The acquisition of Acorus, completed in May, has transformed hospital medicines group Maelor, giving it a well-spread portfolio of products with genuine growth potential. Combined with strong growth in the ‘old’ Maelor portfolio – particularly blood plasma substitute Volplex whose market share has jumped from 16 per cent to 26 per cent in a year – and a promising pipeline of product launches over the next year-and-a-half, the outlook could hardly be better.

Maelor has recorded a half-time profit of £700,000 against a loss of similar size in 2006 and earnings of nearly 0.5p a share. It looks as if there is more growth to come from Volplex and a number of Acorus products. Cryogesic, a freeze spray, is attracting growing interest in the obstetrics field, but there are other markets, such as paediatric oncology, to target. Mysoline, an epilepsy drug bought in from AstraZeneca, has been introduced in all major territories ahead of schedule. There is a big potential market here in treating essential tremor, a condition that affects one in 25 people over 40.

Maelor has a number of products in late-stage development. One of the most promising is Haemopressin for treating uncontrolled bleeding. Its only competitor in the marketplace produces sales of over £4 million a year. It is expected to be launched in the second half of next year.

Edison Investment Research reckons Maelor will produce a profit this year of £1.6 million for earnings of 1.1p a share. The figures rise to £2.2 million and 1.4p for 2008/09 – though by then it is a safe bet that management will have picked up more product rights or made more acquisitions. There is strong cash generation (net cash is now £1.7 million), which leaves management relaxed about a likely £5 million payout to the Acorus vendors over five years. Now 13.75p (against a recommendation price here in September 2006 of 6.5p) the shares sell for just under ten times earnings a year out. That is way too cheap. I remain a shareholder in Maelor.

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