Pharmstandard pharmaceutical company has released its financial results for 1H 2008, which are above our expectations. In the reporting period, the company's revenue grew by more than 49% y-o-y in US dollar terms to USD 243 million. The company showed high sales performances primarily in the non-prescription medicines segment. Additionally, doubling sales in the prescription medicines segment, which is the most profitable one, allowed Pharmstandard to increase its gross margin to 58.9%.
Table. Pharmstandard: Key Indicators 1H 2008, USD million
| | 1H2007 | 1H2008 | Change 1H2008/1H2007 |
|---|
| Revenue | 163 | 243 | 49% |
| including: | | | |
| Sales of pharmaceuticals | 139 | 222 | 60% |
| Sales of medical equipment | 24 | 21 | -14% |
| Cost of production | 70 | 100 | 43% |
| Gross profit | 93 | 143 | 53% |
| Gross margin | 57.3% | 58.9% | |
| Business expenses | 28 | 38 | 36% |
| General and administrative expenses | 9 | 13 | 40% |
| Operating profit | 53 | 97 | 84% |
| Operating margin | 32.4% | 40.2% | |
| EBITDA | 60 | 103 | 72% |
| EBITDA margin | 36.6% | 42.3% | |
| Net profit | 35 | 69 | 94% |
| Net margin | 21.7% | 28.3% | |
Source: company data, Finam estimates
Although the company's marketing costs went up considerably in 1Q 08, efficient cost control allowed the company to reduce the ratio between its opex and revenue and raise margins.
Improvement of the company's market share, high sales performances coupled with an increase in margins, and the successful implementation of a strategy to introduce new medicines to the pharmaceutical market could lend short-term support to share demand. However, based on the current market multiples, we believe that the company's stocks are rather overvalued by the market at the moment.
In line with our estimates, the fair value of Pharmstandard is USD 42 per share.
0.569
0.073
