Galenica achieves solid growth in a challenging market environment

Galenica AG / Key word(s): Half Year Results

06-Aug-2024 / 06:45 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.

Press release
Ad hoc announcement pursuant to Art. 53 LR

Galenica Group sales grew by 2.6% to CHF 1,900.0 million in the first half of 2024. Both the “Products & Care” segment and the “Logistics & IT” segment contributed to the sales growth, with growth of 3.1% and 3.0% respectively. As a result, Galenica Group sales developed more dynamically than the market.

Compared with the pharmaceutical market, which grew by 1.7% (IQVIA, Pharmaceutical market Switzerland, first half of 2024) and the Consumer Healthcare market, which declined by 0.2% (IQVIA, Consumer Health Market Switzerland, first half of 2024), the Galenica Group gained market share with growth of 2.6%.

Following the 4.8% increase in Galenica Group sales at the end of April 2024, growth slowed sharply in the months of May, and particularly June 2024. While the constellation of sales days at the end of April was favourable compared to the same period of the previous year, with an estimated positive impact of around 1% on sales growth, at the end of June 2024 this effect was negative compared to the previous year, which dampened growth accordingly. By the end of the year, this effect will be positive again.

A cold and rainy early summer also meant that demand for seasonal products such as sunscreen, outdoor and allergy products was exceptionally low in May and June 2024. In addition, significantly increased sales of generics and biosimilars dampened growth. This development was driven in particular by the increase in the deductible from 20% to 40%, which came into force on 1 January 2024, if patients prefer another medicine that is more than 10% more expensive for the same active ingredient. In the first half of 2024, Galenica pharmacies increased the generic substitution rate from 75.2% at the end of 2023 to 80.8%, thus making a significant contribution to curbing rising healthcare costs.

Reported EBIT increased by 10.7% to CHF 102.4 million. The adjusted¹ EBIT of the Galenica Group, i.e. excluding the effects of the IFRS 16 (Leases) and IAS 19 (Employee benefits) accounting standards, increased by 9.9% to CHF 99.1 million. In the previous year, earnings were negatively impacted by special factors in the amount of CHF 9.8 million. Adjusted for these special factors, EBIT would have declined slightly in the first half of 2024 by 0.9%. The flat EBIT development was due in particular to the lower-than-expected sales growth. In addition, higher expenses in connection with the further expansion of the IT infrastructure to implement the “Omni-Channel” strategy as well as temporary efficiency losses and additional burdens due to the modular introduction of the new ERP (enterprise resource planning) system at Galexis that started at the beginning of the year had a negative impact on the result.

2024 Guidance confirmed

Galenica expects significantly stronger growth in the second half of 2024 than in the first half of the year. Galenica therefore confirms its guidance for the 2024 financial year with sales growth of between 3% and 5%, EBIT¹ growth of between 8% and 11% and a dividend at least at the previous year’s level.

Highlights of the first half of 2024

• The pharmacy network has undergone dynamic development since the beginning of the year: nine new pharmacies were acquired, one new pharmacy was opened and five pharmacies were closed or merged with other locations.
• In the first half of 2024, around 93,000 customers used fee-based healthcare services and consultations offered by Galenica pharmacies, 32% more than in the same period of the previous year.
• Compared to the same period last year, demand for vaccinations in Galenica pharmacies increased by 30% (excluding COVID-19 vaccinations). 
• After a successful pilot project, 250 of the approximately 370 Galenica pharmacies can now directly consult a doctor digitally via "Book a Doc" in a test phase, enabling them to quickly organise a telemedical consultation for complex cases.
• Galenica is further expanding its cooperations with health insurers. For example, the costs of consultations in Galenica pharmacies will now be covered under AXA supplementary insurance policies. Assura, KPT and atupri have also integrated numerous healthcare services such as heart and diabetes checks or immunisations into their supplementary insurance models.
• Verfora was able to further expand its market position – with growth of 4.5%, sales of Verfora products in the pharmacy and drugstore market outperformed the overall market (IQVIA, Consumer Health Market Switzerland, YTD June 2024), enabling further market share to be gained.
• Alloga was able to migrate all customers to the new ERP solution and thus complete the project. 
• HCI Solutions has also performed well – by the end of June, around 174 million CDS checks (Clinical Decision Support) had been performed (+30%), making an important contribution to patient safety. 

Key figures of the Galenica Group in the first half of 2024

(in million CHF)

1^st half of 2024

1^st half of 2023

Change

Net sales

Products & Care segment

Retail (B2C)

Professionals (B2B)

Logistics & IT segment

Galenica Group

EBIT adjusted¹

Galenica Group

Net profit from ongoing business activities adjusted¹

Detailed information in the half year report 2024:

• Management report of the Galenica Group
• Management report for the Products & Care segment
• Management report for the Logistics & IT segment
• Key figures

¹⁾ Excluding the effects of IFRS 16 and IAS 19 (details of the adjusted key figures in the half year report 2024)

Further information can be found in the Galenica Group half year report 2024.

Dates for the diary

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Welcome to the Galenica network!
Our ambition is to meet the needs of patients and customers in the Swiss healthcare market in a seamless, efficient and personalised way. To achieve this, we operate the Galenica network with over 20 Business Units, the strongest partners in the Swiss healthcare market. We offer fully inte-grated solutions both for customers and patients as well as for pharmacies, drugstores, medical practices, hospitals, retirement and nursing homes, home care providers, wholesalers, pharma-ceutical companies, health insurance funds and other partners.
Galenica is listed on the Swiss Stock Exchange (SIX Swiss Exchange, GALE, security number 36,067,446). Additional information concerning Galenica can be found at www.galenica.com.