Galenica in 2007: a new record year for strategy and business
In 2007 the Group took significant strategic decisions and reached important milestones in various key projects. The acquisition of the Canadian Aspreva Pharmaceuticals Corporation and MediService, the Swiss specialty pharmacy, are of long-term strategic importance. The new iron replacement product Ferinject® was approved in 18 EU countries and in Switzerland and is already being sold in Germany. The distribution centre in Niederbipp is scheduled to begin operations soon. The Galenica Group pharmacy network was expanded to a total of 228 locations.
The Galenica Group continued to develop and strengthen its market position across all business sectors in 2007. The acquisition of Canadian Aspreva Pharmaceuticals Corporation and MediService, the Swiss specialty pharmacy, marks a new phase in the transformation of the company and underpins the sustainable development of the Group. The result generated by Galenica in 2007 exceeded all expectations. Sales increased year-on-year from CHF 2,152.3 million to CHF 2,529.2 million (+ 17.5%). Earnings growth will be in the double-digit range for the twelfth year in a row, setting a new record and fulfilling Galenica’s prediction of achieving an increase in consolidated profit of 20 to 25%.
Pharma: Ferinject® on sale for the first time; sales up again for leader products
With net sales of CHF 400.0 million, the Pharma business sector exceeded the previous year’s figure by 11.4%. Given that the billing method for these iron replacement products was reorganised with various agents and that Vifor ceased to represent certain products in Switzerland with the licences reverting to the manufacturers, this represents an outstanding result.
Sales of global leader Venofer®, the parenteral medication for treating iron deficiency, increased by a total of 10.5% to CHF 174.4 million. Venofer® is sold in around 70 countries. The biggest drivers of growth were western industrialised nations, including the USA, which generated a 10.4% markets increase in sales. Maltofer®, the oral iron replacement product continued to perform well: sales rose by a total of 3.6% to CHF 49.3 million. The innovative injectable iron replacement product Ferinject® was registered by the public health authorities in 18 EU countries and in Switzerland. It has been used to treat iron deficiency diseases in Germany since November 2007.
The most important event was the acquisition of the Canadian Aspreva Pharmaceuticals Corporation, which was integrated into the Galenica Group effective from the beginning of 2008. The competencies and expertise acquired through this transaction will in future accelerate the development of new medical indications for the products of Vifor (International) and enable the therapeutic profile of the products to be refined. This transaction was completed on 3 January 2008 and therefore has no influence on sales or operating statement for 2007.
Vifor has streamlined its organisation in Switzerland and undertaken a strategic review of its product portfolio. As a result, the brand rights to the Eduard Vogt® and Therme Eduard Vogt® cosmetic lines were sold effective 1 January 2008. In spite of the fact that the overall market for OTC products posted only 0.7% growth in Switzerland in 2007, sales of Vifor’s OTC products, notably the leader products Algifor®, Triofan® and Perskindol®, rose by 2.1% to CHF 54.5 million. Sales of Algifor® alone increased by 19.2% to CHF 7.4 million. The Rx business unit (prescription medicines) succeeded in boosting sales in Switzerland by 12.9% to CHF 67.4 million, with sales of Venofer® playing a key role, rising by 61.3% to CHF 16.2 million. In mid-2007, Vifor took on the sales representation of the transdermal hormone patches from Novartis and thus has a comprehensive product range at its disposal for treating female health problems such as menopausal complaints. The export business is Vifor’s fastest growing sector. Sales increased by 110.8% to CHF 14.5 million. The products of Equazen Nutraceuticals, acquired at the end of 2006, particularly eye q™, accounted for around 33% of this increase.
Logistics: new services; work on the distribution centre in Niederbipp going to plan
The Logistics business sector, incorporating Galexis, Alloga and Unione Farmaceutica Distribuzione, registered a 18.0% increase in sales to CHF 1,976.4 million in 2007. 11.5% of the increase in sales is attributable to Unione Farmaceutica Distribuzione, which was fully consolidated for the first time in 2007. Sales growth therefore again significantly outpaced growth of the market as a whole. Galexis launched a comprehensive sales and advisory concept for pharmacies and drugstores called TOPHOMECARE, which makes it easier for customers to enter the fast-growing homecare market. The new Promologistics service guarantees the efficient distribution of promotional material to selected target groups. There is a big demand for articles for medical practices and laboratories, which has led to double-digit sales growth. Construction work on the new distribution centre in Niederbipp is proceeding as planned. Alloga has acquired new customers and extended its logistics services in connection with clinical trials.
HealthCare Information: products promote networking in the healthcare sector
At CHF 35.4 million, the HealthCare Information business sector increased its sales versus 2006 by 28.1%. e-mediat launched new master data products HospINDEX and InsureINDEX. Documed’s new editorial system compendiumPORTAL facilitates the production of the Swiss Drug Compendium and enables customers to manage data more efficiently. Following the acquisition of Swiss software company BMC Holding SA, TriaPharm® has its ideal partner in BMC’s Arizona, a unique patient and customer management system. By the end of 2007 more than 160 pharmacies worked with the software from Triamun. Triamun has been able to establish itself as the second largest supplier of IT solutions for medical practices in Switzerland thanks to TriaMed®,
Retail: pharmacy network complemented by Pharma Care, an innovative pharmacy concept.
The Retail business sector lifted its sales by 19.6% to CHF 428.8 million (excluding Coop Vitality), with internal growth accounting for 4.6% and acquisitions for 15.0%. The most important acquisition was the integration of MediService, the specialty pharmacy, which contributed CHF 17.9 million to the growth in sales. Its Pharma Care format is a unique business model in a high-growth market and covers the entire homecare spectrum for patients with serious diseases.
At the end of 2007, the Galenica Group pharmacy network had 228 pharmacies. The network comprises 116 own pharmacies (of which 109 are Amavita pharmacies), 27 affiliated pharmacies (of which 25 are Coop Vitality), 5 independent Amavita partner pharmacies and 80 independent Winconcept partner pharmacies. It is the most extensive pharmacy network in Switzerland.
Outlook for 2008: increased internationalisation – strong position in Switzerland A major strength of the Galenica Group is its ability to anticipate developments in the healthcare market and prepare for them with specific measures. The acquisition of Aspreva constitutes a strategic quantum leap for Galenica and a further step towards internationalisation. The companies in the Pharma business sector form a new, fully-integrated, specialty pharma group called Vifor Pharma.
The Pharma business sector was restructured accordingly as of 1 January 2008. Dr. Anthony Coombs has been appointed as a new member of the Galenica Corporate Executive Committee with responsibility for the pharmaceutical business of the Galenica Group. He will take up his office as CEO of Vifor Pharma at the start of February 2008. Noel Hall, co-founder of Aspreva and designated Head of the Strategy Division of the Galenica Group, has opted to pursue a new professional challenge. He will however remain with Galenica in an advisory capacity.
At product level, the focus will be on the roll-out of Ferinject® in Europe and in Switzerland. Ferinject® has been approved in Switzerland for reimbursement by health insurance companies as from 1 February 2008 and will be on sale from mid-February. This makes Switzerland the second country where the new medicine is being launched. The Group will pursue the development of its own sales force in various key markets, and Potters’ leader product, eye q™, will also be launched in Switzerland in 2008.
In the USA, the food and drug regulatory authority FDA has requested further information on the efficacy and safety of Ferinject®. Luitpold Pharmaceuticals, Inc., the US licence partner of Vifor (International), has submitted the necessary documentation to the FDA, where it will be discussed on 1 February 2008 by a Drug Safety and Risk Management Advisory Committee. This is a normal stage in the US New Drug Application process. The Advisory Committee has no decision-making authority itself and will make a recommendation to the FDA with regard to the points discussed. A decision by the FDA is expected by the end of the first quarter of 2008.
The strategic area of Swiss HealthCare Services is helping Galenica reach a strong position in Switzerland and achieve further attractive growth potential. Galexis will start its move to the new logistics centre in Niederbipp in April 2008 and complete it in the summer. Service quality and stability will be fully guaranteed during this crucial phase. Alloga will push ahead with its automation and enhance its standardised basic services. e-mediat and Documed will continue to develop their products based on market-specific needs. Triamun will push forward with integrating the BMC products into the traditional Triamun product line, thereby exploiting potential synergies. TriaPharm® will now also be introduced in pharmacies outside the Amavita Group. The expansion of Amavita is set to continue at highly attractive locations such as Zurich airport and RailCity Berne. The Pharma Care format will be further improved and gradually expanded to include all potential indications and medicines.
Dates for the diary:
The Galenica Group will hold a conference for media and financial analysts on 18 March 2008 to announce the results of the 2007 business year.
The Annual General Meeting of Shareholders will be held on 8 May 2008.
Galenica is a diversified group active throughout the healthcare market which, among other things, develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistical and database services and sets up networks. The Galenica Group enjoys a leading position in all its business sectors – Pharma, Logistics, HealthCare Information and Retail. A large part of the Group’s income is generated by international operations.
Additional information concerning the Galenica Group can be found on www.galenica.com.