London-Based Opiates Trader Plans to Sell Shares : Pharmaceuticals: Meconic dominates its tightly regulated field with more than 20% of the global market in controlled drugs.

The descendant of a company that once supplied Britain’s Queen Victoria with a tincture of opium is about to sell its shares on London’s stock market.

Nowadays heroin and cocaine are usually associated with drug lords and crack dens rather than royalty, but for a British firm called Meconic, legal dealing in such substances constitutes a profitable niche market.

Meconic is one of the few firms in the world to have a license for trading in opiates and other controlled drugs that are supplied to the pharmaceutical industry to turn into medicine--usually painkillers.

The firm dominates its field with more than 20% of the global market and later this month its shares will begin to trade in a move aimed at raising $28 million.

“It’s not a big market, but we do have the largest share in it,” Marshall Smalley, Meconic’s managing director, told Reuters.

Smalley estimates the official world market for controlled drugs, of which the vast majority are opiates, at about $160 million.

Due to the violence and social ills associated with the illegal drug trade, Meconic is forced to operate in one of the world’s most tightly regulated markets. For most of this century, governments have sought to control the trade, with the first steps taken at the Shanghai Convention in 1909. In Britain, dealing in opiates has been restricted since the 1920 Dangerous Drugs Act.

Now the trade is governed by the 1961 Convention on Narcotic Drugs, and the Vienna-based International Narcotics Control Board monitors the industry.

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Strict quotas, agreed on more than a year in advance, govern the amount of opium poppies grown and also the orders for drugs in which the resulting opiates will be used. The board in Vienna regulates the quotas and makes sure the amounts add up.

Meconic snaps up about a fifth of the world’s legal opium poppy crop and turns it into ingredients for drugs ranging from headache pills to pellets designed to stun charging rhinos.

Poppies are shipped in from as far as Tasmania and Turkey to the group’s Edinburgh plant. Security is tight--the kind usually reserved for protecting royal palaces rather than factories.

“Whenever I walk by Buckingham Palace I see the same sort of security that we have,” Smalley said.

The firm makes about 440 pounds of medical heroin a year, as well as much smaller amounts of cocaine, which is used to treat facial pain. Larger amounts of more common opiates, such as codeine and morphine, form the core of the business.

These products are then traded to 69 countries worldwide.

Smalley hopes that most of the cash raised from the initial stock offering will help the firm expand. Some of the cash also will help pay off debt left over from its management buyout from Glaxo in 1990, when the giant drug firm decided its opiates businesses had become nonessential.

Meconic’s recent growth of 11% a year has resulted from a large increase in the use of morphine opiates. Technological innovation now allows morphine to be administered by controlled release tablet rather than injection.

“That revolutionized the treatment of painkilling,” Smalley said, pointing to a doubling of world morphine sales since 1991. “I would imagine the morphine market will grow at least 10% a year over the next few years,” he added.

As for the link with Queen Victoria, who used tincture of opium to help her sleep, Smalley says, “We’ve got the royal warrant to prove it.”