Galenica achieves significant milestones in the first half of 2013 and
announces for 2013 profit growth for the 18th consecutive year
Tuesday, 13 August 2013, ↓ directly to download
The Galenica Group performed well in a complex market environment during the first six months of 2013. Net sales increased by 2.0% to
CHF 1,648.6 million year-on-year. Profit before and after minority interests increased by around 7% on a comparable basis. Taking into account the one-time effects of IAS 19, profit increased even more significantly by 20.3% before minority interests and by 21.8% after minority interests. Galenica therefore anticipates that the Group will record double-digit profit growth for the 18th consecutive year in 2013, this time both before and after minority interests.
Sales of the intravenous iron drug Ferinject®, up by 31.8% to CHF 73.7 million, again recorded double-digit sales growth, exceeding sales of Venofer® for the first time. The FDA approval for Injectafer® (the US brand name of Ferinject®) for the US market, which was awarded at the end of July 2013, will give the product a further growth spurt.
The first regulatory filings for the new phosphate binder PA21 were submitted at the end of 2012 and the beginning of 2013, with the first decisions expected from the FDA at the end of 2013.
The Logistics, Retail and HealthCare Information business sectors also made a significant contribution to the good half-year results. Despite widespread government-mandated price reductions, they all increased in profitability again. The integration of Medifilm Ltd. into the Logistics business sector in July 2013 will allow Galexis to broaden its range of services and enable pharmacies to offer individual blister packaging for patients in care homes. Also in July 2013, GaleniCare acquired a 49% stake in the pharmacy Bahnhof Apotheke Zurich, the largest pharmacy in Switzerland and highly successful and strategically well-positioned in the Zurich main station.
Other and eliminations
_Shareholders of Galenica Ltd.
The Galenica Group increased net sales by 2.0% year-on-year to CHF 1,648.6 million in the first half of 2013. Currency effects had a negligible impact. On a comparable basis, i.e. excluding one-time effects due to IAS 19, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 1.5%, the operating result (EBIT) by 1.8% and consolidated net profit before and after deduction of minority interests (non-controlling interests) by around 7%. Including the aforementioned one-time effects, EBITDA increased by 9.6% to CHF 240.8 million and EBIT by 11.6% to CHF 203.7 million. Consolidated net profit before minority interests rose accordingly to CHF 160.0 million (+20.3%) or to
CHF 148.2 million (+21.8%) after minority interests.
In the first half of 2013, Galenica again made significant investments totalling
CHF 62.6 million (CHF 70.5 million in the first half of 2012) in research and development activities including studies for Ferinject®, PA21 and Infectious Diseases/OTX. Investments in tangible and intangible assets totalled CHF 33.1 million (compared with CHF 24.0 million in the same period last year).
All in all, in the first half of 2013, the Pharma business sector generated net sales of CHF 318.3 million, an increase of 5.0%. Income from licensing fees for CellCept amounted to CHF 50.5 million. Earnings before interest and taxes (EBIT) fell by 4.8% to CHF 134.4 million due to the "Other revenue" position, which declined by 20.5 million year-on-year. Adjusted for this amount, EBIT growth would reach nearly 10%.
Vifor Pharma Rx
Ferinject® expands into new markets and therapeutic areas. Sales of the intravenous iron drug Ferinject® continued to increase strongly international sales grew by 31.8% to CHF 73.7 million, while the number of 100 mg units of Ferinject® sold rose by 43.5%, in particular in the UK (+53%), Spain (+30%), Austria (+35%) and France (+33%). In Switzerland too, sales increased by 15.6%.
Venofer® generated sales of CHF 59.3 million (-17.4%). Sales were again impacted by price pressure and government-mandated price reductions in several markets as well as iron sucrose similars (ISSs) and substitution effects from Ferinject® in Europe. In the USA, pressure on prices and the optimised use of intravenous iron replacement products in haemodialysis had a negative impact.
Sales of other iron replacement products rose to CHF 32.7 million (+9.1%), including the oral iron replacement product Maltofer® with growth of 13.4% to
CHF 27.0 million.
FIND-CKD study reaches primary endpoints. A strategic priority is to tap the market potential of injectable iron in therapeutic areas other than the dialysis market. In the first half of 2013 Vifor Pharma made a significant step in the area of non-dialysis chronic kidney disease (ND-CKD) by concluding the FIND-CKD study to determine the optimal form of iron therapy administration and dosage strategy for patients with ND-CKD suffering from iron deficiency anaemia. The study reached its primary endpoints; the detailed results will be submitted for presentation at the American Society of Nephrology (ASN) Kidney Week in November 2013.
Injectafer® approved in the USA. Supporting the American partner Luitpold Pharmaceuticals, Inc. (Daiichi Sankyo Group), in the registration and the launch of Injectafer® (US brand name of Ferinject®) was another priority for Vifor Pharma.
At the end of July 2013, the US Food and Drug Administration (FDA) approved Injectafer® for the treatment of iron deficiency anaemia in adult patients with an unsatisfactory response or intolerance to oral iron. Injectafer® is therefore the first non-dextran intravenous iron therapy to be approved by the FDA for the treatment of iron deficiency anaemia in a diverse group of patients and regardless of the underlying cause. The Galenica US partner, Luitpold Pharmaceuticals, Inc., instituted the product’s market launch as soon as the decision was announced. This means that Vifor Pharma has now achieved a major milestone and launched its best-selling product in the world’s largest healthcare market.
New partnership for Ferinject® in Japan. In August 2013, Vifor Pharma entered into an exclusive licensing agreement with Zeria Pharmaceutical Co., Ltd. for the development and commercialization of Ferinject® in Japan. The collaboration with Zeria Pharmaceutical Co., Ltd. is a significant milestone in the global growth strategy for Ferinject®. The strong development and marketing capabilities at Zeria Pharmaceutical Co., Ltd. are ideally suited to introduce Ferinject® to the Japanese market place. As many as 18 million people in Japan exhibit signs of anaemia mainly due to iron deficiency.
Submission dossier for PA21 filed in key markets. Vifor Fresenius Medical Care Renal Pharma, the common company with Fresenius Medical Care, expanded its global presence and is working on preparing the market launch of the phosphate binder PA21 for 2014. In the first half of 2013, PA21 was filed with the regulatory authorities in Singapore, Switzerland and the USA. All submissions were validated by the respective regulatory authorities during the first half of the year and the FDA has set a target action date of 1 December 2013 (PDUFA) to complete the review of the dossier. Subsequent decisions are anticipated in 2014.
Infectious diseases/OTX: Strong growth for Broncho-Vaxom®
The Infectious Diseases/OTX franchise saw growth in its immunostimulant product range. Global net sales of Broncho-Vaxom® increased to CHF 21.4 million (+24.6%), while sales of Uro-Vaxom® were CHF 8.5 million (+10.5%).
Notably, development in Russia has been very good, with a new partner generating increasing sales of Broncho-Vaxom®. This product also performed well in Switzerland, where a new campaign was launched.
Consumer Healthcare: better medical training for pharmacies and drugstores
Total sales at Vifor Pharma Consumer Healthcare Switzerland rose to CHF 47.2 million in the reporting period, an increase of 22.6%.
Sales of OTC products in Switzerland grew by 21.9% to CHF 30.1 million. The strategy change initiated in 2012, focusing on sales efficiency, marketing measures based on customer insights and a unique medical training programme for pharmacies and drugstores has been rolled out and is already paying off. Sales were supported in particular by the flu epidemic. Magnesium Vital Sport® and Magnesium Vital One® products, launched in 2012, have continued to outperform the market in their categories. In the first half of 2013, two new products were successfully introduced: Tenderol® Herpatch Serum to treat orolabial herpes and Triofan® Hay Fever natural relief nasal spray and eye drops. Algifor® and Triofan® also witnessed strong growth.
The third-party manufacturing business continued to expand, with an increase of 23.8% to CHF 17.1 million on a year-on-year basis. The product Tecfidera™, formerly known as BG-12, was approved by the FDA in March 2013 as oral therapy for patients with multiple sclerosis, and manufacturing activities for Biogen Idec are going according to plan.
Consumer Healthcare export sales fell slightly in the period under review to
CHF 13.6 million (-3.4%). Geographic expansion continues to progress.
The Logistics business sector posted slightly higher sales year-on-year for the first half of 2013 at CHF 1,048.7 million (+1.0%). Earnings before interest and taxes (EBIT) grew by 22.3% to CHF 15.8 million. Given the price reductions in the Swiss pharmaceutical market, this is a remarkable performance and proof of the successful implementation of measures to improve efficiency.
Exploiting cross-business sector synergies. An important, ongoing efficiency enhancement programme is operating under the name COAXIAL, covering the Logistics, Retail and HealthCare Information business sectors. It aims to standardise the different IT infrastructures and merge them into a single data centre in Niederbipp. The project is proceeding according to plan and should be concluded in 2014.
Several companies are interested in Switzerland-wide exclusive distribution via Galexis. Following Procter & Gamble, the cosmetics supplier Quarz Ltd., whose brands include Sans Soucis, opted for exclusive delivery by Galexis in 2013.
Expansion of the service offering. In July 2013, Galexis acquired Medifilm Ltd, the leading company in the field of blister packaging for medicines. Medifilm prepares medicines individually for patients in care homes on behalf of pharmacies. By integrating Medifilm, Galexis can extend its range of services with a new, attractive offering. The plan is to roll out the service, which is currently primarily offered in German-speaking Switzerland, across the rest of the country.
The Retail business sector was able to continue last year’s upturn and increased sales in the first half of 2013 by 4.6% to CHF 609.9 million, with like-for-like growth accounting for 1.4%. By far the largest proportion of the increase in volume is due to further expansion of the pharmacy network, to which nine own pharmacies were added. Price cuts in the Swiss pharmaceutical market continued to have a discernible impact. The Retail business sector compensated for these with increased customer traffic and service-related sales in the pharmacies. Earnings before interest and taxes (EBIT) increased overall, rising significantly in the first half of 2013 by 14.9% to CHF 30.2 million.
Expansion of the range. Continuing range expansion for products and services is being given equal priority to increasing efficiency in the Retail business sector.
As part of a pilot project, Coop Vitality and Amavita are now offering a quick allergy test in their pharmacies in the Canton of Zurich. Around one quarter of the Swiss population suffers from an allergy. To celebrate the 25th anniversary of the customer magazine "for me", Sun Store is offering customers a range of special offers and promotions. The "Sunny Monday" promotion, which was launched in 2012 to mark the pharmacy chain’s 40th anniversary, is also being continued in 2013 due to its great success.
MediService’s Pharma Care business unit expanded its scope beyond the previous therapy segments of multiple sclerosis, oncology and autoimmune diseases in the first half of 2013, and now includes medicines for haematology and haemophilia. Winconcept, the marketing services provider for autonomous and independent pharmacies, conducted a customer survey with the objective of strengthening customer loyalty and collecting information to further develop its services.
Stake in Bahnhof Apotheke Zurich, the largest pharmacy in Switzerland. In July 2013 GaleniCare Holding Ltd. acquired a 49% stake in the pharmacy Bahnhof Apotheke Zurich, thereby expanding its pharmacy network with a highly successful and strategically well-positioned pharmacy. With over 350,000 commuters and travellers passing through each day, Zurich main station is the most frequented place in Switzerland. GaleniCare is intended to become the majority shareholder at a later date. Until that time, the majority shareholder will retain sole responsibility for managing the pharmacy.
Sales in the HealthCare Information business sector declined by 14.8% to
CHF 20.8 million in the first half of 2013. This was due to the absence of turnover from services following the sale of external ERP activities to an third-party, together with a decline in the number of contracts concluded with the pharmaceutical industry for the Swiss Drug Compendium (Arzneimittel-Kompendium der Schweiz®) as a result of the new regulatory framework. The operating result (EBIT) increased nonetheless by 5.6% to CHF 2.6 million.
“Kinderdosierungen” project receives Swiss Quality Award. When it comes to medicating children, incorrect dosage is one of the most frequent sources of error. With the support of Documed and e-mediat, the Zurich Children’s Hospital has launched the “kinderdosierungen.ch” website to tackle this problem. The project was recently given the Swiss Quality Award 2013 in Patient Safety by the Swiss Medical Association FMH.
HealthCare Information has launched a cross-company project to tap additional potential synergies. The objective is to develop offerings that better align current software modules.
Galenica is a diversified Group active throughout the healthcare market which, among other activities, develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistical and database services and sets up networks. With its two Business units Vifor Pharma and Galenica Santé, the Galenica Group enjoys a leading position in all its core business activities. 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).
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Head of Corporate Communications