Major Polish Pharmaceutical Distributors Report Revenue and Profit Growth in H1

Two of the largest pharmaceuticals distributors operating on the Polish market, Torfarm and Polska Grupa Farmaceutyczna (PGF), have recently reported their financial results for the first half. Both companies have reported growth, although Torfarm, which is the largest pharma distributor in Poland since its takeover of Prosper in April, has far outperformed PGF in this period. Prosper was not consolidated into the Torfarm group until 1 May, and therefore the impact of the takeover is not greatly reflected in Torfarm's first-half results. The group earned 2.558 billion zloty (US$870.5 million) in the first half, which represented an increase of 27.1% year-on-year (y/y), while its net profit increased by 38.8% y/y to 13.3 million zloty. Contrastingly, PGF achieved only a 0.03% y/y growth in its revenues in the first half of 2009, reaching 2.686 billion zloty, while its profit rose by 1.2% in this period to 22.04 million zloty.

Torfarm's results need to be seen in the context of its recent acquisition, Prosper, only becoming consolidated within the Torfarm group in May. Although if Prosper's results were excluded from the Torfarm figures, the group would still have increased its revenue by 10%, estimates Hanna Kedziora from bank PKO BP, as quoted in Polish business daily Puls Biznesu.

Torfarm Makes Cautious Predictions for Full-Year 2009 Results

Torfarm has predicted that in 2009 as a whole, its revenue will reach 5.55 billion zloty, and that it will earn a net profit of 44 million zloty. This is based on the assumption that the Polish pharmaceutical market will grow by 5% y/y in 2009, Piotr Sucharski, Torfarm's Chief Executive Officer (CEO), told Puls Biznesu. These predictions are seen as fairly cautious, considering that the Polish pharmaceutical market is predicted to grow by between 6% and 8% in 2009 according to IMS Health, as quoted on financial news website Bankier.pl. In contrast, however, PGF is expecting a significant improvement in its results in the final quarter of 2009, PGF's Deputy CEO Jacek Dauenhauer told Bankier.pl.

Outlook and Implications

Poland's pharmaceutical market grew by 10.1% in the first half, and therefore Torfarm's revenue growth—not including revenue earned by the recently acquired Prosper—is consistent with the growth of the market (see Poland: 10 July 2009: Polish Pharmacy Sales Grow 10.1% in H1). Torfarm's cautious prediction for its full-year results in 2009 could be related to the recent change in approach by the National Health Fund and the Ministry of Health, which are now signalling an end to the phase of dynamic growth in the number of new drugs on the reimbursement list, as the drug reimbursement budget is expected to be overshot by 650 million zloty in 2009 (see Poland: 25 August 2009: Poland's Delayed Reimbursement List Update Unlikely to Contain Long-Acting Insulin). A slower growth in the prescription drugs market would certainly have an impact on the growth of pharmaceuticals distributors.