Effects of COVID-19 on Sopharma



Current COVID-19 pandemic has already affected all participants in the Bulgarian economy. For Sopharma, this has led to increased demand for specific groups of medicines, including quinin-based medical products for fighting COVID-19, whose export was banned temporarily by the Bulgarian minister of healthcare with the aim of guaranteeing the local needs for this medicine. Sopharma’s Investor relations director has expressed certainty that the Company will be able to supply the local market (the initially needed quantity was 250k packages).

Furthermore, as soon as the ban is lifted, the Company will be able to export the needed quantities to its foreign clients. In addition, the increase in the demand for food supplements, vitamins and medical consumables has led to a surge in purchases towards some of Sopharma’s subsidiaries, namely Sopharma Trading and Vita Pharma.

Currently, Sopharma’s production is done by smaller teams at more shifts so that the possibility of a person being infected with COVID-19 is minimized. Supply chains are not interrupted and exports go as planned, with no expectations of possible delays as at the moment.

Sopharma’s financial results

During 2019, Sopharma marked an improvement in its standalone financials, the main driver for this being export sales. The latter reached BGN 137.3m. (up 15.4% y/y) thanks to an increase of 32% y/y in Russian sales and a 5% y/y growth in Ukraine. Furthermore, sales grew in the Balkan’s region, Poland, the Czech Republic and Moldova. During the year, Sopharma kept local sales flat y/y at BGN 91.6m, remaining #1 in terms of local sales in volumes in Bulgaria.

Thanks to good OPEX management, high net financial income and income from dividends and shareholdings, the standalone net profit for FY2019 came to BGN 40.4m, up 33% y/y.

Preliminary Company data for Q1’20 point to 4% y/y drop in sales, yet in Mar’20 alone revenues grew by 11% y/y as a result of flat local sales and 21% y/y boost in export. The latter is due to Sopharma’s successful strategy targeting the increase in its market shares abroad, especially in Russia, Ukraine, Poland, Moldova and Serbia.

Source: Sopharma's standalone financial statements, ELANA Trading estimates

Source: Sopharma’s standalone financial statements, ELANA Trading estimates

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