganisation costs (FY2016: £6.5m).

Finance costs were £4.5m (FY2016: £4.7m) benefiting from a reduction in interest on borrowings. Group earnings before tax and special items increased by 10.4% to £35.6m (FY2016: £32.3m). Adjusted basic EPS increased by 13.1% to 65.1p (FY2016: 57.6p). Basic EPS increased by 50.5% to 46.2p (FY2016: 30.7p).

Cash generated from operations before special items decreased by £2.6m to £51.5m (FY2016: £54.1m). EBITDA before special items grew £4.4m (9.1%) to £52.7m (FY2016: £48.3m). Bespak EBITDA grew 5.6% to £32.1m, with Aesica growing 15.0% to £20.6m. Working capital decreased by £0.5m to £13.5m (FY2016: £14.0m). Capital expenditure of £18.1m (FY2016: £21.5m) included £6.6m from Bespak (FY2016: £12.7m) and £11.5m from Aesica (FY2016: £8.8m).

The Group balance sheet closed with a net debt position of £92.6m (FY2016: £97.0m), representing gearing of 1.7x Net debt: EBITDA. This reduction in gearing is in line with our strategy and comfortably within the banking facility covenant (maximum 3.0x). The Group has comfortable cash resource availability with total committed facilities of £166.6m.

The Board is proposing an increased final dividend of 13.21p (FY2016: 12.56p), making a total dividend for the year of 20.30p (FY2016: 19.31p).

Further Investment in Atlas Genetics

In January 2017, Consort subscribed for a further £3.1m equity investment in Atlas Genetics Ltd ("Atlas") as part of a £28.4m Series D funding. Atlas is a diagnostic company developing ultra-rapid point of care tests for a range of infectious diseases. Consort now holds a 15.2% shareholding in Atlas (13.4% on a fully diluted basis) having invested a total to date of £9.4m in the company.

This investment followed Atlas Genetics' successful CE marking for the Chlamydia Trachomatis (CT) io®test cartridge and the funding was raised to finance the continued development of the combined Chlamydia and Gonorrhoea (CT/NG) assay and test cartridge. This is planned for regulatory approvals in the US and Europe around early 2018. The equity raise also provides funding to expand manufacturing capacity at Bespak, which is Atlas' development, and manufacturing partner.

Bespak Business Review


EBITDA margin %26.5%26.0%
EBIT margin %21.6%21.5%
  1. Underlying – FY2017 less FY2016 at constant currency.
  2. Currency retranslation effects from historically reported to constant (FY2017 average).

Bespak has a well-established and diverse core business of products in volume manufacturing with a strong pipeline of innovative products. These products include: respiratory, nasal, ocular and injectable drug delivery, as well as point of care diagnostics. Once again, the business has grown in the year supported by the commercialisation of two of its development pipeline projects.

Revenue grew 3.3% to £121.1m with Bespak's leading respiratory products continuing to perform well and strong growth of the injectables business. The Group's diversification strategy to reduce its dependence on respiratory products has made good progress with non-respiratory sales now at 21% of revenue (compared to 8% in 2012).

Bespak grew revenue despite the impact of a lower level of activity with Nicovations due to the termination of the supply agreement. This demonstrates the strength of the business through its broad range of programmes. Service revenue also continued its strong contribution given the growing development and innovation pipelines.

The good revenue performance translated to EBIT growth, which increased 3.9% to £26.1m, as EBIT margin increased 10bps to 21.6%.

In October 2016, Bespak exhibited alongside Aesica at the CPHI exhibition in Barcelona. This was the second time both companies have shared a major industry exhibition platform, and the event drew increased interest in the joint service offering of device and drug.

Product Development

In line with our strategy we have assembled a full and broad product development pipeline of underlying growth opportunities, which supplements the strong core business going forward. Successful conversion of these opportunities will provide progressive revenue and profit growth, in both contract manufacturing and products with our own proprietary IP. This is across a range of therapeutic areas, including commercial drug handling.

Our published development portfolio provides an update on the key business development projects in the business. We guide that for inclusion in the published portfolio, projects must have a reasonable expectation of success, though timescales are difficult to predict, and are expected to produce peak annual sales of at least £3m per annum.

In the period, UCB received regulatory approval from the European Medicines Agency for INJ570, an auto-injector for UCB's Cimzia®, which was successfully launched in the UK. The product has also been launched in other European markets.

Bespak also entered into a landmark commercial supply agreement for Bespak's proprietary respiratory devices with AstraZeneca AB (referred to as project VAL100). This is a multi-year agreement for the scale up and supply of Bespak's proprietary pressurised metered dose inhaler (pMDI) valves and actuators. These have been assembled with AstraZeneca's Bevespi Aerosphere® (glycopyrrolate and formoterol fumarate) inhalation aerosol indicated for the long term maintenance treatment of airflow obstruction in patients with chronic obstructive pulmonary disease (COPD), including bronchitis and/or emphysema. AstraZeneca announced that its device was approved by the US Food and Drug Administration (FDA) on 25 April 2016 and the Bevespi Aerosphere® has now been launched in the US.

We have also signed a significant new master agreement for our proprietary Vapoursoft® Syrina® auto-injector technology (project SYR075) with a leading global biopharmaceutical company. Initially there is a single drug/device combination, but the agreement allows for the addition of others, and contains outline terms for commercial supply.

Bespak has made good progress on DEV610 where it is working with Mylan in developing a generic Advair product. Mylan has announced that they are in discussion with the FDA following receipt of a Complete Response Letter as part of the regulatory process.

Inevitably, not all of Consort's development projects reach commercial launch, and on 3 January 2017 we announced that Nicovations had terminated its supply agreements with Bespak for Voke®, exercising its contractual right in the event that Voke was not commercially launched before 31 December 2016. Confidential settlement terms have since been agreed with Nicovations.

The current status of the 15 major programmes in our development pipeline is listed below:

VAL310Easifill primeless valveUS PharmaAwaiting regulatory approval
INJ570*Auto-injectorUCBProduct launched in October
VAL020MDI valveGlobal PharmaStability trials complete; customer progressing towards approval and launch
POC010POC Test CartridgeAtlas GeneticsCE marking granted for Chlamydia in February 2016; Combined Chlamydia / Gonorrhoea test cartridge development progressing to plan
NAS020Nasal deviceGlobal GenericFormulation change; brief under review
DEV610DPIMylanAwaiting FDA approval
NAS030Nasal devicePharma Co.Early stage programme
INJ600PatchPump® infusion system for TreprostinelSteadyMed Therapeutics Inc.Good progress made. NDA submission planned H1 FY2018
INJ650ASI® Auto-injectorGlobal GenericContinuing progress; early stage
INJ700Lila Mix® InjectorPharma Co.Development programme on track
IDC300Oral IDCPharma Co.Good progress; launch expected H2 FY2018
VAL050MDI valve/actuatorAeropharmDevelopment contract ongoing
OCU050Ocular device/ formulation/fillingOxularEarly stage programme
VAL100*MDI valve/actuatorAstraZenecaProduct launched
SYR075Syrina®/Vapoursoft®Global BiopharmaMaster development agreement signed and development proceeding according to plan

DPI = Dry Powder Inhaler, MDI = Metered Dose Inhaler, POC = Point of Care, IDC = Integrated Dose Counter.
* As these products are launched, they will then not be included in the development programme in future periods.

Finished Dose Manufacture


The Innovation team continues to be highly active and the team has grown to 33 people (22 as at FY2016) at our dedicated facilities in Cambridge.

The commercial and innovation teams continue to generate very strong interest in our new technology platforms on a range of opportunities. The innovation funnel has progressed broadly during the period across a number of therapeutic areas and technologies. These development and feasibility programmes cover a range of therapeutic areas and are all in partnership with biotech and pharmaceutical companies. These complement our current customer portfolio in our core business. This is again indicative of the strength and success of our innovation drive and strategy to broaden and diversify our product and customer base.

Syrina®, Lila® & Lapas® Update

Vapoursoft® powered Syrina®auto-injectors, Vapoursoft® powered Lapas® auto-injectors, and our Lila Mix™ and Duo™ technologies have continued to generate widespread interest as innovative and novel drug delivery devices, with several biotech and pharmaceutical companies initiating feasibility and development programmes for their injectable drugs portfolios.

This rapidly expanding innovation funnel includes an active schedule of early stage development programmes, feasibility programmes, and programmes awaiting initiation.

Launch of Bespak's Syrina® AR 2.25 Auto-injector

In October 2016, Bespak unveiled its Syrina® AR 2.25 auto-injector. This innovative auto-injector is the latest addition to the Vapoursoft® powered Syrina® range and is suitable for delivering volumes of up to 2.0ml using a standard 2.25ml pre-filled syringe. The Syrina® AR 2.25 provides patients with a fully-automatic two-step, compact device for self-administration of viscous drug formulations.

Bespak's proprietary Vapoursoft® compact energy source is able to deliver 2.0ml of viscous drug solutions smoothly and safely in less than 15 seconds. Designed with a hidden needle, Syrina® AR 2.25 offers automatic needle insertion and retraction, as well as drug delivery with a single push-on-skin operation. Syrina® AR 2.25 has been tailored specifically for higher viscosities while still enabling the safe use of glass syringes.

Using Vapoursoft® at its core allows a compact design and, with quiet operation, provides a discrete solution for patients. Syrina® AR 2.25 is clinical trial ready, enabling a fast track implementation process once paired with a specific drug formulation.

Aesica Business Review


EBITDA margin %11.9%11.2%
EBIT margin %8.0%7.4%
  1. Underlying – FY2017 less FY2016 at constant currency.
  2. Currency retranslation effects from historically reported to constant (FY2017 average).

Aesica revenue grew 8.2% to £172.9m, which included underlying growth of £1.6m (1.0%) at constant exchange rates. The division has continued to make solid progress in the year in improving its operating performance and EBIT margin. EBIT in FY2017 grew by 17.7% to £13.9m, with EBIT margin growing by 60bps to 8.0%. Underlying profit growth was £0.5m (4.5%) at constant exchange rates. This includes improvements in operational performance across the network from upgrades to teams and processes as well as an improvement in the product mix.

We are now routinely supplying commercial product using the first semi-continuous processing line and technology installed at the Queenborough site and we anticipate using this line for additional third party development work in the future.

Aesica has moved from validation to routine supply of S+ flurbiprofen to a leading Japanese pharmaceutical company to provide the active ingredient for an anti-inflammatory formulation.

Aesica attaches a very high priority to maintaining a solid track record of compliance in an evolving regulatory environment. During the year two sites were subject to routine FDA audits and the observations raised have been addressed and shared across other sites. Aesica continues to focus on safety in the work environment and there has been a further reduction in its lost time accident rate over the last 12 months.

Business Development and Innovation

We are beginning to see the benefits of restructuring our sales and marketing activities, although the lead times in our industry can be long. We recently signed a contract extension with one of our major customers and have seen some diversification of our customer base in some geographies towards speciality pharma which is providing further opportunities for growth.

We are in receipt of significant orders from a European speciality pharma customer to manufacture proprietary API following a technically challenging validation exercise.

Recent contract wins with regional pharma companies demonstrate that our commitment to operational performance, customer focus and a more targeted business development effort across Europe is beginning to generate returns. The increase in the number of potential opportunities we are seeing provides us with an encouraging backdrop to secure further growth.

A changing regulatory requirement within the pharmaceutical industry is for products to be uniquely identifiable at the individual pack level. This process is known in the industry as serialisation. Aesica has been an early provider of serialisation services to the industry including China and Latin America that have adopted this process. It is also well advanced in developing the service for the next wave of territories adopting serialisation including the EU. We believe Aesica is in a strong position relative to the sector in general and we have been actively promoting this offering with marketing and industry events such as a recent webinar series. Further capital expenditure is being committed to enhance our capabilities in this area.


Aesica is primarily focused on two pools of business development: development services and manufacturing services, with some overlap between the two.

  • Development services applies to know-how in API/formulation development to a wide range of project opportunities for a wide range of customers at differing stages of the clinical trial cycle
  • Manufacturing services revenue mainly comes from the application of its process technology and know-how to specific API and drug product manufacturing opportunities. Many of these may be different from those API/formulation development opportunities

The Aesica commercial team is focused on a growing pipeline of API/formulation development opportunities supported by our ability to meet customer needs across a number of technology offerings. This includes an opportunity for API and formulation development that could lead to commercial manufacture and packaging of finished products for patients.

Jonathan Glenn
Chief Executive