Celesio sees profits drag

By Kirsty Barnes

- Last updated on GMT

Related tags Pharmacy Marketing

Celesio fingerpointed two 'extraordinary items' in its dominant
Wholesale division for the drag on company profits during the third
quarter.

During the period, both pre-tax profit and operating income fell by around 10 per cent, to €143.7m and €177.3m respectively, and revenue edged up only a fraction to €5.4bn, falling short of the €5.5bn anticipated by analysts. According to the firm, a negative reaction by its German pharmacy customers over its acquisition of Dutch online pharmacy DocMorris was largely to blame. German pharmacists' associations are being investigated by antitrust regulators as to whether they encouraged members to boycott buying from Celesio's wholesale unit in retaliation. Secondly, the loss of a logistics customer by AAH, Celesio's British wholesaler, when a UK manufacturer decided to switch its distribution system to a single logistics partner, also played a part in the financial decline. Meanwhile, Celesio's Solutions division, which comprises two businesses, Movianto and Pharmexx, and offers distribution, logistics, storage, staff, sales and marketing services to pharma manufacturers, was negatively impacted by "costs and investments for the continued process optimisations and for Movianto's European expansion,"​ said the firm. The company did not provide a financial breakdown of this division's performance in the third quarter, although for the nine months to date the operating profit was reported as €11.7m, a 14 per cent drop year-over-year. Although Celesio's core business is that of a pharmaceutical wholesaler, the company is one of the three major wholesalers in Europe who are all busily expanding their scope beyond their traditional business models and evolving as service providers to meet the changing needs of pharma firms, which are increasingly relying on outsourcing.​ At present this market "is fragmented and not directly subject to governmental regulations",​ said the firm. "Pharmaceutical manufacturers are increasingly outsourcing processes to allow them to concentrate on their core competence. Therefore this market offers good growth potential".​ In its forecast for the future, Celesio said it expects "good medium-and long-term growth opportunities"​ for the Solutions unit and will therefore continue to "increase both its service portfolio and storage capacity nationally and internationally".

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