Galenica Group: successful first half year, extremely positive outlook for 2007
Galenica Group: excellent result despite high level of investment
Galenica once again produced extremely positive results in the first half of 2007. Net sales grew to CHF 1,236.0 million, an 18.2% increase over the year-earlier period. Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 17.7% to CHF 96.9 million, while consolidated earnings before interest and taxes (EBIT) increased by 31.6% to CHF 78.7 million. Group profit was up 27.7% to CHF 69.1 million despite the high Research & Development investment for the phosphate binder PA21 and Ferinject® as well as the preparations for the launch of this new medicine. In addition to this, substantial investments were made in tangible and intangible assets, totalling CHF 58.6 million in the first half of 2007 (compared with CHF 23.8 million in the same period in 2006). In particular, the construction of the new distribution centre in Niederbipp and also the introduction of Triamun management systems in the Amavita pharmacies required a high level of capital investment.
Pharma: an important milestone reached with Ferinject®
Sales in the Pharma business sector rose to CHF 196.3 million (+7.2%), while earnings were up 16.8% to CHF 62.3 million despite the high Research & Development investment and the preparations for the launch of Ferinject®. The fact that sales growth slowed somewhat can be attributed on the one hand to changes in the way accounts are settled with various agents representing the iron replacement products of Vifor (International). Although this affects sales growth, it does not impact earnings. On the other hand, Vifor is working to streamline its product portfolio with a view to focusing more on its own products. Furthermore, the licences for Tobi® products and the RoC® and Piz Buin® cosmetic lines reverted to the manufacturers on the basis of agreements to this effect.
In June, the UK Medicines and Healthcare products Regulatory Agency (MHRA) became the first authority worldwide to approve the registration of Ferinject®. Since the UK is a reference country in the decentralised drug registration process, the new product will therefore be registered simultaneously in a total of 18 EU countries. With the approval of the MHRA, Vifor (International) has achieved a major milestone in the launch of the new drug.
Although sales growth for the globally distributed iron replacement products Venofer® and Maltofer® slowed somewhat for the reasons already stated, it was still very satisfactory: sales of Venofer® rose by 2.7% and those of Maltofer® remained at the previous year’s level. Venofer® showed a very satisfactory development primarily in the key markets USA (+15%), Germany (+28%), the UK (+14%) and Turkey (+73%), while Maltofer® posted an increase in Turkey in particular (+36%).
Sales of the Rx business unit (prescription drugs) in Switzerland grew by a further 11.0%. Venofer® achieved the most outstanding result with a 65.2% increase. Venofer® is also being used increasingly for indications other than the original indication (haemodialysis): in Switzerland alone, other areas of application such as gynaecology or gastroenterology account for about 80% of sales. Sales of the antidepressant Trittico® grew by 32.3%. On 1 June 2007 Galenica took on the representation of various transdermal hormone patches from Novartis.
Vifor’s sales are continuing to increase at an above-average rate (+4.6%) compared with the development of the Swiss OTC market (+1.3%). The leader products posted particularly satisfactory growth, with sales of Algifor® up 17.0% and OTC magnesium products up 6.1%. Anti-Brumm® registered a remarkable 48.2% increase in sales. Sales of Perskindol® remained stable compared with the previous year’s level.
The integration of Equazen into Potters is proceeding according to schedule and generated sales of CHF 8.9 million. Without the acquisition, Potters’ sales would have increased by 27.8%. Sales of the leading Potters product, eye q™, continued to grow.
Exports from Switzerland and the UK grew to CHF 8.6 million overall – particularly as a result of the Equazen Nutraceuticals acquisition. Vifor’s OTC products, especially Maltofer®, Perskindol® and Otalgan®, were also successful in a number of various countries. Anti-Brumm® was especially pleasing, posting growth of 125.2% thanks in particular to the development in Germany.
Logistics: integration of Unione Farmaceutica Distribuzione progressing well
The Logistics business sector generated sales of CHF 975.5 million (up 21.0% compared with the previous year, with 11.9% stemming from the acquisition of Unione Farmaceutica Distribuzione, which was consolidated for the first time in the first half of 2007. Internal growth has therefore been remarkable. Operating profit increased by 38.6% to CHF 8.3 million.
The integration of Unione Farmaceutica Distribuzione has been very positively received by customers in Ticino, who are benefiting from the expanded range of services. Products for private practices and laboratories are enjoying strong demand, and the medical technology line has also scored initial successes. Construction work on the new Galexis distribution centre in Niederbipp is proceeding as planned. Because of Alloga’s high level of quality and its market-tailored products, pharma industry is purchasing more new and increasingly standardised services from the company, which has been able to win a number of new major customers.
HealthCare Information: extended range of software solutions for pharmacists
Sales of the HealthCare Information business sector increased by 9.1% to CHF 15.4 million, while the operating result was CHF 0.8 million (CHF –7.6 million in 2006). Documed has completed ProDoc®, the new editorial system for the Swiss Drug Compendium®. The 3rd edition of the Basis-Brevier™, which allows users to make transparent price comparisons between generics and original brand-name drugs, has been available since April.
Hospindex, the database product for hospitals and nursing homes that was launched by e-mediat in April, replaces the previous product Galdat and is used together with another newly developed product called CIS (Clinical Information System) as a basis for bedside medication.
At the beginning of July, Galenica acquired the Swiss firm BMC Holding SA. The company primarily offers software solutions and IT services tailored specifically to the retail trade in the healthcare sector. The BMC product range provides an excellent addition to Galenica’s IT solutions, and in particular to the pharmacy software TriaPharm®. This move allows Galenica to build on its expertise and service offering in the market for integrated IT solutions for pharmacies, enabling it to accelerate the development of TriaPharm®. TriaPharm® is already in use at 64 Amavita pharmacies.
Retail: strong growth – 12 new points of sale in the first half of 2007
Sales in the Retail business sector rose by 13.9% to CHF 196.0 million. This does not include the company’s stake in Coop Vitality, which is not fully consolidated and which generated sales of CHF 28.5 million. Operating profit increased by 43.6% to CHF 7.4 million.
The Amavita pharmacy network comprised 109 locations at 30 June 2007, including 5 Amavita partner pharmacies. Coop Vitality has 25 points of sale in this market. In total, the 143 outlets posted sales of around CHF 243 million (the sales of Amavita partnerships, Coop Vitality and minority holdings are not included in the consolidation accounts of the Galenica Group).
With more than 3,000 check-ups, the HerzCheck® system offered in cooperation with the Swiss Heart Foundation has been successfully established. The number of StarCard holders has also grown: around 317,000 customers are now using the cards.
Galenica: extremely positive outlook for 2007
The Galenica Group is convinced that it will be able to continue on its successful path of growth. The Group's ambitious development projects are generating a considerable need for human and financial resources. Nonetheless, management expects to be able to post double-digit consolidated earnings growth again in 2007 for the twelfth consecutive year, this time in the magnitude of 20% to 25%.
Based on the approval for Ferinject® from the MHRA, Vifor (International) is now receiving the national registration documents for the other EU countries, including Germany, the UK, the Netherlands, Sweden and Spain. Ferinject® will be launched on the European market in stages once the national registration documents are received. Decisions regarding approval by health insurance companies and pricing will have to be made individually in each country. Further registration applications are pending in Switzerland and the US. Galenica assumes that registration in Switzerland will also be approved in the course of 2007. Work on the phosphate binder PA21 is continuing as planned. Exportinitiatives will be actively pursued for a number of OTC products and will focus particularly on eye q™, Perskindol®, Anti-Brumm® and Otalgan®.
The main focus of the ongoing preparations for the new distribution centre in Niederbipp will be aimed at ensuring that services continue to function seamlessly. The Nova invoicing system with its new functions will be presented to customers at the Vitawell Fair in Berne in September 2007.
From 1 July 2007 TriaMed®, the solution for medical practices, was delivered for the first time to selected physicians. They will test the product and gather initial empirical data. A nationwide market launch is planned for early 2008.
The Amavita network will continue its dynamic growth, particularly by adding more highly attractive locations. With new locations opening up in Shopville Zurich and at Zurich Airport (three points of sale) in the autumn of 2007 and at the Berne Railway Station in the spring of 2008, Amavita will be prominently represented in Switzerland's major transport hubs.