Sopharma – 2025 Q3 cons. review – Profitability improves amid growing sales

Profitability improves amid growing sales

Q3 2025 Consolidated Results

• Revenues from sales increased by BGN 369.5.2mln to BGN 1,908m, compared to BGN 1,538.1m in Q3 2024 or 24% increase. The main push came from sales of products, for which the approval for distribution came in late 2024 and those increased by 25.7% adding BGN 336.4mln.
• Sales growth for Q2’25 in the domestic market marked 1.9%. As per data from IQVIA, Sopharma has the 17^th largest share in the Bulgarian market responsible for 1.69% of the supply in nominal terms, while it holds the 2^nd largest share with 6.18% 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 – 6.05% (0.16% vol), AstraZeneca – 5.32% (0.57% vol), Roche – 4.76% (0.25% vol), Swixx Biopharma – 4.43% (1.39% vol), Novartis – 4.19% (1.13% vol), Abbvie – 4.05% (0.09% vol), Pfizer – 3.77% (0.71% vol), Johnson & Johnson – 3.09% (0.73% vol), Teva – 2.89% (8.62% vol), Stada – 2.76% (4.50% vol). The highest sold products are Analgin, Vicetin, Famotidine, vitamin C, Paracetamol, Methylprednisolone.
• When comparing previous periods, it is clear that the biggest names have increased their share in nominal terms and many have decreased in volume terms. This suggest a gradual increase in prices, which are also sticky and they have managed to transfer the higher personnel cost to the end products. On the contrary, producers such as Sopharma which specialize in generic products, had to push out greater amounts to compensate. It is possible that such shift if positive in higher inflationary periods, where over a longer periods customers gradually will shift to generic products, which are technologically identical, and avoid paying the premium for the brand name. This way Sopharma would be very well positioned for that increased demand. On the contrary, an inflationary period may put greater pressure on OPEX, which could hurt profitability.
• Internationally, growth was recorded in Russia (39.9%) and Poland (26.2%). International sales have been the biggest growth engine for the company over the last year. The company managed to return to traditional markets like Russia, which have been hit since the start of the conflict in Ukraine.
• EBITDA increased significantly by 49.7% to BGN 168.5mln and Net Profit shot up by 72.1% to BGN 117mln.
• OPEX increased 21.7% to BGN 1,826mln. In that, COGS had the largest contribution increasing by BGN 257mln or 28.6%. Personnel expense added BGN 42.8mln or 28.6% to reach BGN 149.6mln as a result of salaries indexation and increase in workforce. External services added BGN 15.8mln to reach BGN 74mln and it is the result of distribution costs.
• Sopharma has managed to keep most costs growth below the growth of sales. The only exclusion is Payroll, but that is only 10.5% of OPEX and a greater staff or better motivated staff can contribute to sales growth in the future.
• Trade receivables increased significantly by 38% to BGN 457mln and the majority of that gain appeared in both Q1 and Q2 (the account was BGN 411mln by Q1 2025). The increase is due to consolidation of sales after the acquired approvals for trading of pharmaceutical products at the end of Q4 2024 and due to counterparty payment delays. 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 hospitals depend on government approved budgets and in more politically volatile political periods such payment can be delayed. On the positive side, the collection rate must be very close to 100%. Additionally, the growth in Q2 was 44%, which could indicate that collection has increased in Q3.
• PB ratio is 1.58 where we take into consideration non-material assets, such as trademarks and reputation, as they are important in this industry and main distinguishing factor. This is especially true in the generics market, where the products are essentially the same. If we use the formula, where they are excluded, the PB ratio would be 2.08.
• Total debt marked a massive increase of 58% YoY to BGN 612mln, adding BGN 225mln. The greater part of that increase took place in Q1 and Q2 as the marginal increase in Q3 was just BGN 9mln. In that, LT debt increased 82% adding BGN 90mln to reach BGN 110mln, BGN 74mln of which was from LT bank debt). ST debt increased 49% to reach BGN 412mln. The ST debt to banks increased by BGN 45mln to reach BNG 49.5mln. 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. The major withdrawals came from credit lines with limits of EUR 40mln, BGN 30mln, EUR 20mln, EUR 3.5mln and EUR 4.7mln. 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. The growing sales in Russia and Ukraine confirm that it is returning to its important export markets. It is a company with strategic view and good financial management.

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