Galenica achieves new record results
Double-digit profit growth for the 16th consecutive year
Over the past 16 years, Galenica has steadily transformed itself from a wholesaler into an internationally active healthcare group. The Group is now at the start of a five-year period during which several strategic projects of major importance for the company's future will be carried out. To implement these projects successfully, Galenica is relying on its proven, long-term strategy and its entrepreneurial culture, as well as its first-class pharmaceutical expertise, which was significantly strengthened with the appointment of David Ebsworth as Galenica Group CEO as of 1 January 2012.
In 2011, Galenica generated consolidated net sales of CHF 3,187.4 million, a 2.7% increase over the previous year.
This resulted in earnings before interest, taxes, depreciation and amortisation (EBITDA) of CHF 399.4 million. The decline of 9.8% over the previous year was due to significant negative currency effects and the anticipated decline in licence fee income from CellCept to CHF 120.5 million (2010: CHF 187.5 million).
Galenica invested CHF 130.4 million in research and development, and investments in tangible and intangible assets totalled CHF 60.4 million in 2011 (2010: CHF 71.2 million).
Earnings before interest and taxes (EBIT) increased by 1.3% to CHF 327.1 million. Adjusted for currency effects, EBIT increased by 7.2%.
Consolidated net profit (before minority interests) rose by 10.9% to CHF 255.6 million. Adjusted for currency effects, this increase was 17.9% and, after deducting minority interests, consolidated net profit was up by approximately 5%.
Shareholder equity continued to grow to CHF 1,202.6 million (+29.0%), increasing the equity ratio to 38.6%, while net borrowings decreased by 25.2% to CHF 708.8 million. Subsequently, gearing fell significantly from 102% to 59%.
Net sales of the Pharma business sector grew by 1.0% to CHF 584.3 million. Adjusted for currency effects, the increase was 8.4%.
Investments in R&D totalled CHF 123.7 million and supported clinical studies for the filing of PA21 in the USA and Europe, as well as projects that promoted scientific evidence of the efficacy of Ferinject®. Additional resources were used to establish subsidiaries and the international distribution network for marketing Ferinject®. Adjusted for these factors, the Pharma business sector generated earnings before interest and taxes (EBIT) of CHF 254.4 million (+1.1%).
Iron and prescription drugs (Rx): Sales of Ferinject® increased by 23.0% to CHF 85.7 million (+32.1% in local currency), while Venofer® achieved sales of CHF 167.1 million (-9.5%, +1.9% in local currency). The considerable weakness of the US dollar and euro and adjustments targeted at lowering healthcare costs in some markets had a negative impact on sales growth. The increase in the number of units (100 mg) of Ferinject® sold (+44%) was, however, very pleasing: growth in the Netherlands was 262%, in the UK 76%, in the Nordic countries 46%, in Germany 41% and in Spain 31%. Ferinject® was also launched very successfully in France, which after only one year is now the fourth-largest market for Ferinject®.
The preliminary results from PREFER, a study in women with iron deficiency without anaemia, are now available and demonstrate that the statistically defined endpoint was met. The results are currently being analysed and will be published this year. By the end of 2011 more than 6,600 patients had been treated with Ferinject® within the framework of the clinical trial programme. This is believed to be the largest clinical evidence base for intravenous iron in different therapeutic areas.
The business activities of Vifor Fresenius Medical Care Renal Pharma were approved by European Union and Swiss competition authorities in October 2011. In early November, the nephrology marketing and sales rights to Ferinject® and Venofer® and all rights to PA21 were transferred to Vifor Fresenius Medical Care Renal Pharma for Europe and other regions. With the start of operations, sales teams representing Vifor Fresenius Medical Care Renal Pharma began calling on customers in 15 countries, who now interact with a single sales team offering a full portfolio of nephrology pharmaceutical products. This means that more than 225,000 patients can more easily and rapidly access the complete range of products of Vifor Fresenius Medical Care Renal Pharma.
The development of the phosphate binder PA21 is proceeding according to plan, with good support from Fresenius Medical Care. A New Drug Application is expected to be submitted to the US Food and Drug Administration (FDA) and the European health authorities in the fourth quarter of 2012. Japanese partner Kissei Pharmaceutical has also made impressive progress in the clinical development of PA21 for Japanese patients and has successfully completed its Phase I trial and initiated a Phase II trial. Japan is the second-largest dialysis market in the world.
Other iron products grew by 14.2% (+19.7% in local currency) to CHF 62.3 million, led by Maltofer® which recorded an substantial increase of 20.3% (in local currency +26.9%), both in Switzerland (+18.9%) and in major international markets such as Russia (+102.1%) and Brazil (+16.1%).
Sales of other prescription products grew by 13.6% to CHF 47.8 million (+17.3% in local currency).
Infectious Diseases/OTX: The Infectious Diseases/OTX franchise achieved a slight increase in sales of its products, despite negative market factors and currency effects. The four best-selling products all grew in local currency terms, particularly Uro-Vaxom®, which grew by 19.9% to CHF 12.7 million (in local currency +27.7%). Sales of Broncho-Vaxom® grew by 3.6% in local currency to CHF 47.8 million (-2.4%).
Consumer Healthcare: Sales of Vifor Pharma Consumer Healthcare products in Switzerland were CHF 81.3 million (-0.1%). While sales of some OTC products suffered negative seasonal effects, the third-party manufacturing segment (contract manufacturing) performed very well, with growth of 16.4%. International sales of Consumer Healthcare products totalled CHF 23.6 million (-17.4%, -7.6% in local currency) and were severely affected by the dampened economic environment in many key markets.
Sales of the Logistics business sector rose by 3.3% year-on-year to CHF 2,081.5 million, although the pharmaceutical wholesale market only developed by 0.7%. Both Galexis (wholesale) and Alloga (pre-wholesale) were able to maintain their leading market positions and expand their market shares thanks to the acquisition of new customers. The high degree of automation at the Niederbipp distribution centre also contributed to this positive development, and helped offset declines in margin. The expansion of services offered by Galexis, including the introduction of the Parcel Service, innovations such as the new Alloga transport coolbox, and the modernisation of the distribution centre in Lausanne-Ecublens also played a role in the business sector's positive results. On a comparable basis, and taking into account exceptional items such as the sale of a property in 2010, earnings before interest and taxes (EBIT) remained stable versus the previous year and totalled CHF 22.8 million (-15.7%).
With approximately 450 locations, Galenica's pharmacy network is the largest in Switzerland and includes 289 pharmacies directly owned by Galenica and 161 partner pharmacies. Despite the difficult environment, the Retail business sector saw an increase in sales of 2.6% to CHF 1,117.9 million (excluding Coop Vitality). Organic growth was +1.0%. The sales of Coop Vitality pharmacies, which are not consolidated, amounted to CHF 125.6 million (+7.5%).
The Federal Department of Home Affairs (FDHA) implemented further measures to reduce drug prices, including promotion of the use of generics. These measures had a significant impact on the Swiss pharmacy market, which shrank by 0.9%. Thanks to the hard work of our employees and to targeted measures such as active sales promotion, the development of new offerings in collaboration with suppliers as well as the opening of new locations and the acquisition of existing locations, the Retail business sector managed to significantly offset negative market influences and compensate for the declining margins. This enabled the Galenica pharmacies to further strengthen their market position. At the same time, streamlined back-office processes resulted in improved efficiency, with earnings before interest and taxes (EBIT) rising by 3.5% to CHF 52.6 million.
The HealthCare Information business sector generated sales of CHF 47.8 million in 2011. The 2.5% decline in sales can be largely attributed to the slowdown in the roll-out of the pharmacy management software TriaPharm®. Earnings before interest and taxes (EBIT) were CHF 2.4 million. The digital version of the Swiss Drug Compendium (Arzneimittel-Kompendium der Schweiz®) was further developed in 2011 and an app for iPhone, iPad und iPod touch is now available. An optimised online version of the Compendium is also available for other smartphones, e-book readers, Windows and Mac. The INDEX range was expanded further with the logINDEX® module for wholesalers and the "Clinical Decision Support" module for hospINDEX®.
GALENICA GROUP - OUTLOOK
The Galenica Group is at the start of a five-year period during which a number of strategically important projects will be implemented which are of major significance for the further internationalisation of the company and its success in the future:
- The US Food and Drug Administration (FDA) will reach a decision this year on the approval of Injectafer® (US brand name for Ferinject®) in the USA.
- Vifor Pharma will continue to expand both the geographic reach of Ferinject® and the awareness of iron deficiency and related therapies.
- Vifor Fresenius Medical Care Renal Pharma will help to maximise the significant potential of iron therapies in nephrology.
- Preparations for the filing of PA21 in the USA and Europe will be intensified. Submission to the authorities is planned for the fourth quarter of 2012.
- Vifor Pharma took part in the galenic development of BG-12, an investigational MS therapy from Biogen Idec that is currently under review by U.S. and E.U. regulatory authorities. Vifor Pharma was selected by Biogen Idec to be a manufacturer of BG-12. If approved, the new product candidate may be an important therapy for MS patients.
- Processes are being continuously optimised in the Logistics, Retail and HealthCare Information business sectors to increase efficiency and improve profitability. Through innovation and excellent service, customer loyalty will be strengthened and expanded.
Galenica will continue to invest in research and development, and in scientific and commercial activities. These projects will be financed through sales and other operating income such as licence fee income from CellCept. The next five years will be challenging for the Galenica Group, as it will take some time to achieve success.
Due to the long-term nature of the projects undertaken and unstable external factors, management has set itself the goal of achieving the same level of profit in 2012 as in the previous year.
Annual General Meeting on 3 May 2012
After 15 years of intense engagement as a member of the Board of Directors of the Galenica Group, most recently as Deputy Chairman and Lead Director, Paul Fasel has decided not to stand for reelection. Paul Fasel is a certified pharmacist and was intimately involved in the transformation of the Galenica Group from a wholesaler into a modern, internationally active healthcare company. At the Annual General Meeting, Fritz Hirsbrunner will be proposed for election as a new member of the Board of Directors. The Board of Directors will also propose the distribution of an ordinary dividend of CHF 9.00 per registered share (+12.5%).
New member of the Corporate Executive Committee of the Galenica Group
The Board of Directors of Galenica Ltd. has appointed Karin Isabella Priarollo as a new member of the Corporate Executive Committee of the Galenica Group. As of 1 May 2012 she will be Head of Human Resources for the Group. Under her leadership, Human Resources will be run as a Division .
Vifor Pharma will continue to expand both the geographic reach of Ferinject® and the awareness of iron deficiency and iron therapies in medical and patient communities. The growing body of studies supporting the value of iron therapies for patients confirms the role of iron therapies in supporting treatment of a growing number of diseases. Results from the PREFER study in women with iron deficiency without anaemia will be published in 2012. Clinical studies in the fields of oncology, pregnancy, chronic kidney disease and in chronic heart failure patients are ongoing, and new trials in other therapeutic areas are planned for 2012.
Vifor Fresenius Medical Care Renal Pharma will offer high-quality iron therapies to patients suffering from chronic kidney disease. Marketing and distribution for Vifor Fresenius Medical Care Renal Pharma will be conducted by Vifor Pharma, Fresenius Medical Care or a third party, depending on the organisational structure of the partners in the respective country.
The immuno-stimulant products Broncho-Vaxom® and Uro-Vaxom® will expand their reach into new indications and new geographies, leveraging the Vifor Pharma network of partners around the world.
In Vifor Pharma Consumer Healthcare Switzerland, the development of core therapeutic areas will continue as will the cooperation with key pharmacy chains and groups. The launch of line extensions for Perskindol® is planned for 2012. Also on the horizon is the start of contract manufacturing of the Biogen Idec drug BG-12 in Villars-sur-Glâne.
Pressure on service providers in the healthcare market will increase further in the years ahead. As a result, companies will focus more on their own label brands. Demand for the services of the Logistics business sector and a product range that goes beyond pharmaceutical products, such as warehoused cosmetics, will therefore remain high.
Galexis will expand its functionalities and develop new areas of service, with the help of the GALe-coline®
Following the launch of its transport cool box, which was developed in-house, Alloga will continue to develop other solutions to support the pharmaceutical industry in addressing increasing regulatory requirements. Internal processes will be harmonised in 2012, which will further improve efficiency. range which includes a new ear thermometer, cold/hot packs and glucose.
GaleniCare will continue the strategy of standardising Amavita pharmacies and the expansion of the Coop Vitality network in 2012, as well as further establishing Winconcept as the largest group of independent pharmacies. Sun Store will focus on its 40th anniversary and further pharmacy openings across Switzerland. MediService's Pharma Care business unit will retain its focus on selected therapy niches and expand the therapeutic spectrum on a targeted basis.
HealthCare Information: strengthening electronic media
Documed will continue transitioning the Swiss Drug Compendium (Arzneimittel-Kompendium der Schweiz®) to electronic media. The image database "Identa" will complement the Swiss Drug Compendium as an identification register. New service portals should ensure that data can flow directly from the pharmaceutical industry to Documed and e-mediat, simplifying electronic communication. The "Clinical Decision Support" hospINDEX® module will be expanded with additional functions, such as one for allergies. Based on the specific needs of customers, TriaPharm® and TriaMed® functions will be further developed, particularly in the networking of group medical practices and practice chains.
Galenica is a diversified Group active throughout the healthcare market which, among other activities, develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistic and database services and sets up networks. The Galenica Group enjoys a leading position in all its business sectors - Pharma, Logistics, Retail and HealthCare Information. A large part of the Group's income is generated by international operations. Galenica is listed on the Swiss Stock Exchange (SIX Swiss Exchange, GALN, security number 1,553,646).
For more information, please visit the company's website at www.galenica.com.