The first quarter of 2010 was a challenging time for the pharmaceutical market in the whole of Central and Eastern Europe. Sales of sore throat products dropped by over 25% on the first quarter of 2009. Furthermore, over the same period, sales across the entire OTC market declined by 12% by value and as much as 17.6% in volume terms. Lower sales were also seen in the dermocosmetics market, which in Q1 2010 was down by 4% year on year.

 

"In Q1 2010, our revenue and earnings were similar to the Q1 2009 figures, which we view as a success considering the market situation. The result was mainly attributable to a nearly 19% increase in sales of products, thanks to which the market shares of our key brands, Iwostin and Emolium, grew faster than of their respective markets. The market share of Iwostin rose from 5.9% to 6%, whereas Emolium, with a 28.1% share (up from 23.6%) in the emollients market, became the market leader," comments Łukasz Butruk, President of the Management Board of Nepentes S.A.

 

Analysts of the pharmaceutical market agree that the trend seen in the first quarter of the year followed from the fact that the flue season, typical for that period of the year, peaked earlier owing to the extraordinarily long and severe winter. This resulted in fewer customers visiting pharmacies and lower sales reported across virtually all OTC product groups, particularly common cold medications.

"We strongly believe that the unfavourable developments seen on the pharmaceutical market in the first quarter of the year are of non-recurring nature and do not portend a reversal of the general trend on the pharmaceutical market which in our opinion will continue to grow," says Mr Łukasz Butruk.

 

The results of the first quarter of 2010 confirm Nepentes’ ability to generate profits and expand its customer base despite the market setback. 

 

"Among major achievements, we managed to secure stronger sales and develop a strong market position of our prescription drugs used to treat dermatological conditions. Six months after we added dermatology drugs into our portfolio, sales revenue in this product group have reached almost PLN 2m, with PLN 1m of revenue posted in the first quarter of 2010 alone, the first full quarter after the addition," says Mr Łukasz Butruk.

 

Market shares of Nepentes’ prescription medications are also on the rise. After Q1 2010, Beloderm secured a 22.5% share of the betamethasone market in value terms and 27.5% in volume terms, while the share of Belosalic in the betamethasone and salicylic acid market stood at 20% by value and 21% by volume. The other drugs’ market shares are hovering around 10%, but have been steadily climbing. Afloderm is an exception here – as the only medication on the market, its has from scratch been building a category of its own and currently has no competition.

"Our goal is to hold more than 10% of the total market of dermatological prescription drugs in two to three years, which translates into 20%-30% market shares in the respective categories", says Mr Łukasz Butruk.

 

In Q1 Nepentes strengthened its position on export markets, primarily Romania, Bulgaria and Lithuania, where – to note – the impact of the economic downturn on the pharmaceutical market has been much more severe than in Poland. Therefore the fact that we actually recorded a growth of sales on those markets is a noteworthy achievement. On the Bulgarian market, sales of our sore throat product Propolets (Propolki) grew year on year at the rate of 25% in volume terms and 16% in value terms. By the way, Propolki was the only product in its category which gained market share in Bulgaria, in contrast to the whole Bulgarian market of sore throat medications, which shrank by 15% year on year. In the case of Propolets, a similar trend was seen on the Romanian and Lithuanian markets, which saw declining sales of sore throat cures, as opposed to the steadily rising sales and market share of Propolets. It is also worth noting that on the Bulgarian market, Sudocrem outstripped the then leading product in its category, not even a year from its market launch in that country.

 

"It is our export sales, alongside new launches of dermocosmetics and incremental sales of prescription drugs that will be the key drivers of Nepentes’ revenue and profit growth, shaping the outlook for the entire year 2010," says Mr Łukasz Butruk.

 

In Q1 2010, the growth of the dermocosmetics market was upset. In Q1 2010, sales fell by 4%, but already in March the trend reversed with sales edging up 7% over March 2009. The market share of the Elixine dermocosmetics demonstrated strong quarter-on-quarter growht of 28.8% in value terms.

 

According to IMS data, in Q1 2010, the emollients market grew in value terms by 8.5% over Q1 2009 and 12.2% over Q4 2009. In the same period, the value of Emolium sales grew over three times faster than the market, gaining 29.1% over Q1 2009 and 22.1% over Q4 2009.

In Q1 2010, the OTC market recorded a year-on-year decline in sales to patients: by 12.2% in value terms and 17.6% by volume. The value of sales was 1.92bn and their volume stood at 174.56m items. The Q1 decline was attributable to the absence of the infection season which was seen in the corresponding period of 2009.

 

The market of simple steroids (prescription dermatology drugs), including corticosteroids of various strengths, was stable with no significant developments in Q1 2010 vs. Q1 2009. Similar trends were seen on the market of complex steroids, where a slight decline was reported only for corticosteroids and antiseptics. This, however, did not prevent Nepentes from successfully launching its prescription drugs. Q1 2010 was the first full quarter after the addition of dermatology drugs to our product portfolio. In the first quarter, Nepentes completed the rollout of its numerical distribution model designed to reach the broadest possible range of pharmacies in order to ensure the availability of products in any form and packaging.

 

Nepentes S.A. is among the most dynamically growing pharmaceutical companies, focusing on delivering to the market innovative formulations and solutions in the area dermatology, paediatrics and colds. It has developed and currently manufactures the Iwostin, Emolium and Propolki brands, which are sold in Poland and in other countries of the CEE region. In addition, the business scope of Nepentes S.A. comprises the introduction and promotion of a number of internationally-recognised pharmaceutical brands in Poland and on other CEE markets of numerous renown international brands, including Sudocrem, neo-angin, Melisana and Marimer. Last year the Company added prescription dermatology drugs to its product portfolio. Nepentes’ production plants, located in Łódź and Chociw, operate their own in-house research and development centre and are listed among the most advanced plants of the type in Central Europe.

 

September 2007 saw the establishment of two subsidiaries of Nepentes: Nepentes Romania and Nepentes Bulgaria, while in early 2008 Nepentes set up its own sales structures in Lithuania. The Company has also registered subsidiaries in the Czech Republic and Slovakia.

Nepentes S.A. is a public company, listed on the Warsaw Stock Exchange since December 2007. Its principal shareholders are Łukasz Butruk (15.83%), Marek Orłowski (15.85%), MORLUK Sp. z o.o. Spółka komandytowa (31.09%), OFE ING NN Polska (5.01%), and OFE Aviva (5.80%).

 

More information on the Company and its product portfolio is available at www.nepentes.com

 

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