Moscow, 29 April 2016 – OTCPharm PJSC (RTS: OTCP) (“OTCPharm” and/or the “Company”) reports its Audited IFRS Results for the year ended 31 December 2015.
The consolidated revenues of OTCPharm in 2015 amounted to RUB 17,845.1 million (in 2014 RUB 16,646.3 million) demonstrating an increase of 7.2% vs. 2014. The revenue breaks down into two categories: finished products under the Group’s trademarks consisting mainly of OTC medicines and the products of third-party manufacturers. The Company uses fully identical business practices in relation to these two product categories which include methods of marketing, promotion and product distribution. Since June 2015, the Group has acquired trademarks on some prescription pharmaceuticals, mainly Azitroх®, complementary to OTC products within the Group's overall portfolio that have generated the revenue in the amount of RUB 140.3 million.
This category consists of branded products in the Group’s portfolio with trademarks owned by the Group, mostly represented by OTC pharmaceuticals and also by prescription pharmaceuticals produced under the trademarks acquired by the Company in 2015 as complementary to the current Group's portfolio. The revenues principally include sales under the trademarks transferred to the Company during the reorganisation through the spinning off of Pharmstandard OJSC’s branded over-the-counter business into an independent legal entity but also include the brands registered by the Company independently or acquired in the course of investment activities. Net sales in this category amounted to RUB 15,268.2 million or 85.6% (2014: RUB 14,438.6 million or 86.7%) of the total revenues for the period, including RUB 15,127.9 million of revenues generated by the products under OTC brands. The share of individual brands in the total sales under this category is presented in the table below:
|Brand||000’ packs||RUB million||%||000’ packs||RUB million||%||%|
|Pentalgin®||28 023,7||2 489,9||16%||32 252,3||2 752,6||19%||-9,5%|
|Arbidol®||9 996,8||2 272,5||15%||13 371,7||2 884,1||20%||-21,2%|
|Complivit®||14 309,3||1 838,6||12%||13 844,7||1 526,0||11%||+20,5%|
|Amixin®||2 767,2||1 456,0||9%||2 700,0||1 340,6||9%||+8,6%|
|Aphobazol®||6 492,7||1 353,4||9%||6 937,6||1 418,6||10%||-4,6%|
|Codelac®||9 165,4||855,6||6%||7 419,9||675,8||5%||+26,6%|
|Acipol®||3 990,1||849,8||6%||3 802,7||744,5||5%||+14,1%|
|Flucostat®||4 730,6||753,7||5%||5 547,2||844,8||6%||-10,8%|
|Rinostop®||25 666,3||728,3||5%||17 796,4||393,3||3%||+85,2%|
|Magnelis®||2 533,7||557,0||4%||1 639,1||356,4||2%||+56,3%|
|Next®||2 963,6||269,3||2%||2 314,5||213,5||1%||+26,1%|
|Maxicold®||2 200,4||237,0||2%||1 529,2||159,4||1%||+48,7%|
|Ascophen-P®||18 348,3||210,1||1%||20 857,0||191,3||1%||+9,8%|
|147 099,3||15 268,2||100%||148 743,8||14 438,6||100%||+5,7%|
This category includes branded OTC products purchased from third parties under the sales contracts; the rights to the related brands do not belong to the Group. The Company is engaged in marketing, promotion and distribution of the pharmaceuticals and medical devices. The revenues under the category amounted to RUB 2,576.9 million or 14.4% (2014: RUB 2,207.6 million or 13.3%) of the total revenues for the period. The key drivers of revenue growth in this category in 2015 were such pharmaceuticals as Taufon (RUB 1,142.2 million (2014: RUB 940.8 million)), Micrasim (RUB 520.4 million (2014: RUB 293.1 million)).
The cost of sales consists of costs of raw materials and supplies, costs of acquisition of goods from third-party manufacturers, costs of contract manufacturing services and trademark amortization.
The costs of contract manufacturing primarily represent expenses incurred by the Company in the production of goods under long-term contracts with main production plants of Pharmstandard Group.
Raw materials and supplies costs include the costs of acquisition of active pharmaceutical ingredients (hereinafter, “API”) purchased by the Company from third and related parties and transferred to contract manufacturers for the subsequent production of finished goods.
Amortization of intangible assets includes the amortization of trademarks and exclusive contractual rights held by the Group. The amortization is calculated on a straight-line basis using the established useful lives.
Cost of sales components are presented in the table below:
|Materials||1 295,5||22,0%||1 744,3||31,7%||-25,7%|
|Products of third parties||1 243,5||21,0%||1 007,7||18,3%||+23,4%|
|Cost of contract manufacturing services provided by related parties||2 333,0||39,6%||1 824,6||33,2%||+27,9%|
|Amortization of intangible assets||1 024,4||17,4%||923,4||16,8%||+10,9%|
|Cost of sales, total||5 896,4||100,0%||5 500,0||100,0%||+7,2%|
During the reporting period, the cost of sales increased by 7.2% compared to the previous reporting period, which conforms fully to the revenue growth of 7.2%; in absolute terms, the increase amounted to RUB 396.4 thousand. Here are the reasons that influenced the dynamics of the individual cost items compared with the previous reporting period.
The costs related to raw materials decreased in comparison with 2014 by RUB 448.8 thousand or 25.7%; this was mainly caused by the fact that the cost of sales for the period from 23 December 2013 to 1 April 2014 represented the direct cost of the branded over-the-counter business derived from the accounting records of Pharmstandard OJSC in the corresponding reporting period. Since 1 April 2014 the Company has entered into the contract manufacturing agreements.
The cost of sales of third parties products increased by RUB 235.8 thousand or 23.4%. The reason for that was an increase in sales volumes and, as a consequence, an increase in the purchased products. A slight increase in prices for third-party goods purchased since 1 January 2015 has produced synergistic effects.
The costs of production under contract manufacturing increased by RUB 508.4 thousand or 27.9%. The main reasons for the increase are: (1) an increase in prices for materials, packaging and auxiliary raw materials as part of the price of contract manufacturing; (2) an increase in the sales of products produced under contract manufacturing; (3) during the period from 23 December to 31 March 2014 the Company did not conduct any independent operations, so that the Company had not entered into any contract manufacturing agreements, respectively, the cost of certain raw materials, packaging materials, auxiliary materials for the period are included in the costs of materials.
Gross profit is the difference between the revenue and cost of sales. As a percentage of sales, the overall gross profit in 2015 is 67.0% (2014: 67.0%) or RUB 11,948.7 million (2014: RUB 11,146.3 million). Comparative analysis of gross profit from the sales of goods produced under the contract manufacturing agreements and third-party products is given in the table below:
in million rubles
|2015||Goods produced under contract manufacturing agreements||% of sales||Third-party products||% of sales||Total||% of sales|
|Cost of sales excluding amortization||3,628.5||23.8%||1,243.5||48.3%||4,872.0||27.3%|
|Gross profit excluding amortization||11,639.7||76.2%||1,333.4||51.7%||12,973.1||72.7%|
|Gross profit, total||11,948.7||67.0%|
in million rubles
|2014||Goods produced under contract manufacturing agreements||% of sales||Third-party goods||% of sales||Total||% of sales|
|Cost of sales excluding amortization||3,568.9||24.7%||1,007.7||45.6%||4,576.6||27.5%|
|Gross profit excluding amortization||10,869.8||75.3%||1,199.9||54.4%||12,069.7||72.5%|
|Gross profit, total||11,146.3||67.0%|
Selling expenses of the Group amounted to RUB 7,009.1 million (2014: RUB 5,878.4 million) showing an increase by 19.2% compared to 2014. The composition of selling expenses and the main reasons for the increase in 2015 were as follows:
The Company’s management structure was formed in accordance with the implementation and customization of the Company’s business processes and was largely completed by the end of 2014. Administrative expenses incurred by the Group in the amount of RUB 430.0 million (2014: RUB 259.6 million) mainly consist of:
During 2015 the Company’s net other income amounted to RUB 71.0 million compared to RUB 148.0 million of net other expenses in 2014. This change is mainly a result of net foreign exchange gains in the amount of RUB 147.9 million in 2015 compared to the net foreign exchange losses in the amount of RUB 138.2 million in 2014.
In 2015 the consolidated operating profit of the Group was RUB 4,580.6 million (2014: RUB 4,860.2 million); the operating margin was 25.7% (2014: 29.2%).
EBITDA is calculated by the Group as earnings before income tax expenses adjusted for depreciation, amortization and interest income. In 2015, the consolidated EBITDA of the Group amounted to RUB 5,607.4 million (2014: RUB 5,905.5 million) which represents approximately 31.4% (2014: 35.5%) of the consolidated revenue.
The interest income in 2015 amounted to RUB 55.2 million (2014: RUB 87.4 million) and was related mainly to the income from loan provided to the major shareholder and placing funds on short-term deposits with banks during 2015 as well as interest income accrued on the balances at current bank accounts.
Income tax expenses in 2015 amounted to RUB 957.7 million (2014: RUB 944.1 million). The effective income tax rate in 2015 was 20.7% (2014: 19.1%).
The Company recognized net profit of RUB 3,678.1 million (2014: RUB 4,003.5 million). Net profit margin in 2015 was 20.6% (2014: 24.1%).
The Group has no recognised non-controlling interests in its subsidiaries.
1 EBITDA is calculated as earnings before profit tax adjusted for depreciation, amortization and interest income.
2 Calculated as Cash + Short-Term Investments – Short-Term and Long-Term Loans and Borrowings.