STADA: Record first half year results - optimistic for further growth
08/26/2003 . Press Release
At today’s presentation of first-half figures,STADA’s CEO Hartmut Retzlaff concluded: “The new record results for sales and earnings in the first half of 2003 confirm STADA’s successful growth strategy.”
Compared to the first half of the prior year, STADA increased its consolidated sales in the first half of 2003 by +16% to EUR 358.6 million. Compared to the first half of 2002, the core segments generics, branded products and special pharmaceuticals grew by +28% with sales totaling EUR 340.2 million.
In the first half of 2003, STADA generated sales of EUR 261.7 million with generics (up +26% compared to HY 2002), EUR 67.5 million with branded products (up +34% compared to HY 2002) and EUR 10.9 million with special pharmaceuticals (up +41% compared to HY 2002). Because of the planned reduction of the commercial business in the Netherlands, sales of non-core activities (commercial business, Group holding company) were EUR 18.4 million (down -57%). The core segments thus contributed 95% to consolidated sales (HY 2002: 86%).
An important event in the core segment generics in the first half of 2003 was the introduction of products with the newly patent-free active ingredient Simvastatin (for lipid lowering in lipometabolic disorders) in Germany and several other European markets. Owing to intensive investments in marketing, the results attained so far following the introduction in the German market in May 2003 confirm the high significance the sales of this drug have for the Group. By the end of June 2003, a total of EUR 6.1 million in sales had been generated with Simvastatin in Germany and EUR 10.2 million Group-wide. In the long term, Simvastatin is expected to be the second highest selling active ingredient in the Group.
The regional analysis shows a pleasing breadth of growth of the Group. In the first half of 2003, numerous subsidiaries within Germany and abroad contributed to STADA’s sales growth.
In the largest national market of the EU, Germany, which also continues to be STADA’s largest national market with a 53% share of Group sales, it was possible to increase consolidated sales in the first half of 2003 to EUR 190.1 million, i.e., by +14% compared to the same period of the prior year - and by even +18% to EUR 138.6 million in the generics segment.
Italy, currently STADA’s second largest national market, was able to increase its sales in the first half of 2003 by +152% to EUR 29.3 million compared to the prior year period. In addition to acquisitions, strong +34% organic growth in sales (first half of 2003 vs. first half of 2002) of the local generics line contributed to this result.
In the emerging French generics market, STADA generated sales of EUR 16.0 million in the first half of 2003 and continues to invest heavily in the further expansion of its market position. With +84% organic growth, STADA even exceeds the high growth rates of the total generics market in that country.
In the U.S. as well, the expansion of the Group’s own business activities is proceeding continuously and successfully. In the first half of 2003, STADA generated total sales of EUR 22.6 million in the U.S., which is equivalent to +15% growth compared to the first half of 2002. In local currency, Group sales in the U.S. in the first six months of 2003 even increased by +43% to US$ 25.3 million compared to the same prior year period.
A comparison of sales of the first half of 2003 with the first half of 2002 shows that outstanding growth rates were also achieved in the United Kingdom (up +97% including the acquisition of the generics sales line Genus from Schein Pharmaceuticals in the first quarter of 2003), in Spain (up +158% including the acquisitions made there in 2002), in Austria (up +37%), in Denmark (up +45%) and in Belgium (up +17%).
STADA’s CFO Wolfgang Jeblonski also reported new records on the earnings side as well. In the first six months of 2003, consolidated net income rose to EUR 23.2 million (up +17% compared to HY 2002), earnings before taxes (EBT) to EUR 40.3 million (up +22% compared to HY 2002) and earnings before interest and taxes (EBIT) to EUR 47.4 million (up +24%compared to HY 2002). Earnings per share for the first half of 2003 were EUR 1.16 (HY 2002: EUR 1.06, with approx. 6% fewer shares at that time); diluted EPS (in accordance with IAS 33.24) was EUR 1.07 (HY 2002: EUR 0.98).
The Executive Board sees the Group’s current successes and growth potentials as confirmation of the correct strategic positioning. In the health market, STADA concentrates on multisource products, i.e., drugs, medical or health products that are accessible to it without performing its own cost-intensive and risky basic research into new active ingredients.
Particularly dynamic growth worldwide is expected in the market for generics, the largest of STADA’s core segments. This growth will be supported by the need for cost-effective therapies as well as the continuous stream of drugs that are no longer covered by patents. In the four most important countries of the EU alone (Germany, France, United Kingdom and Italy), active ingredients with current sales volume of EUR 7.2 billion will become patent-free from 2003 through 2007 and will thus be available as a market potential for generic products. But also the growth of generic products with active ingredients that have been patent-free for some time is as a rule far from being over in the individual national markets. The cost pressure of the national health systems continues to support the market penetration of inexpensive drugs and is thus a constant growth stimulus for generic products.
An important success factor for STADA continues to be its leadership position in product development. “The primary goal of our own product development,” says the member of the Executive Board responsible for this area, Dr. Klaus-Peter Reich, “is comparable or optimized dosage forms of known drugs.” STADA’s development strength is evident in the large number of annual product introductions. In the first half of 2003, 183 new products were introduced Group-wide (first half of 2002: 107 new products introduced).
In keeping with the strategic premise of a concentration on patent-free active ingredients, STADA’s development activities are also becoming increasingly wide-ranging. Several development activities using advanced pharmaceutical technology such as a transdermal patch either have been already started or are in the evaluation stage. The goals of these activities may exceed a pure equivalence with the products of the initial suppliers.
Using venture capital financing and external developers, STADA has been developing biogenerics based on the three biopharmaceutical active ingredients Erythropoetin, Filgrastim and Interferon beta since early 2001. The cumulative market potential of these three active ingredients in the EU is continuing to grow in 2003 and as of March 31, 2003 it has reached EUR 2.3 billion. The approval experts involved have discussed the structure and scope of the necessary clinical studies with national and European authorities. STADA thus expects that it will be possible to start these studies still this year with the goal of an initial market introduction by the end of 2006. STADA continues to expect to generate at least EUR 100 million in sales with these biogenerics after the third full marketing year. For STADA, biogenerics thus offer a supplemental growth potential to complement the expected structural growth impulses in the core segments.
In its outlook, the STADA executive board anticipates a successful continuation of the growth strategy. “Our spirit of optimism is unchanged. We continue to expect that double-digit percentage growth rates for sales and earnings will make 2003 another record year for STADA,” says CEO Retzlaff, underscoring the Group’s further ambitions for growth. “And irrespective of any healthcare policy factors, from the present perspective, we expect the double-digit percentage growth in sales and earnings to continue in 2004 as well.”
You'll find the complete half year report and the ad hoc release on the Internet at www.stada.com.
For more information, please contact:
STADA Arzneimittel AG
D-61118 Bad Vilbel
Tel.: +49 6101 603-113
Fax: +49 6101 603-506