A&D Pharma, the biggest player on the pharmaceutical market, posted a 92% decline in net profit in the first six months of this year compared with the corresponding period of 2007, to less than one million euros, compared with 11.9 million euros in the first half of last year.
The capitalisation of A&D Pharma, a company listed on the London Stock Exchange, has gone down 85% since the beginning of the year (from 516 million euros to 76 million euros), when the shares of the company traded for 15.5 euros, while the closing price on Monday stood at 2.3 euros.
According to the company's report, the main factors that led to the decline in the net profit were drug prices that were not adjusted to the exchange rate, as well as the volatile exchange rate. The Romanian authorities extended the validity of the controlled price drug list until the end of August, based on a 3.3 RON/EUR exchange rate, given that the exchange rate exceeded 3.6 RON/EUR in June.
The sales of A&D Pharma through its two divisions, Mediplus (distribution) and Sensiblu (retail), increased by 28% in the first six months and reached 254 million euros, while the EBITDA fell by 35% to 10.7 million euros.
The pharmaceutical group, however, explains that the normalised EBITDA (which does not include operational exchange rate differences, hedging costs and reserve variation) amounted to 13.2 million euros, an increase of 51% on the January-June 2007 period.
"We lost some 8 million euros as a result of the price of drugs not being adjusted for the actual trend of the exchange rate," stated Dragos Dinu, CEO A&D Pharma, who would not provide estimates for the trend of the financial results in the second half.
The sales of Mediplus, A&D Pharma's distribution division increased by 41% in the first half of the year to 159 million euros. "The turnover from the distribution business went up by 41% in euros, as a result of the deregulation of the auction system for hospitals, which can now organise their own procurement processes for diabetes or HIV drugs," explained Dragos Dinu.
Another contribution came from the increase in the number of drugstores using Mediplus as a supplier, which reached 2,905 drugstores in the first half of the year compared with some 2,600 in the first half of last year.
The Sensiblu drugstore chain posted 27% growth in euros, with business going up to 71 million euros, while the growth in RON stood at 40%.
Sensiblu opened six new drugstores in the first half of the year and reached a total of 218.
At the same time, in order to boost drugstore profitability, the firm closed 10 pharmacies and relocated another.
The drugstores closed were located in Iasi, Galati, Bucharest, Piatra Neamt and Odorhei, where it also had other drugstores.
The growth rate of the drugstore chain will slow down over the coming period, as a result of a shift in focus to making the drugstores more efficient.
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