2013 performance stronger but still below expectations
In 2013, Pelion Healthcare Group's consistent work toward consolidating its position in the healthcare market in Poland and Lithuania led to a year-on-year improvement in key financial metrics. Still some figures, particularly net and operating margins, came as a disappointment. The achieved results stop us from developing the right balance between the interests of patients, employees and investors.
A demanding year behind us
Changes in the legal framework stemming from regulations enacted in January 2012 had a severe impact on the condition of the pharmaceutical distribution market in 2013. The direct ramifications of these changes include a sharp drop in sales of reimbursable drugs and a concurrent steep rise in sales of non-reimbursable and OTC drugs; distributor margins that are worryingly narrow and drug prices that are among the lowest in Europe (which is a paradox considering that in Poland patient cost-sharing in healthcare is the highest); and unforeseen struggle of the private sector to build a modern, efficient and comprehensive pharmaceutical care system, which would support the government in its healthcare education mission but also (and perhaps even more importantly) in rationalising its healthcare spending. Pharmacies today are unable to provide pharmaceutical care to modern standards or expand their OTC business as the market is becoming increasingly populated by non-pharmacy retailers. As a result, pharmacies may be turning into simple prescription drug dispensaries, with reimbursement money from the government as their primary source of revenue. Meanwhile, from the state budget perspective, pharmacies should rely on OTC products for most of their profit.
Instead of opening the industry to technology-based innovative solutions, the regulatory changes from two years ago, by delivering a blow to innovation, have taken the industry back to the 19th century.
The industry’s disagreement with the existing regulations was expressed by the Polish Confederation of Private Employers (PKPP Lewiatan) filing two complaints with the European Commission − one stating that the pharmacy advertising ban infringes fundamental economic freedoms protected in the Treaty on the Functioning of the European Union and the other claiming that the ban contravenes the EU competition law.
For us, a hurdle is a challenge to be overcome
The tough conditions on the healthcare market in Poland prompted us to look for even more effective ways to streamline our operations and for growth opportunities in new market segments. In 2013, we were focused on refining our management processes and maximising synergies among Pelion Healthcare Group's four business lines. The consistent strategy of geographic and business diversification helped us lift sales across our core segments.
Operating to the highest CSR standards
In 2013, as confirmation of our compliance with the highest CSR standards, Pelion Healthcare Group was twice included in the RESPECT Index, the Warsaw Stock Exchange index of sustainably managed companies, which are leaders in corporate governance, quality reporting and investor relations, and which stand out for their pro-environmental, social and employee-oriented activities.
Another difficult year ahead
The beginning of 2014 brought further important changes to participants in the domestic pharmaceutical market, the wholesale distribution segment in particular. As of January 1st, the statutory wholesale margin on reimbursable drugs has been further reduced to the target level of 5%, forcing pharmaceutical distributors to search for more cost savings and new business development areas.
The key challenge faced by Pelion Healthcare Group is now to find a consensus between the patient's interest, the employees' interest, the principles of managing a healthy business and the terms and conditions imposed by the market regulator. One way to attain this goal is growth-oriented investment, to which we want to apply most of our 2013 profit.
The table below presents our 2013 financial highlights, along with year-on-year comparative data:
For further details please contact:
Renata Borkowska-Kubiak
PR Executive Officer / Press Officer for Pelion S.A.
Tel.: (+48 42) 200 79 19
Mobile: (+48) 785 858 991
Fax: (+48 42) 200 75 35
Email: renata_borkowska-kubiak@pelion.eu
Pelion S.A. has operated on the market for twenty-three years. It began life as a local pharmaceutical wholesaler. In 1998, the Company shares were floated on the Warsaw Stock Exchange. Proceeds from the initial public offering fuelled the Company’s dynamic growth and allowed it to embark on consolidation of the pharmaceutical wholesale market. Since its floatation, the Company has secured a top position among domestic distributors of medicinal products. Today, Pelion Healthcare Group is one of the largest groups operating on the healthcare markets in Poland and Lithuania. The Company's services cover all market segments (wholesale, retail and sale to hospitals) and are targeted at individual patients, pharmacies, hospitals and manufacturers. As a holding company, Pelion S.A. oversees all areas of the Company’s operations, which are conducted by PGF S.A. and Pharmapoint Sp. z o.o. (wholesale), PGF Urtica Sp. z o.o. (sale to hospitals), CEPD N.V. (retail sale), and Pharmalink Sp. z o.o. (services for manufacturers).
The key challenge faced by Pelion Healthcare Group is now to find a consensus between the patient's interest, the employees' interest, the principles of managing a healthy business and the terms and conditions imposed by the market regulator. One way to attain this goal is growth-oriented investment, to which we want to apply most of our 2013 profit.
The table below presents our 2013 financial highlights, along with year-on-year comparative data:
| Q1–Q4 2013 | Q1–Q4 2012 | Change (%)* | |
| Revenue (PLNm) | 7,302.0 | 6,685.5 | 9.2% |
| EBITDA (PLNm) | 164.4 | 139.6 | 17.8% |
| EBITDA margin (%) | 2.3% | 2.1% | +0.2pp |
| Operating profit (PLNm) | 128.3 | 100.8 | 27.3% |
| Operating margin (%) | 1.8% | 1.5% | +0.3 pp |
| Net profit attributable to owners of the Parent (PLNm) | 100.2 | 57.4 | 74.6% |
| Net margin (%) | 1.4% | 0.9% | +0.5pp |
| Earnings per share (PLN) | 8.88 | 4.88 | 82.0% |
* Change calculated based on figures in PLN '000
For further details please contact:
Renata Borkowska-Kubiak
PR Executive Officer / Press Officer for Pelion S.A.
Tel.: (+48 42) 200 79 19
Mobile: (+48) 785 858 991
Fax: (+48 42) 200 75 35
Email: renata_borkowska-kubiak@pelion.eu
Pelion S.A. has operated on the market for twenty-three years. It began life as a local pharmaceutical wholesaler. In 1998, the Company shares were floated on the Warsaw Stock Exchange. Proceeds from the initial public offering fuelled the Company’s dynamic growth and allowed it to embark on consolidation of the pharmaceutical wholesale market. Since its floatation, the Company has secured a top position among domestic distributors of medicinal products. Today, Pelion Healthcare Group is one of the largest groups operating on the healthcare markets in Poland and Lithuania. The Company's services cover all market segments (wholesale, retail and sale to hospitals) and are targeted at individual patients, pharmacies, hospitals and manufacturers. As a holding company, Pelion S.A. oversees all areas of the Company’s operations, which are conducted by PGF S.A. and Pharmapoint Sp. z o.o. (wholesale), PGF Urtica Sp. z o.o. (sale to hospitals), CEPD N.V. (retail sale), and Pharmalink Sp. z o.o. (services for manufacturers).
