reports
- Mariam Wael
IbnSina Pharma: 1Q23: A Strong Start for the Year
ISPH TOPS EGYPT’S PHARMA DISTRIBUTERS ON MARKET SHARE GAINS; ASP SOLELY DRIVES PHARMA MARKET GROWTH ISPH topped pharma distributers in 1Q23 with a market share of 23.9% (+2.6pps YoY), up from 21.3% in 1Q22 despite a challenging market dynamics. Pharma market has been significantly challenged since 2020 (covid outbreak), before starting to gradually show signs of recovery in 1Q22. However, the Russian Invasion of Ukraine along with the rounds of EGP depreciation have capped growth and slowed d...
- Mariam Wael
IbnSina Pharma: 4Q22 – End-of-Year Favorable Seasonality Drives Sequen...
ASP SOLELY DRIVES PHARMA MARKET GROWTH The pharma market has been significantly challenged since 2020 (covid outbreak), before starting to gradually show signs of recovery in 1Q22. However, the Russian Invasion of Ukraine along with the rounds of EGP depreciation have capped growth and slowed down the recovery. The Egyptian pharma market has always been price-driven, where price increases used to drive two-thirds of the growth. However, given the current challenging macro dynamics (including...
- Mariam Wael
ISPH: Management Meeting Key Takeaways
WEAK VOLUMES CAP PHARMA MARKET GROWTH The pharma market has been significantly challenged since 2020 (covid outbreak), before starting to gradually show signs of recovery in 1Q22. However, the Russian Invasion of Ukraine along with the rounds of EGP depreciation have capped growth and slowed down the recovery. The Egyptian pharma market has always been price-driven, where price increases used to drive two thirds of the growth. However, given the current challenging macro dynamics (including E...
- Mariam Wael
IbnSina Pharma: ISPH Breaks into Hospital Business, Non-operating Expe...
ISPH BREAKS INTO HOSPITAL BUSINESS IN AN OPPORTUNISTIC MOVE ISPH signed a contract to acquire El Shorouk Hospital (105 beds), a brownfield hospital located at Shorouk city. The acquisition was concluded at a total consideration of EGP430 mn (this includes settlement of receivables due to ISPH of EGP230 mn), with the remaining amount of EGP200 mn paid in cash. The acquisition value includes the hospital’s real estate and operational assets. Management expects the hospital to be operational by ...
- Mariam Wael
IbnSina Pharma: Meet the management webinar key takeaways
SOLID PERFORMANCE IN 2021, CLOSE TO MANAGEMENT EXPECTATIONS ISPH achieved solid performance in 4Q21, very close to management’s expectations; implying a clear reflection of the optimization strategy the company implemented since 2020 after the covid impact on the market. Management is looking for double-digit growth in revenues along with lower opex and other expenses which implies recovery in EBITDA margins, operating profits, and bottom-line growth. Given the slowdown in the market, ISPH r...
- Mariam Wael
- Merna Arafat
Egypt Pharma 2022: Well positioned for recovery, supported by favorabl...
Egypt is the MEA region’s largest producer and second largest consumer of pharmaceuticals, growing at a CAGR of 17% over 2013a-2020a, surpassing the region’s CAGR of 8%. Despite pressure during the past couple of years because of the pandemic, we forecast total pharma market to grow at a 6-year CAGR of 13.2% between 2021e -26f. During 2022f, we expect the retail pharma market to record sales of EGP95.2 billion (+10.1% YoY), while non-retail pharma sales record EGP48.0 billion (+13.4% YoY), br...
- Mariam Wael
IbnSina Pharma: Solid operational performance confirms a better outloo...
MODEST GROWTH IN RETAIL PHARMA MARKET Retail pharma market continued to sequentially recover during 9M21, which confirms the sustainability of the gradual sequential recovery expected in 4Q21. According to IQVIA, retail pharma sales recorded EGP62.0 billion during 9M21, showing a modest of 6% YoY, according to the latest available data. Such YoY growth is higher than 2020 retail pharma market growth (+4% YoY growth) but is still below 2019 double-digit growth levels of c.17% YoY. Retail pharm...
- Mariam Wael
ISPH: Annual performance back to norm, base effect shapes sequential p...
RETAIL SEGMENT GROWS ON ASP; ISPH OUTPERFORMS MARKET According to IQVIA data, retail pharma sales recorded EGP19.6 billion in 1Q21, an increase of 5.6% YoY, compared to EGP18.6 billion in 1Q20. Pharma sales growth, as usual, was driven by higher ASP, given that volumes declined by 4.0% YoY to stand at 551.6 million units sold in 1Q21. ISPH retail sales grew by 6.6% YoY in 1Q21, outperforming retail pharma market growth by 0.90pps. The company supplied 21.9% of the retail pharma market in 1Q21...
- Mariam Wael
ISPH: 4Q20 – A relatively weak quarter
RETAIL PHARMA MARKET REBOUNDS IN 4Q20; BETTER OUTLOOK IN 2021 According to ISPH data, retail pharma sales recorded EGP78.6 billion in 2020, an increase of 5% YoY, compared to a growth rate of 17.7% in 2019. This came slightly higher than our growth estimates of 4.2% YoY. This shows a relatively solid recovery in November and December, where retail sales grew by around 13% and 8%, respectively. A RELATIVELY WEAK QUARTER ON THE BACK OF PHARMACIES SYNDICATE BOYCOTT ISPH reported 4Q20 net revenu...
- Mariam Wael
ISPH: Management webinar key takeaways
On-the-ground update and market growth * According to IQVIA’s latest available data, Egypt’s retail pharmaceutical market registered total sales of EGP73.1 billion during 11M2020; recording a growth of 3.8% YoY. Volumes sold recorded a slight decline of 2.0% YoY reaching 2.26 billion units in 11M2020, with only higher ASP driving market growth. * During November 2020, retail sales grew by 12.8% YoY, to reach EGP7.4 billion, while volumes grew by 5% YoY to reach 226 million units. *...
- Mariam Wael
- Merna Arafat
Egypt Pharma 2021: Not entirely defensive; Macro dynamics to support g...
Egypt is the MEA region’s largest producer and second-largest consumer of pharmaceuticals, growing by a CAGR (2013-2019) of 19%, surpassing the region’s CAGR of 8%. Market growth is predominantly driven by out of the pocket expenditure (61% of total health expenditure), alongside a heavily growing population by c.2% per annum. Yet, Egypt still exhibits one of the lowest pharma expenditure per capita figures in the MENA region, implying vast room for future growth. We forecast the total pharma...
- Mariam Wael
ISPH: Wholesale segment leads revenue growth but pressures margins
SIGNS OF GRADUAL MARKET RECOVERY According to IQVIA’s latest available data, Egypt’s retail pharmaceutical market registered total sales of EGP57.0 billion during 9M2020; recording a growth of 3.4% YoY (c.+14% YoY in September 2020). Volumes sold recorded a modest decline of 2.7% YoY reaching 1.75 billion units in 9M2020, with only higher ASP driving market growth. During September 2020, retail sales grew by 14% YoY, while volumes grew by 3% YoY; showing strong signs of gradual recovery. ISPH...
- Michel Said
- Mohamed Antar
- Passant Mohamed
Egypt healthcare 3Q20e results preview | Earnings confirm the rebound;...
Healthcare coverage 3Q20e earnings set to rebound; Pharma players to lag. We look for a q-o-q rebound in revenues and earnings for our healthcare coverage, chiefly underpinned by a hike in traffic, following the ease of mobility restrictions, and a slowdown in COVID-19 cases in 3Q20. Pent-up demand is seen as coming more in favour of healthcare services providers, with earnings growing on average by 11% (excluding SPMD). Conversely, pharma players are seen delivering muted earnings growth (exclu...
- Mariam Wael
ISPH: Q2 20 – Weak market dynamics pressure performance; maintain Ov...
Diversification shielded revenue growth According to IMS Health latest available data, during 1H2020, Egypt’s retail pharmaceutical market registered total sales of EGP36.20 billion, slightly up by 0.8% YoY and volumes sold recorded a modest decline of 4.8% YoY reaching 1.13 billion units in 1H2020. Retail pharmaceutical market was most aggressively hit during April and May (sales dropped by 11.0% and 16.0% during April and May, respectively), mainly on movement restrictions imposed and the c....
- Mariam Wael
ISPH: Q1 20 – Exposure to retail and non-retail segments supports pe...
According to IMS Health, Egypt’s retail pharmaceutical market registered total sales of EGP18.6bn during 1Q20, compared to EGP17.7 billion in 1Q19; a modest growth of 4.8% yoy. Weak retail market growth is primarily driven by challenges imposed by the current Covid-19 pandemic that caused demand on non-chronic diseases to drop. Retail Volumes in 1Q20 showed a slight decline of 1.7% YoY in 1Q20 to reach 579.5 million units; mainly as a result of lower demand on medication for non-chronic disea....
- Mariam Wael
IbnSina Pharma: Meet the management webinar – key takeaways
IMPACT OF COVID-19 PANDEMIC ON OVERALL MARKET 1. 1Q20 market performance if compared to 1Q19, is weaker, given a strong base effect in 1Q19. 2. During March, awareness increased and demand on vitamins, immunity boosters and sanitizers increased. 3. Demand for chronic disease medications increased, since consumption has been a little bit higher than average in fear of the lockdown and any future shortages. 4. The increase in consumption will not continue during April and May, since it is a...
- Michel Said
- Passant Mohamed
Uninterrupted growth amid global headwinds
Cut TP on higher WC needs; Upside warrants an upgrade to Overweight. We cut our TP by 14%, as we factor in higher WC needs, following the change in ISP’s revenue segments’ contribution in 2019. Nevertheless, we acknowledge the drug distributor’s solid growth profile (2020-22e revenue CAGR of 18%) and retail market positioning (21.3% as of 4Q19, to reach 25% by 2024e). ISP trades on a 2020e P/E of 14x, at a 32% discount to peers (adjusted for growth), while offering a 2020-22e EPS CAGR of 29%. We...
- Khaled Sadek
Robust earnings priced in; Downgrade to Neutral
Delivering on promised growth, but valuation is rich. ISP closed 2018 with a c20% market share (+2pp y-o-y), with revenue growth of 39% y-o-y, ahead of the market’s 25%. We assume retail pharma market will grow at 2019-21e CAGR of 21%, 9% of which is volume driven and the balance on pricing. We expect ISP’s network expansion will boost its retail market share to 24.4% by 2023, yielding a 2019-21e clean EPS CAGR of 35%, well ahead of peers’ 7%. Nonetheless, ISP’s strong rally (6M +45% vs. +8% for...
- Ahmed El Moataz
- Khaled Sadek
Guilty or not, we remain buyers on fundamentals
Raise TP 15% on market share gain. Our valuation of EGP13.2/share accounts for: i) higher market share of c2% p.a. (evident by ISP’s strong performance in 2017, 19.24% market share), ergo better economies of scale, ii) new distribution contract signed on Mar-18 with Novo Nordisk (60% insulin market share), adding c3% to our 2018-22e revenue and improving blended gross margins (10% GPM vs. 8.6% for ISP in 2017), and iii) 0.3ppt higher discounts to clients, conservatively accounting for any possib...
- Ahmed El Moataz
- Khaled Sadek
Ideal exposure to Egypt’s healthcare sector; Initiate with Overweigh...
Outstanding growth justifies premium valuation. We initiate coverage on Ibnsina Pharma (ISP), Egypt’s fastest growing and second largest pharma distributor (19% market share), with an Overweight rating, and a 12-month TP of EGP11.50/share (c24% upside). An ongoing expansion spree, market share gains, along with economies of scale, are key growth drivers. ISP trades on a 2019e P/E of 14.2x, marginally below its peers’ 14.5x, despite growing the fastest at a 2018-20e EPS CAGR of 48% vs. peers’ 15%...
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