Pelion in Q3 2014: Investments in the health and beauty segment, pharmacy support programmes and expansion of the distribution network
Pelion has built its business strategy on the sound pillars of growth: high service quality, distribution security, guaranteed access to pharmaceuticals, and business diversification. In Q3 2014, our strategy was pursued through the acquisition of the Drogerie Natura beauty store chain, implementation of the ‘Zdrowy Wybór’ (Healthy Choice) programme for pharmacies, as well as the launch of a new distribution system ‘DOZ Direct’ and a logistics centre in Kaunas.
In Q3 2014, Pelion booked revenue of just under PLN 1.9bn, up 3.9% year on year, delivering a gross margin of almost PLN 200m and an EBITDA of close to PLN 30m.
Our financial results were strongly affected by the drug reimbursement law, and particularly by the reduction of the statutory wholesale margin to 5% (a level that makes sales of reimbursable drugs unprofitable), as well as by obstacles to conducting operations by pharmacies. Moreover, increased requirements on the quality of drug distribution (including those imposed under the new Good Distribution Practice guidelines) are bound to drive up our costs.
Despite this challenging market environment, Pelion continues to build its value by offering top-quality services to its customers, patients in particular, and deploying advanced technology that helps to create a secure and tightly controlled drug distribution system.
Our financial results were strongly affected by the drug reimbursement law, and particularly by the reduction of the statutory wholesale margin to 5% (a level that makes sales of reimbursable drugs unprofitable), as well as by obstacles to conducting operations by pharmacies. Moreover, increased requirements on the quality of drug distribution (including those imposed under the new Good Distribution Practice guidelines) are bound to drive up our costs.
Despite this challenging market environment, Pelion continues to build its value by offering top-quality services to its customers, patients in particular, and deploying advanced technology that helps to create a secure and tightly controlled drug distribution system.
Drogerie Natura beauty store chain officially joins the CEPD N.V. Group
With the related antitrust proceedings closed, on October 14th 2014 the President of the Office of Competition and Consumer Protection granted clearance to the acquisition by CEPD N.V. of control of Polbita, a company operating a chain of 258 beauty stores under the Natura brand. After all conditions precedent to the acquisition were satisfied, the ownership of shares in the company was transferred on October 31st 2014. The transaction is part of the strategy to diversify CEPD N.V.’s business and strengthen its presence in the health and beauty segment. The cosmetics and beauty store market in Poland is experiencing a rapid growth and, not being regulated by the government, allows the freedom to control margins and carry out unconstrained communication with customers, something that traditional pharmacies are denied under applicable laws. Drawing on the experience gained from managing large retail chains in Poland (‘Dbam o Zdrowie’ pharmacies) and abroad (‘Gintarine Vaistine’ and ‘Norfos Vaistine’ pharmacy chains in Lithuania), CEPD is planning to further grow the Drogerie Natura franchise, chiefly by expanding its range of products and services and strengthening its relationships with suppliers.
PGF – reliable partnerships with manufacturers and pharmacies to best serve the interests of patients
As Pelion’s wholesale managing arm, PGF offers manufacturers fair terms of cooperation, ensuring professional service and guaranteed distribution of products to pharmacies across Poland. PGF’s strategic priority is to provide support to independent pharmacies by implementing programmes that improve their financial standing, increase their profitability and meet patient expectations. With access to the nationwide network of partner suppliers, as part of its ‘Zdrowy Wybór’ (Healthy Choice) programme PGF offers a variety of tools, compliant with the medical prescription rules and the pharmaceutical law, that guarantee continuous growth to pharmacies. PGF has no plans of launching its own pharmacies, medical establishments or product brands, and hence is not a competitor to manufacturers or pharmacies.
‘DOZ Direct’ and the Kaunas project as investments in innovation and well-controlled drug distribution process
We have now completed the implementation of ‘DOZ Direct’, an innovative platform providing a closed, tightly controlled and fully secure system for distribution of drugs from the manufacturer to the patient. It guarantees access to the widest available range of pharmaceuticals, ensures safety of drug therapy, and provides means to confirm that no drug leaves a ‘Dbam o Zdrowie’ pharmacy without a prescription.
The Pelion-owned UAB NFG Group has launched a new logistics centre near the city of Kaunas, which is among the largest investment projects completed in Lithuania in the last five years. The new facility is equipped with a modern distribution line, which helps to significantly shorten delivery times, guarantees secure, safe and quality drug deliveries to pharmacies and hospitals, and broadens the range of services for manufacturers. The centre will largely improve the efficiency of logistics processes.
Sights set on further growth
The Group’s plan for the coming months is to achieve further growth across its business lines based on the development strategies of the individual companies.
Growth in wholesale to pharmacies will be pursued by scaling up the activities designed to support manufacturers in their drug sales efforts, continued implementation of the ‘Zdrowy Wybór’ programme, developing the e-commerce channel, and keeping the revenue growth rate above the market average.
In supplies to hospitals, the goal is to maintain market leadership and keep accounts receivable at a safe level.
In retail, the key priority is to guarantee access to the widest available range of products and affordable prices for patients. Other tasks will be to use the investments made in 2014 to optimise the costs of pharmacy supplies, and to best leverage the Drogerie Natura acquisition.
The key objectives in services for manufacturers, Pelion’s newest business line, is to win new accounts, particularly for direct and dedicated distribution services, and to optimise transport costs.
The table below presents the Q3 2014 financial highlights, along with comparative year-on-year data:
For further information, please contact:
Pelion S.A. Press Office
Phone: (+48 42) 200 75 94
Fax: (+48 42) 200 75 35
Email: biuro_prasowe@pelion.eu
Pelion S.A. has operated on the market for twenty-four years, starting out 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 flotation, the Company has secured a top position among domestic distributors of medicinal products. Today, Pelion Healthcare Group is one of the largest groups operating in the healthcare markets in Poland and Lithuania. It provides services across all market segments (wholesale, retail sales and sales to hospitals), 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. (hospital sales), CEPD N.V. (retail sales), and Pharmalink Sp. z o.o. (services for manufacturers).
Growth in wholesale to pharmacies will be pursued by scaling up the activities designed to support manufacturers in their drug sales efforts, continued implementation of the ‘Zdrowy Wybór’ programme, developing the e-commerce channel, and keeping the revenue growth rate above the market average.
In supplies to hospitals, the goal is to maintain market leadership and keep accounts receivable at a safe level.
In retail, the key priority is to guarantee access to the widest available range of products and affordable prices for patients. Other tasks will be to use the investments made in 2014 to optimise the costs of pharmacy supplies, and to best leverage the Drogerie Natura acquisition.
The key objectives in services for manufacturers, Pelion’s newest business line, is to win new accounts, particularly for direct and dedicated distribution services, and to optimise transport costs.
The table below presents the Q3 2014 financial highlights, along with comparative year-on-year data:
| Q3 2014 | Q3 2013 | Change (%)* | |
| Revenue (PLNm) | 1,853 | 1,784 | 3.9% |
| EBITDA (PLNm) | 29.2 | 31.1 | -6.1% |
| EBITDA margin (%) | 1.6% | 1.7% | -0.1pp |
| Operating profit (PLNm) | 20.0 | 22.3 | -10.3% |
| Operating margin (%) | 1.1% | 1.2% | -0.1pp |
| Net profit attributable to owners of the parent (PLNm) | 4.2 | 11.9 | -64.5% |
| Net margin (%) | 0.2% | 0.7% | +0.5pp |
| Earnings per share (PLN) | 0.38 | 1.06 | -64.2% |
* Change calculated based on figures in PLN ‘000
For further information, please contact:
Pelion S.A. Press Office
Phone: (+48 42) 200 75 94
Fax: (+48 42) 200 75 35
Email: biuro_prasowe@pelion.eu
Pelion S.A. has operated on the market for twenty-four years, starting out 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 flotation, the Company has secured a top position among domestic distributors of medicinal products. Today, Pelion Healthcare Group is one of the largest groups operating in the healthcare markets in Poland and Lithuania. It provides services across all market segments (wholesale, retail sales and sales to hospitals), 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. (hospital sales), CEPD N.V. (retail sales), and Pharmalink Sp. z o.o. (services for manufacturers).
