According to the company's press release, Veropharm's FY 2007 revenue grew over 39% y-o-y in dollar terms to USD 140 mn. The strongest gains were achieved in the prescribed (Rx) drugs segment, more than 55% up on 2006 largely due to over 90% spike in Rx sales in 4Q 2007. In our opinion, strong earnings growth in this segment was achieved thanks to the company's successful participation in the FRS program and increased sales of new prescribed medicines launched in 2006-2007. Other segments posted weaker growth due to lower output, specifically, in the conventional medicines segment and also therapeutic plasters.
Table 1. Veropharm: Key financial showings for FY 2007 (USD mn)
| | 2006 | 2007 | 2007/2006 |
|---|
| Revenue | 100.5 | 140.0 | 39.3% |
| Rx drugs | 52.8 | 82.1 | 55.5% |
| Conventional drugs | 16.8 | 19.4 | 16.1% |
| Plasters | 21.1 | 24.6 | 16.7% |
| Non-prescribed medicines | 8.36 | 11.75 | 40.6% |
Source: Company data, Finam estimates
We view Veropharm's preliminary FY 2007 results as positive. In our opinion, a rising share of high valued-added segment of Rx drugs in the company's earnings structure, around 58.6% compared to 52.5% in 2006, should enable Veropharm to strengthen margins in 2007. What's more, we are upbeat on the results of launching sales of new original medicines and plans to promote 7 new drugs in 2008.
According to our estimates, the estimated fair price of Veropharm is USD 43.10 per share.
0.244
0.616
