Utrecht, July 26, 2012
Net sales - Down 2% to € 647.1 million; growth from acquisitions at Direct & Institutional; sales decrease at Pharmacies Netherlands and Pharmacies Poland.
EBITA from ordinary activities 1 - Decrease by 18% to € 24.3 million; mainly due to € 5.9 million decrease at Pharmacies Netherlands.
Net result - Amounted to € 12.3 million, reflecting lower EBITA and higher amortisation of customer relationships.
Net earnings per share from ordinary activities 1 - Amounted to € 0.29, decrease by 12% reflecting lower EBITA from ordinary activities, partly offset by lower number of shares outstanding.
Outlook 2012 - Further specification of previously given guidance: EBITA between € 111 million and € 116 million.
Direct & Institutional
− Sales up 12% reflecting acquisitions. Organic decrease of 5% due to transfer of biopharmaceuticals to hospital budget (Netherlands). Excluding this effect, organic growth was 1%.
− Increase in result for medical devices partly offset by lower result on sales of (bio)pharmaceuticals to hospitals and patients (NL).
− EBITA margin from ordinary activities 7.9%; adjusted for two one-off items (related to the sales of pharmaceuticals to hospitals) the margin was 8.6%.
− Diabetes Specialty Center in USA consolidated as of 31 May.
− Sales and EBITA down due to substantially lower prices and lower volumes than expected; poor market conditions continue.
− Outcome of restructuring plan for pharmacy and wholesaling activities to be announced at publication of third quarter results.
− Sales down 8%, mainly due to depreciation of zloty; declined market, reflecting fewer discounts for patients due to regulatory changes.
− Growth in wholesaling market share.
− EBITA up, mainly due to improved gross margin.
Marc van Gelder, CEO:
“The introduction of deregulated pricing in the pharmacy sector in the Netherlands has led to very substantial margin pressure since the beginning of this year. In addition, the effects of patent expiries of several major pharmaceuticals were even more keenly felt in the second quarter. We already stated on the publication of our first quarter results that the changed market conditions necessitated vigorous intervention. We take our responsibility by reviewing our pharmacy and wholesaling activities. This has led to the identification of three focus areas of our upcoming restructuring plan, which is currently being developed in greater detail and which we will begin to implement after the summer.
This is an industry-wide issue. Wholesalers are impacted especially hard by the various developments. Due to the preference policy, for instance, the absolute margin on generic pharmaceuticals is not sufficient to cover the distribution costs and pharmacies are saddled with a large operational burden. There is consequently a risk of pharmacies and wholesalers going out of business, while patients need to be able to rely on a future-proof delivery of pharmaceutical care in a strong primary healthcare service and on the safe distribution of medicines. As a member of various industry organisations, Mediq is engaged in extensive discussions with various parties in the field, amongst others the government, insurers and manufacturers. The introduction of a measure such as a cost covering distribution fee for wholesalers would represent an important step towards a healthier market. No tangible solution is in sight yet, however. We are also keen to talk about the future of the Dutch pharmacy network.
With conviction we put our pharmacists’ knowledge and experience central to optimise the quality of pharmaceutical care. Outcome based solutions, and not just the dispensing of pharmaceuticals, should be the guiding consideration. Putting this into practice, we successfully implemented our Integrated Pharmaceutical Care Programme GFZ in the past year and together with prescribers have already adapted 25,000 patients’ medication. This produces better care at a lower cost because complications are avoided.
The underlying trends in Direct & Institutional remain positive for medical devices. Sales in especially homecare activities in the Netherlands, the USA and Germany, and in deliveries to healthcare institutions and professionals in Sweden and the Baltic states increased. Apart from organic growth there was also a good contribution from acquisitions. Our operating result was however adversely impacted by a negative result at the delivery of (bio)pharmaceuticals to hospitals and patients in the Netherlands, amongst others related to two one-off items, and lower sales in Norway and Finland due to different timing of projects. In terms of the margin, we were able to compensate these effects to a large extent by improving efficiency and deploying an improved product mix.
EBITA in the second half of the year will be significantly higher than in the first half, benefiting from good order books at several institutional business units, contributions from acquisitions and a strong fourth quarter.”