Sopharma – 2025 Q1 review – Continued stable growth and further investments

Q1 2025 Consolidated Results

• Revenues from sales of manufactured medical products increased by BGN 131mln to BGN 640.5m, compared to BGN 509.1m in Q1 2024 or 25.7% increase. The main push came from sales of products, for which the approval for distribution came in late 2024.
• Sales growth for Q1’25 in the domestic market marked 2.9%. As per data from IQVIA, Sopharma has the 17^th largest share in the Bulgarian market responsible for 1.77% of the supply in nominal terms, while it holds the 2^nd largest share with 6.12% with regards to volume (amount of meds). Note that while sales of Sopharma grew, the relative share declined slightly from last year, indicating that the market as a whole grew even more, which is a definite positive sign indicating a significant upside potential.
• The positions of the main competitors are as follow: Merck – 5.07% (0.08% vol), AstraZeneca – 5.20% (0.58% vol), Roche – 5.07% (0.48% vol), Swixx Biopharma – 4.43% (1.44% vol), Novartis – 3.95% (1.04% vol), Abbvie – 3.78% (0.09% vol), Pfizer – 3.63% (0,74% vol), Johnson & Johnson – 3.02% (0.74% vol), Stada – 2.90% (4.61% vol), Teva – 2.80% (7.96% vol). The highest sold products are Analgin, Vicetin, Famotidine, vitamin C, Paracetamol, Methylprednisolone.
• Internationally, growth was recorded in Russia (3.3%) and Ukraine (2.6%).
• EBITDA increased significantly by 25.9% to BGN 57.8mln and Net Profit shot up by 40% to BGN 43.9mln.
• OPEX increased 22.6%. In that, COGS had the largest contribution increasing by BGN 87.5mln or 22.8%. Personnel expense added BGN 16.4mln or 34% and is the result of salaries indexation and increase in workforce. External services added BGN 4.2mln to reach BGN 27.6mln and is the result of distribution.
• Trade receivables increased significantly by 32.3% to BGN 411mln and the majority of that gain appeared in Q1 2025. The company does not disclose which part of that is due to sales to hospitals vs retailers, but it notes that receivables from hospitals can be extended significantly beyond the 30/60/90 day framework due to “the specifics of the counterparties” and can reach up to 2 years. State funded hospitals are heavily dependent on state budget approvals and allocations from the Ministry of Healthcare, which tend to get interrupted during turbulent political periods. Considering the fact that nearly half of the sales of Sopharma are domestic, it is safe to assume that a large part of that is to hospitals, which experience delays in budget allocations. As such, the negative side is that those payments get delayed, but the positive is that the collection rate is either 100% or very close to it.
• Total debt marked an increase of 44% to BGN 527mln, adding BGN 161mln. In that LT debt, specifically debt to banks, added BGN 83mln to reach BGN 134mln. Sopharma specifies that the purpose of it is the acquisition of long term assets, which will serve the expansion of the production of the company and that it is in line with debt covenants, such as Current Ratio of 1.1, net debt not exceeding 4x EBITDA, capital adequacy greater or equal than 40% and not decreasing own capital after last audited financials. Currently, everything is within required limits.
• Sopharma showed excellent performance considering the heavy dependency on the Russian market, which was clearly affected from the war with Ukraine (trade limitations, etc). In the same time, they managed to expand in Serbia and the outcome from the positioning will be seen in the following quarters. It is a company with strategic view and good financial management.

Full report can be accessed here.