New research report: Sopharma Trading – set for double expansion in 5 years


With 8.2% CAGR for the last 10 years and 7% average DY in the last 7 years, Sopharma Trading firmly leads the Bulgarian pharmaceuticals wholesale market. Following strong acquisition spree on the local and export markets in 2017, the Company is all set for a major expansion to nearly double in size in next 5 years.

This is what ELANA Trading analysts say in their latest research report on Sopharma Trading.

Moving towards establishing a nationwide pharmacy network

Sopharma Trading has been developing its own branded pharmacy operator SOpharmacy since 2015, with 27 pharmacies across Bulgaria’s biggest cities. In 2017, the Company acquired local #4 in terms of sales pharmacy operator Pharmastore adding 19 pharmacies to its portfolio. This, coupled with the Company’s full country coverage logistics network with four regional distribution centers in Bulgaria’s major cities – Sofia, Varna, Plovdiv and Veliko Turnovo, sets the ground for the establishment of the second largest national pharmacy network.

M&A-driven export expansion

M&A-intense 2017 saw the Company acquiring 70% in Serbian peer Lekovit, opening the gate to the USD 1.1bn Serbian market. Lekovit currently holds 7% of the overall market and 20% of the small pharmacies segment.

Lekovit is the fastest growing Serbian company in its sector with 25-30% annual growth, 4% net income margin. Sopharma Trading’s expansion strategy envisions Lekovit to reach 25%+ market share within the next 3-5 years.

Sopharma Trading performance

Sopharma Trading has been steadily increasing its revenues for 11 consecutive years since inception, with 8+% CAGR for the period, and 2x+ its profit over the same period. The Company has been outpacing the overall market in six of the past ten years.

Gross profit has registered 9% CAGR over the last four years to BGN 57m in 2017. Additionally, after several years of working below 7% gross profit margin, thanks to diversification, since 2013 the Company surpassed the 7% barrier and in 2017 it reached 8%.

ELANA Trading analysts expect this positive trend to continue and with Sopharma Trading focusing on higher margin OTC products, cosmetics and exclusive products, estimations are that gross profit margin will reach 8.3% in 2022.

Net income has been steadily rising until 2015 when it reached BGN 12.2m, and dropped to BGN 11m in 2016 and 2017 due to the opening of a large number of pharmacies, which are expected to start adding to the Company’s bottom line in 2018-2019, aided by the expansion in Serbia.

ELANA Trading analysts estimations are that net income will grow at 12% CAGR during the next 5 years, with net income margin reaching 2% in 2022.

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