- Gerresheimer sees good growth opportunities in long-term megatrends of pharma and healthcare
- Growing importance of drug delivery and dosage devices in Western markets and of pharmaceutical primary packaging business in emerging markets
- Mid-term growth potential 2016 to 2018: 4% to 6% average organic revenue growth and up to 21% adjusted EBITDA margin
- Initial indications for financial year 2015: around 1% to 3% organic revenue growth and up to EUR 10m higher adjusted EBITDA
Gerresheimer AG set out its strategy at a Capital Markets Day held in Buende, Westphalia. “Health and well-being are issues taking on ever greater global significance. I believe we have very strong medium-term growth prospects with our products becoming increasingly important. We are outstandingly well placed with our broad product portfolio, experience and proximity to the customer. We aim to grow in promising pharma markets, develop innovative products for safe and simple drug delivery and expand local production in the main emerging economies,” explained Uwe Röhrhoff, CEO of Gerresheimer AG, speaking to investors and analysts. “We will invest heavily in production capacity as well as in standardizing our technologies and in quality systems. This is the basis for healthy medium-term growth for our Company.”
CEO Röhrhoff took investors and analysts through key trends in the growing pharma markets and charted Gerresheimer’s plans for successful growth based on those trends. “The pharma and healthcare markets offer attractive prospects and are growing continually. Our strategy for profitable growth is in place and we are successful both with our high-quality glass and plastic pharmaceutical primary packaging and with complex products like insulin pens, inhalers, autoinjectors and prefillable syringes. I am very optimistic for the future of our Company,” Röhrhoff said.
Medium-term outlook and initial indications for 2015
Gerresheimer reaffirmed its medium-term guidance for revenue growth at the Capital Markets Day. For the years 2016 to 2018, the Company expects average annual organic revenue growth of some 4% to 6% at constant exchange rates. Alongside this, the Company held out the prospect of an adjusted EBITDA margin of up to 21% in the same period. Capital expenditure is expected to be around 9% to 10% of revenues.
Gerresheimer also gave initial indications for financial year 2015, to be followed up with more precise figures in February 2015 on presentation of the 2014 annual financial statements. The Company plans to streamline its portfolio in 2015. It will continue standardizing to trim costs. Further investment in capacity expansion is also on the agenda for the US, India and the Czech Republic. On a very preliminary estimate, Gerresheimer anticipates organic revenue growth of around 1% to 3% at constant exchange rates in financial year 2015. With regard to earnings, Gerresheimer expects adjusted EBITDA to climb by up to EUR 10m in 2015. Capital expenditure is expected to be around 9% to 10% of revenues at constant exchange rates.
Key trends for tomorrow’s pharma market
The Company eyes six key trends for the future of pharma markets:
- Patents on numerous drugs are expiring at the same time as generic drugs gain ground.
- More people in emerging markets have access to healthcare and hence to medication.
- Regulatory requirements relating to drugs are increasing globally. This is already evident today in stricter regulation by US health authorities.
- New drugs are emerging, many of them biotech-based, with special requirements in terms of administration and packaging.
- Chronic diseases such as asthma and diabetes are on the increase worldwide.
- There is a growing trend toward self-medication by patients.
Success strategy for the Plastics & Devices Division
Based on the key healthcare market trends, Gerresheimer is forging ahead with its strategy for its two main divisions. In the Plastics & Devices Division, Gerresheimer develops and produces complex, customer-specific products for safe and simple drug delivery and dosage, including pens, inhalers and prefillable glass syringes. There is notable growth in demand for these products in Europe and North America, where Gerresheimer holds a strong position (number one or two) in each submarket it serves. The Company is adding to production capacity and expanding global development centers for such products. In prefillable syringes, the Company sets new standards of quality and flexibility with its very latest, fourth production line in its global Syringe Competence Center in Buende, Germany. Other innovations in this sector relate to new materials, such as sophisticated plastics like COP, suitable as an alternative for some drug packaging products. The Company also gave a heads-up insight into its project pipeline for medical plastic systems. In the plastic drug packaging product category, Gerresheimer targets innovations in closures, caps and dosage systems along with growth in South American and Asian emerging economies, where it has several plants.
Success strategy for the Primary Packaging Glass Division
In its second major division, Gerresheimer produces glass primary packaging items such as injection vials, ampoules, cartridges and pharma bottles. Here, too, it holds strong, number one or number two positions with a broad product range in the European, North American and emerging markets. In light of increasing regulatory requirements for drugs and drug packaging, Gerresheimer’s strategy consists in further improving quality as well as continuing to standardize technologies and production processes across all plants worldwide. In terms of upcoming investment to expand production, the priority is on Asia and above all India. While glass is the oldest and still remains unbeaten as the best material for safe, long-term packaging and transportation of pharmaceuticals, this is nonetheless another area where Gerresheimer continues to push the innovation envelope. As a case in point, the Company is working on innovations in the manufacture of glass used in pharmaceutical applications.
Producing sophisticated cosmetic glass is a good supplementary business in this division. Key factors here include extended capabilities in glass processing and decoration. Here, Gerresheimer is outstandingly well placed for the future, notably in the European cosmetics market, with a broad range of innovative products and finishing technologies.