Switzerland’s Galenica rethinks its structure

Switzerland’s Galenica rethinks its structure

1 December 2020 - Deborah Wilkes

Galenica, which owns the Verfora consumer healthcare business, is reorganising from 1 January 2021 in a move that should allow it to “develop new products and services more efficiently with shorter time-to-market”.

The Swiss company said the reorganisation would “facilitate collaboration with flatter hierarchies” and “bring management closer to the customer”.

Galenica added that its business units, including Verfora, would be able to “concentrate even more effectively on their core tasks and offer the best service to customers”.

Main elements of the reorganisation

The company is getting rid of its three business sectors – Retail, Products & Brands and Services. Instead, it will be led by a management team consisting of the chief executive officer and the heads of newly-structured service units.

Galenica’s well-established business units – such as Verfora and the pharmacy formats Amavita, Sun Store and Coop Vitality – will remain independent. The company said they were “well known on the market and work directly for customers”.

These business units will be managed by a number of service units – Pharmacies, Healthcare, Products & Marketing, Wholesale & Logistics, and IT & Digital Services – which will also apply their expertise to the group as a whole.

Several other service units – Finance, Human Resources, Corporate Communications, Legal & Board Services and Transformation – will operate at the group level and be managed centrally.

Galenica said the new structure would provide optimum conditions for four new strategic programmes called Omni-channel, Care, Professionals and Efficiency.

The company added that the new structure was “consistently focused on customers, promotes collaboration within the group and strengthens the pharmacy channel, both in stores and online”.

Verfora’s financial performance

In the first six months of 2020, Galenica’s Products & Brands business unit, which mainly consists of Verfora, reported sales of CHF54.6 million (USD61.4 million). This represented a rise of 1.0% compared to the same period a year earlier.

The Swiss company said the rise had mainly been driven by the export business. Export sales by Products & Brands increased by 14.0% to CHF13.3 million.

In Switzerland, Products & Brands reported sales down by 2.6% to CHF41.3 million. The company noted that the Swiss consumer healthcare market had increased by 3.9%, according to market researcher IQVIA.

Products & Brands accounted for 6.8% of Galenica's Health & Beauty segment, which reported sales up by 2.8% to CHF803 million.

The majority of sales by the Health & Beauty segment, 93.1%, were generated by the Swiss Retail business, which recorded sales up by 2.9% to CHF747 million.

Galenica's total sales, including the Services segment, increased by 5.6% to CHF1.69 billion in the first half of 2020.

Growth achieved despite COVID-19

The Swiss company said growth had been achieved despite “lower sales triggered by the nationwide lockdown, which had a particularly adverse effect on pharmacies in high-frequency locations, as well as the temporary closure of perfumery departments mandated by the authorities”.

Quoting data from IQVIA, Galenica said the Swiss pharmaceutical market as a whole had increased by 2.9% in the first half of 2020.

Despite additional expenses associated with the COVID-19 pandemic, Galenica’s Earnings Before Interest and Taxes (EBIT) were only down slightly at CHF82.3 million.

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