Grunenthal Pharma GmbH&Co. KG

Overview Key strengths Key risks Strong player in the European pain management therapeutic area, with sound geographic diversity. Reduced headroom for acquisitions given more pronounced pricing pressure from competitors on top-selling drug Palexia and lower-than-expected projected revenue growth in the U.S. for key growth-oriented franchise Qutenza. Promising late-stage asset in the group?s research and development (R&D) pipeline--RTX in osteoarthritis knee pain--which if successful could lead to high sales. Loss of exclusivity of several key products, one of which is top-selling drug Palexia, will negatively impact revenues in the coming years. Track record of good cash flow conversion allowing the group to co-fund acquisitions with internal cash generation, with a prudent shareholder distribution policy. Dependance on one drug, Qutenza, as the

...Despite the volume increase in 2023, Grunenthal's profitability decreased due to weaker margin contribution of Palexia, higher-than-anticipated cost of sales and operating expenses. It posted revenues of 1.82 billion for the year, showing annual revenue growth of 10%, higher than the 1.73 billion we had expected. Revenues were bolstered by Nebido and Qutenza's strong performance, the commercialization of Crestor, and contributions from Grunenthal Meds--and despite Palexia's underperformance amid competition from generic drugs in Europe. Regardless of the strong topline, poorer Palexia's margin contribution as well...

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