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Management report - «Logistics & IT» segment

«Logistics & IT» segment

Management report

The «Logistics & IT» segment comprises two sectors: «Wholesale» and «Logistics & IT Services». They operate and develop the logistics and IT platforms for the Galenica Group and offer services to all the parties involved in healthcare – pharmacies, drug stores, doctors, hospitals and care homes.


These activities focus on optimising and further developing the range of logistics solutions and services as well as producing innovative solutions to promote digitalisation in the healthcare market.


Key figures «Logistics & IT» segment

The «Logistics & IT» segment achieved net sales of CHF 2,831.4 million (+7.9%) in the 2021 financial year. CHF 2,728.4 million (+7.8%) of this was generated by the «Wholesale» sector and CHF 111.9 million (+13.7%) by the «Logistics & IT Services» sector. The «Logistics & IT» segment thus clearly exceeded the growth of the overall market of 4.4% (IQVIA, Pharmaceutical Market Switzerland, 2021).

COVID-19 also impacted sales in the «Logistics & IT» segment in the year under review. Additional extraordinary sales, driven primarily by the coronavirus pandemic, contributed an estimated 3% to sales growth. Another sales driver was again the market share gains in the wholesale business with doctors.

Losses in sales in the first half of 2021 due to the absence of the flu and cold season in the winter of 2020/2021 were largely compensated by a strong increase in the fourth quarter 2021.

Government-ordered price reductions led to a decline in sales of 1.3% in 2021. Had this not been the case, the segment’s net sales would have increased by 9.2%.

The adjusted¹ operating result (EBIT), i.e. excluding the impact of the IFRS 16 (Leases) accounting standard, rose year-on-year by 35.2% to CHF 61.0 million. This significant growth was boosted by the profit from the sale of the property at the Galenica headquarters in Bern amounting to CHF 9.4 million, as well as the EBIT contribution generated by one-off additional sales to combat the coronavirus pandemic of an estimated CHF 6 million.

Thanks to these two special factors, the adjusted¹ return on sales (ROS) rose to 2.2% (previous year: 1.7%).

Investments totalled CHF 37.0 million (previous year: CHF 31.4 million). These were primarily used for the modernisation and renovation of the Galexis distribution centre in Lausanne-Ecublens, for the gradual roll-out of the new ERP software at Alloga and Galexis and for the development of digital infrastructure as part of the strategic «Omni-Channel» programme.

1) Excluding the effects of IFRS 16. See chapter «Alternative performance measures».


Sector «Wholesale»

Strong sales growth of +7.8% to CHF 2,728.4 million was achieved in the «Wholesale» sector, also due to COVID-19-related additional sales.

The pharmacy customer segment recorded significant growth of 7.5%. Adjusted for the extraordinary sales of the COVID-19 initiatives, sales to pharmacies increased by 3.2%. Market growth of stationary pharmacies amounted to 3.5% in the financial year 2021 (IQVIA, Pharmaceutical Market Switzerland, 2021).

Another sales driver was again market share gains in the wholesale business with doctors, with sales growth of a strong 9.8% in this segment. Services for oncologists and rheumatologists were the main contributors to this. Galexis was also able to position itself as the ideal partner for specialist doctors in particular.

By way of comparison, the medical market developed by 6.0% in the reporting year (IQVIA, Pharmaceutical Market Switzerland, 2021). As was the case in 2020, non-essential operations and elective interventions in hospitals and by specialist doctors were postponed nationwide in 2021 due to COVID-19. For this reason, hospitals (+3.0%, IQVIA, Pharmaceutical Market Switzerland, 2021) are still lagging behind the overall market (+4.4%, IQVIA, Pharmaceutical Market Switzerland, 2021).

Growing presence in the physician market

Galexis gained further market shares in the physicians segment in 2021. As a specialist partner, Galexis actively supports its customers in setting up and maintaining group practices and medical centres of various sizes. It thus helps to secure the supply of medical care in Switzerland – particularly in regions where there is already a shortage of family doctors or where this is likely to be the case in the near future.

Significant expansion of warehouse capacities

Galexis significantly increased its warehousing capacity in 2021 to meet the growing demand for its logistics services. In Niederbipp (canton of Bern), the existing distribution centre was expanded and, in particular, the storage capacity for medications was expanded by the creation of 17,600 new storage bays, resulting in a total of 61,395 with two additional automated storage and retrieval machines. The storage and retrieval machines went into operation at the end of September 2021. These additional storage capacities will enable Galexis to significantly increase product availability.

Innovation for the distribution of chilled medications

The range of refrigerated medications (2–8 degrees) is constantly increasing. Galexis delivers more than 2,000 containers of chilled products every day, reaching capacity limits on peak days. Until now, the cool boxes have used cooling elements, which took around 14 hours to reach the required temperature. Galexis was able to optimise this process in 2021 with a sustainable solution similar to that in the catering industry. By using ‘shock freezers’, the time needed to condition the cool boxes to the required temperature can be reduced to four hours. This reduction has made Galexis more agile and enabled it to react more flexibly to the market with a maximum capacity of around 3,000 boxes per day. Galexis is the first pharmaceutical wholesaler to use this innovative cooling process, which sets new standards in pharmaceutical logistics.


Galexis also commissioned a new central warehouse for medical technology products at the neighbouring site in Oensingen (canton of Solothurn). This warehouse also serves as a second location for handling UFD’s «E-Box» logistics service. Until now, all deliveries of online orders received in the Amavita, Sun Store and Coop Vitality online shops have been picked and shipped from UFD in Barbengo-Lugano. Thanks to the new storage capacities in Oensingen, around half of the 60,000 items available throughout Switzerland have been delivered within 24 hours as of summer 2021.

The renovation and modernisation of the Galexis distribution centre in Lausanne-Ecublens continued in the year under review. The outer shell of the new building and the office wing were completed and the administration department moved in at the end of 2021. The conversion included the refurbishment of all the buildings and the roofs to increase energy efficiency. The interior will be fitted out and put into full operation in the course of 2022.

Galexis launches ERP test phase

While more progress has been made with the introduction of the ERP (enterprise resource planning) system at Alloga, the introduction at Galexis began with the implementation phase. This means that the ERP system for Galexis was set up on the basis of the Alloga ERP system and started with the test phase and subsequent data migration.


Sector «Logistics & IT Services»

The «Logistics & IT Services» sector achieved net sales of CHF 111.9 million (+13.7%) in financial year 2021. The main driver of the strong growth was additional invoicing for internal Group IT services due to the new organisational structure introduced in 2021. HCI Solutions also contributed to sales growth with the expansion of digital services in the healthcare sector.

Continuous ERP roll-out at Alloga

The introduction of the ERP system at Alloga progressed according to plan in the year under review. At the end of 2021, Alloga was able to migrate around a third of its customers to the SAP platform. The progress of further migration work depends on the IT changes at the customers’ premises.

Increased efficiency and expanded range of services

In 2021, Alloga was able to implement a new digital tool that suppliers can use to enter their delivery dates themselves in advance. This allows Alloga a better capacity utilisation at goods receipt and to increase the efficiency of its processing with suppliers. Alloga was also able to expand its range of chilled goods services to include Monday deliveries. Thanks to new refrigerated transport boxes, which keep cool for longer, refrigerated goods ordered on Fridays can be assembled for storage and transport at between two and eight degrees on Fridays and delivered on the following Monday.

HCI Solutions: new Documedis® function as the basis for e-Mediplan increases patient safety

By the end of 2021, half of the doctors in Switzerland were already able to access the Documedis® medical and pharmacy software from HCI Solutions via their primary IT system. This also enables them to use the «Clinical Decision Support» (CDS) check, which was supplemented by additional algorithms in the reporting year. The CDS check is algorithm-based and checks a patient’s medication for risks, such as potential intolerance to two drugs taken at the same time. This prevents medication errors and increases patient safety. In 2021, monthly CDS checks increased steadily from around five million in January to almost nine million in December. The CDS check also serves as the basis for the e-Mediplan electronic medication plan. This is integrated into the apps of all Galenica Group pharmacy formats. It not only sends automated messages to remind customers to take their medications, but also gives product information such as dosage, when to start and stop taking medication, comments, instructions and images. The e-Mediplan makes a significant contribution to increased medication safety and further functions will be added in 2022.

Pilot project on electronic transmission of prescriptions

A pilot project for the reliable and secure electronic transmission of prescriptions was launched in the first half of 2021. The corresponding IT solution «E-prescription» was developed by HCI Solutions and its partner company AD Swiss Net. Medi24, Switzerland’s leading telemedicine provider, was the first medical practice to take part in this pilot project. «E-Prescription» is scheduled to be introduced into and other doctors in 2022.

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