Stada Hints At Further Deals To Come As It Posts Big Sales Rise
Executive Summary
Germany's Stada posts 22% jump in first half sales thanks to recent deals and reveals that more acquisitions may soon follow.
STADA Arzneimittel AG reported turnover at its Branded Products business up 22% to €632m ($747m) in the first half of 2020 as a series of consumer health acquisitions across Europe and Asia drove up sales. The German group hinted that further deals could follow, noting that it was continuing to look at a range of business development opportunities.
During the opening six months of 2020, Stada said it had closed a number of key acquisitions to expand Branded Products, including deals for 15 brands from GSK in Europe, a portfolio of OTC and Rx lines from Takeda in Russia and the CIS, and the Fern C range of supplements in the Philippines (see list of related content).
Furthermore, the acquisition of Central and Eastern European consumer health player Walmark had also been finalised in the period, Stada noted, with work already underway to expand its center of excellence for producing vitamins, minerals and supplements in Třnec, Czech Republic. (Also see "Stada Plots Eastern European Expansion With Walmark Deal" - HBW Insight, 4 Nov, 2019.)
Integration of all four of these acquisitions was progressing successfully, Stada reported.
COVID Ups And Downs
While deals had driven up first-half sales, Stada revealed it had also enjoyed good organic growth, despite the challenges posed by the COVID-19 pandemic. Notable rises had been recorded in the UK and Italy, the firm said, with Germany, the CIS and the rest of Europe also performing strongly.
Commenting on the impact of coronavirus on Branded Products’ sales, Stada explained that the first quarter of 2020 had been characterized by strong demand due to stockpiling by wholesalers, pharmacies, patients. The second quarter, on the other hand, had been shaped by purchasing restraint, the company pointed out, reflecting the significantly reduced number of visits to pharmacies by consumers.
Turning to earnings, Branded Products posted operating profit up 4% to €113m in the six-month period, thanks to growth in the UK and Italy, and the positive development of Stada’s Russia business following the close of the Takeda deal. (Also see "Stada Takes Lead In Russia's OTC Market As Group Sales Rise Double-Digits" - HBW Insight, 13 Mar, 2020.)
Branded Products accounted for 43% of Stada’s total first-half groups sales, which advanced by 16% to €1.47bn. The Generics business generated for the remainder of group turnover, posting sales up by 12% to €833m.
Further Deals On The Cards
Stada noted the group was continuing to evaluate a “broad range of business-development opportunities,” in line with fostering an entrepreneurial mindset at the company.
Speaking to HBW Insight earlier this year, Stada’s CEO Peter Goldschmidt said the firm was keen to strike OTC licensing and partnership deals to grow its Branded Products business globally. (Also see "Stada’s Goldschmidt Looks To Take Consumer Health Global" - HBW Insight, 19 Jun, 2020.)
“We will still look [at deals], we still have opportunity to grow,” Goldschmidt said. “We have liquidity and a clear strategy with the support of our owners that we want to create long-term sustainable growth.”
“It’s one of our key strategic pillars to drive development both inorganically and organically.”
Looking ahead to the remainder of 2020, Goldschmidt said he was feeling “optimistic” about Stada’s growth trajectory, even though it would not be an easy ride with the COVID-19 outbreak far from over.
“Given the ongoing negative effects of the coronavirus pandemic, we must continue to show high levels of agility and commitment to remain on our growth course during the second half of 2020,” Goldschmidt insisted.
“But nevertheless, I think we have a lot of ideas and our entrepreneurship will also ensure that we have the opportunity to build a long-term sustainable growth future for Stada.”