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UK: Investors rush for drug deals

The BBC

Thursday 21 Jun 2001

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Two British firms which deal in illegal drugs are proving a hit with investors.
Meconic, a fine chemicals producer which is Britain's only legal supplier of heroin and cocaine, has agreed to a takeover offer of £147.1m from metals group Johnson Matthey.

On the same day, GW Pharmaceuticals, which has the only UK licence to produce remedies from cannabis, raised =A325m in a placement ahead of a planned listing on London's Alternative Investment Market (AIM).

GW's offer was six times oversubscribed, prompting the firm to raise the issue size from £16m.

"There's great interest at the moment in exploring the medical potential of cannabis and other plants," said Emma Palmer, biotech analyst at WestLB Panmure.

Meconic, a 220-year-old firm based in Edinburgh, manufactures bulk opiates, as well as speciality products such as a daffodil-based treatment for Alzheimer's disease.

Its involvement with narcotics goes back to the early 19th century, when it developed techniques for refining morphine from opium.

The firm recently announced a 21% increase in annual pre-tax profits to £9.8m.

Johnson Matthey, which has said it is looking for uses for its £140m cash pile, sees Meconic as a means quickly to build up its chemical and pharmaceutical arm.

GW Pharmaceuticals is a much newer firm, founded three years ago to explore the medicinal properties of cannabis.

Research indicates that the effects of multiple sclerosis and some cancers can be mitigated by cannabis-based drugs.

The firm is licensed by the Home Office to grow 15 tonnes of the plant a year in secret locations.

It hopes to use the proceeds of its placement to raise cannabis output to 100 tonnes.

GW's leading multiple sclerosis drug is currently in final trials, and the firm hopes to win approval from British regulators by 2003.

Although GW is at pains to stress that its cannabis products will only be of therapeutic use, the company's activities have heightened calls for legalisation of the drug.

 

 

 

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