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Drug Software Firm Looks at Ten Targets

Posted on: Monday, 6 June 2005, 18:00 CDT

UP to 1,200 people die every year because they have been prescribed or dispensed the wrong drugs. Illegible handwritten prescriptions or failure to remember a patient's medical condition are often to blame.

A report by the Audit Commission in 2001 estimated that these types of errors cost the National Health Service Pounds 500 million a year through corrective or prolonged treatment and this is before compensation claims have been paid.

The report also said that 70 per cent of mistakes could be eliminated by adopting computerised prescription systems. 'You are more likely to die from medicine mismanagement than in a road accident,' says Stephen Critchlow, chief executive of Ascribe, a software company that floated on the junior Alternative Investment Market last year.

Its technology focuses on doctors' computers, allowing prescriptions to be printed or sent to dispensing pharmacists.

Ascribe's medicine management system also links to hospitals' patient record databases, where conditions are registered, and can automatically alert a hospital pharmacist if a drug or dosage being prescribed will cause harm.

The company's software is already used in 120 hospitals in the UK representing a 40 per cent market share and 41 hospitals abroad.

Ascribe raised Pounds 5 million when it floated through a placing of shares at 18p. This valued it at Pounds 18.6 million.

The cash is being used to expand by acquisition Ascribe has just paid Pounds 2.6 million for Footman Walker, a supplier of information systems to accident and emergency departments.

More deals of that size are likely. Critchlow says he is looking at ten targets 'fairly carefully'.

The board has also been strengthened in recent weeks with the appointment of Chris Moore, the chief executive of software group Torex Retail, as non-executive chairman.

Midas verdict: An acquisition-led strategy such as the one Ascribe is pursuing is always risky. Many deals simply fail to live up to expectations.

But Ascribe can afford to be choosy in what is still a highly fragmented sector. Brokers reckon profits of about Pounds 1 million in the year ending this month will double in 2006.

This puts the shares, now 271/2p, on a price-to earnings ratio of 25, falling to 14 next year.

That is not cheap, but given the good growth prospects, the company is worth a punt. Buy.

Source: Mail on Sunday; London (UK)

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