Wellnex Life Ltd (ASX:WNX) is supplying the liquid softgel painkillers being sold by $60 billion UK giant Haleon under its household Panadol brand.

It’s gaining so much traction, that Wellnex is preparing to dual list on the London Stock Exchange.

But while the company may have slipped under the investor radar, the doubling of both its revenues and gross margins year-on-year has seen the spotlight swing right back over the small-cap brands company.

When I say small cap, I mean it. In fact, I mean nanocap.

WNX has a market cap below $25 million and its shares last traded at 75c.

The company has been carefully collecting a portfolio of high-margin brands and licensing deals with some of the market’s largest consumer healthcare companies.

Brand Building 

The strengths of Wellnex Life lie in management’s ability to identify consumer trends, turn these into marketable products and then reach the shelves fast through the likes of Coles (ASX:COL), Woolworths (ASX:WOW), and Chemist Warehouse.

The portfolio includes the energy supplement Wakey Wakey, sleep aid Nighty Night, and the Iron Company, which offers a TGA-listed slow-release iron supplement combined with Vitamin C – together in one gummy.

Wellnex has forged some smart partnerships, including the collaboration with Chemist Warehouse on Wagner Liquigesic (paracetamol, paracetamol and ibuprofen and mini ibuprofen-based soft-gel capsules), where Wellnex takes care of product supply, registration and commercialisation. Chemist Warehouse manages marketing and distribution. 

Another major milestone in 2023 was the acquisition of Pain Away, the country’s second-largest pain relief brand.

The jewel in the crown 

Above all else, company leaders see the potential for that licensing deal with Haleon, which is gaining major traction.

Born from a spin-off from GlaxoSmithKline, Haleon is now one of the largest consumer healthcare businesses in the world, with products including Sensodyne toothpaste and Voltaren pain relief. 

Wellnex Life Managing Director Zack Bozinvoski said Haleon was interested in the Australian smallcap because of its product capabilities in soft gel paracetamol and other value-added soft gel analgesics.

“The deal struck related to Wellnex’s products being sold under Haleon’s well-known Panadol brand, where Wellnex is responsible for the TGA marketing authorisation and finished goods supply, with Haleon responsible for market launches,” he said.

“I am extremely pleased that our work is now bearing fruit in our financials, but the attention we are getting on the back of the Haleon agreement, both from industry and investors, is a testament to our capabilities as a company. 

“We are hoping that our dual U.K.-Australian listing will get the company to the valuation it deserves, benefiting our valued ASX investors.”

Last September, Wellnex Life received its first purchase order for the U.K. market, which was delivered to Haleon in November.

While the current agreement only focuses on these two geographies, there’s potential for this to widen to other markets or even different brands for Haleon, whose pain relief segment sold over $5 billion in products in 2023 alone.

Wellnex reveals highest gross profit yet

Importantly, these orders from Haleon, together with growth across Wellnex’s wider portfolio, drove the strong improvement in financial performance recently announced for H1 FY25.

WNX revealed its highest gross profit ever.

The uptick was driven by both sales and gross margins – reflecting the company’s pivot from predominantly ‘brokering’ brands, to developing own brands which are showing faster growth and higher margins.

FY25 H1 saw a 112% uptick in sales over the previous corresponding period, to $12 million, as well as a doubling in gross margins over previous years’ averages, to 40% – a very healthy margin considering Wellnex uses contract manufacturers under its scalable and capital-light business model.

“When we relisted in 2021, we made $4 million a year and now we have produced two consecutive months of $3 million per month,” Bozinovski said.

Bolstering its executive team 

Zack Bozinovski was appointed managing director in 2023 after developing brands including Voöst Vitamins, which he sold to Procter & Gamble two years earlier. 

He’s supported by CEO George Karafotias, as well as non-executive director Andrew Vidler – who spent two decades in leadership positions with the EBOS Group (Terry White & Chemmart, Endeavour brands) and four years for API Ltd (now Wesfarmers Health) where he was responsible for the Priceline retail and pharmacy businesses. He has also served with Pacific Smiles Group (ASX:PSQ).

Another director is Jeffrey Yeh, founder of Homart Pharmaceuticals; and, most recently, Wellnex appointed new chairman George Tambassis, a former director of the Pharmacy Guild of Australia and Chair of the Australian Biologics Academy (part of Arrotex) Advisory Board.

U.K. IPO and other growth opportunities 

So where to now? 

Management sees several growth avenues. These include: 

• Brands like Wakey Wakey or Nighty Night are still in their infancy; 
• Plans to roll out PainAway to Wellnex’s existing supermarket network;
• Extending its global distribution network for its products;  
• Growing the partnership with Chemist Warehouse, including with its joint venture new medicinal cannabis product called Wellness Life;
• Growing orders under the Haleon/Panadol deal; and, 
• Listing in Haleon’s home territory, on the London Stock Exchange. Watch this space.  

“Obviously, we want to see Wellnex fully valued by the stock market, and from the discussions we have had with U.K. investors, we are hopeful that European investors can understand and appreciate what our licensing deals and brands mean for our business,” Zack Bozinovski said. 

“Our planned listing in London would open the company up to new investors and in turn that would hopefully be reflected in the Wellnex Life stock price.”

Wellnex shares last sold for 75 cents through early Tuesday morning trade.

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