Research Update: German Pharmaceutical Company Grünenthal Pharma And Proposed Notes Assigned Preliminary 'B+' Ratings; Outlook Positive

Grünenthal Pharma GmbH&Co. KG's (Grünenthal's) earnings generation capacity is constrained by its concentrated and mostly mature product portfolio, which is exposed to competition from generics. This necessitates investments in new products to overcome the structural decline in revenue. There is also some uncertainty surrounding generic competition for Grünenthal's top-selling drug, Palexia, which loses regulatory exclusivity in 2021 and patent protection against a one-to-one generic version in 2025. Grünenthal intends to raise €500 million of senior secured notes to partly refinance its capital structure following its acquisition of the European rights (excluding the U.K. and Spain) to cholesterol drug Crestor from AstraZeneca in February 2021. We expect that Grünenthal will keep generating healthy free operating cash flow (FOCF) as

...- Grnnenthal Pharma GmbH & Co. KG's (Grnnenthal's) earnings generation capacity is constrained by its concentrated and mostly mature product portfolio, which is exposed to competition from generics. This necessitates investments in new products to overcome the structural decline in revenue. - There is also some uncertainty surrounding generic competition for Grnnenthal's top-selling drug, Palexia, which loses regulatory exclusivity in 2021 and patent protection against a one-to-one generic version in 2025. - Grnnenthal intends to raise 500 million of senior secured notes to partly refinance its capital structure following its acquisition of the European rights (excluding the U.K. and Spain) to cholesterol drug Crestor from AstraZeneca in February 2021. - We expect that Grnnenthal will keep generating healthy free operating cash flow (FOCF) as it capitalizes on its expertise in analgesics, underpinned by a robust commercial presence in key end markets. - We have assigned our preliminary...

Research Update