Abcam (LON:ABC) was founded in a Cambridge research lab in 1998 with the simple idea of making it easier for research scientists to buy antibodies across the web. From those humble beginnings it has become one of the AIM market's most notable success stories with a share price that has grown eightfold since float to a market capitalisation of almost £700m. Abcam now runs three websites and has grown its catalogue to list 69,000 products, extended operations to the US, China and Japan while selling its products globally.
With the similarities in its online distribution business model, Abcam has been labelled by some as the 'Amazon of Antibodies', but in contrast to the book-selling behemoth, Abcam has enjoyed consistently high margins and returns on capital. These figures have grown impressively every year since float in spite of operating in what any internet search will show to be an extremely competitive market place.
While Abcam has grown by seizing market share, it has also nurtured and grown demand through a focus on collecting the most valuable asset that scientists require - the data rich information that surrounds each of the antibodies it sells. As Jonathan Milner, CEO, explains below, it turns out that the real reason why Abcam has sustained its competitive advantage is because these data sheets are unique to Abcam and are impossible for competitors to duplicate. As a result, Abcam is in the position where their oldest range of products now command the highest prices in a catalogue which grows in breadth every year.
Some brokers have questioned whether Abcam's business model can continue to grow at its historic pace as the business matures while others have worried that government austerity measures will impact budgets for medical research spending. But in spite of this, Jonathan Milner believes the opportunities available to Abcam are huge and has the dream of building the company into a giant of the life sciences. With the valuation now reaching a PE ratio of 27 times forecast earnings, there are plenty investors that are backing Abcam to deliver.
The company recently released interim results with pre-tax profits up 35.4% to £15.2m on sales of almost £40m. Strong cash generation has taken cash on hand to £47m providing a warchest for possible acquisitions.
Jonathan, could you introduce Abcam for those readers that don't know the story?
