I/C article 20Feb 2019.26 Feb 2019 11:21
Article by Phil Oakley of Investors Chronicle on why good companies need growth.
"Bioventix makes antibodies for use in medical testing. In many ways it is an investor’s dream business. It sells its antibodies to medical testing machine companies such as Siemens or Roche. Every time a Bioventix antibody is used in a blood test it receives a royalty. These royalties are small, but with millions of tests done every year they add up to a meaningful amount of money.
The great thing about Bioventix is that it is such a small company, with its products being developed by just a few people working out of a laboratory in Surrey. Virtually all its sales growth over the past five years has fed through to operating profits and has helped to create an exceptionally profitable business.
The investment needed to grow has been minimal with the increase in capital employed almost entirely attributable to the company’s rising cash balance. There are high hopes for its troponin antibody which can reveal if someone has had a heart attack. Competition is a concern from other types of antibody, but growth from new products could see big growth in future profits and cash flows that need little extra investment."