Pharmacy group Galenica expects further growth

Pharmacy group Galenica wants to increase profits more this year than in 2023. However, last year’s result was depressed by special effects. The dividend must remain at least at last year’s level.

After the pharmacy and healthcare group presented all its turnover figures in January, the announcement on Tuesday focused mainly on profit and prospects. Adjusted operating profit (EBIT) in 2023 amounted to 191.3 million francs, approximately at the same level as the previous year.

Galenica had already warned in the summer that special factors amounting to 9.8 million francs would have an impact on operating profit. These factors include a 2017 ruling by the Competition Commission (Comco) or extraordinary value adjustments on customer receivables, especially in the wholesale business with doctors.

The bottom line is that a profit of 161.6 million francs remained in 2023, which is 2.8 percent higher than the previous year. Although EBIT is roughly in line with analyst expectations, net profit is above experts’ expectations. Galenica wants to pay a stable dividend of 2.20 francs per share to its shareholders.

The group has prospects for further growth before 2024. The group expects a turnover increase of between 3 and 5 percent. Adjusted EBIT is expected to rise slightly more strongly in 2024 by 8 to 11 percent. The dividend should again be at least at last year’s level.

Not least because of demographic developments and innovation with many new, expensive medicines, Galenica expects continued strong growth of approximately 5 percent in the Swiss pharmaceutical market in the coming years. The hospital channel is likely to show the strongest growth, as shown by the group’s presentation. In contrast, pharmacies and medical practices are expected to achieve an average growth of between 3 and 5 percent.

In contrast, trade in non-medicinal products is likely to stagnate, not least due to increasing competition from other retailers’ offerings. Against this background, Galenica expects market growth of between 1 and 3 percent for an average local pharmacy, without expensive medicines.

Together with the financial targets for 2024, the group also confirms its medium-term targets, which it had revised upwards at the investor day at the end of October. In addition to sustained revenue growth of between 3 and 5 percent, these targets also provide for an adjusted EBIT of more than 250 million francs by 2027.

Last but not least, the numerous strategic decisions and programs are designed to help the company achieve these goals. Galenica, for example, strives to offer customers an extensive online and offline offering through its pharmacies. Ultimately, the idea is to respond to megatrends such as changing customer needs. But the group also takes the aging population into account by offering patient care at home. (sda/awp)