15 December 2020 - Deborah Wilkes
French consumer healthcare company HRA Pharma is keen to acquire further “quality” brands and is open to exploring partnerships with distributors in Latin America and South-East Asia, says chief global commercial officer Martyn Hilton.
Hilton tells OTCToolbox that HRA Pharma has an ambitious strategy that will see its sales double to around EUR600 million (USD725 million) by 2025.
The strategy involves a combination of “smart acquisitions, geographic expansion, swift switching and new products”.
Seeking quality brands
Commenting on acquisitions, Hilton says HRA Pharma is “focusing on brands rather than infrastructure or companies”.
“We are looking for brands that are market leaders with a strong profit profile and high growth potential,” he comments, noting the ideal asset would have “either a European or North American focus”.
Hilton says synergy with HRA Pharma’s existing women’s health, wound care and scar care products would be “great but is not essential”. “The quality of the brand asset is the important thing,” he stresses.
HRA Pharma is interested in categories where it can drive growth, continues Hilton, adding that the company is “not going to go after a brand in a category that is “super, super saturated”.
“Those categories are dominated by massive players and you end up buying a smaller brand,” he observes, adding that HRA Pharma is looking for “a brand that has a number one or strong number two status and still has potential for growth”.
HRA Pharma has acquired two significant brands over the past few years.
In April 2019, the company announced that it was acquiring global rights to the Mederma skincare brand from Merz Pharmaceuticals for an undisclosed sum (click here to read the News story).
HRA Pharma pointed out at the time that acquiring Mederma would give it a "solid consumer healthcare platform in the US". While the US is the largest market for Mederma, the brand is also available in a number of countries in Europe, Latin America and Asia-Pacific.
In July 2017, HRA Pharma announced that it was acquiring global rights to the Compeed brand of blister-care and lip-care products from Johnson & Johnson for an undisclosed sum (click here to read the News story).
At the time, Compeed was available in 26 countries including Australia, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, the UK and the US.
Mederma and Compeed joined HRA Pharma’s existing women’s health portfolio including the ellaOne and NorLevo emergency contraceptives.
Outsourcing is key element of strategy
Outsourcing is a key element of HRA Pharma’s business model. The company has a direct operational presence in 11 European countries and the US, as well as distribution partnerships in more than 80 countries.
Towards the end of 2019, HRA Pharma said it was expanding into the Middle East with Compeed through a number of partners including Arabian Ethicals in the UAE, Safwan Trading & Contracting Co in Kuwait and Sitco Pharma in Saudia Arabia (click here to read the News story).
Martina Gripp – HRA Pharma’s head of marketing for DACH, Africa and the Middle East – said market research involving 1,000 men and women had highlighted a gap in the Middle East for specialist blister plasters.
At the start of 2020, HRA Pharma said it was stepping up its presence in China through a new subsidiary in Shanghai and a joint venture with specialty healthcare company Profex (click here to read the News story).
HRA Pharma said the joint venture would focus on its Compeed blister-care brand and “other future high potential brands”.
More recently, HRA Pharma appointed OTC Medical as the new exclusive distributor for its ellaOne, NorLevo and Compeed brands in the Netherlands with effect from January 2021 (click here to read the News story).
HRA Pharma has partners in place for most of its markets, says Hilton, but there is potential in Latin America and South-East Asia.
“We are looking for partners that can demonstrate a track record of either successful product launches or driving growth,” he explains. “Partners that have got the right infrastructure, reach and connections to help us unlock new markets.”
Hilton stresses that HRA Pharma wants to build “long-term partnerships”. “We want partnerships where we work together for years and grow together,” he adds.
Discussing opportunities around the world, Hilton says HRA Pharma intends to achieve “strong double-digit growth” in the US, South-East Asia and Africa. These regions have started to open up for the company over the past 18 months, he explains.
The US – where HRA Pharma opened an office two years ago following the Mederma acquisition – presents one of the biggest growth opportunities, says Hilton. The US is already the biggest single country for HRA Pharma in terms of sales, he notes, adding that the company has “only really just got started”.
Hilton says the Mederma acquisition also gave HRA Pharma a significant presence in South-East Asia, including Indonesia, Malaysia and Thailand. “We have an opportunity to take the Mederma brand into new countries in the region,” he says, “and we now have an infrastructure to expand Compeed’s presence in the region.”
In Africa, meanwhile, HRA Pharma has fairly good coverage for ellaOne, says Hilton, but is looking at ways to expand into more countries and launch the rest of the portfolio including Compeed. HRA has expanded into South Africa with Compeed.
Working on OTC switches
In addition to smart acquisitions and geographic expansion, HRA Pharma is working on switching medicines from prescription-only to non-prescription status, particularly in women’s healthcare (click here to read the News story).
HRA Pharma has significant switching expertise. In 2015, the company switched its ellaOne (ulipristal acetate) emergency contraceptive from prescription to non-prescription status throughout the European Union.
Privately-held HRA Pharma increased its worldwide sales by 21% to EUR254 million in 2019, following the acquisition of Mederma. Excluding the impact of acquiring Mederma in June 2019, sales were up by 14% on an organic basis (click here to read the News story).
The company said its Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) had increased by 30% compared to 2018. The EBITDA margin was 29.6%.
Hilton notes that HRA Pharma has a “small, focused portfolio compared to some companies”. But its brands are “growing share and achieving significant growth”, he says, adding that HRA Pharma is “punching above its weight” and “making a positive name for itself in the industry”.