«Logistics & IT» segment
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
Net sales and operating result
The «Logistics & IT» segment generated net sales of CHF 1,434.6 million (+4.1%) in the first half of 2022. Of this, CHF 1,379.4 million (+3.8%) was attributable to the «Wholesale» sector and CHF 63.8 million (+26.2%) to the «Logistics & IT Services» sector. Adjusted for sales of COVID-192 self-tests, which were exceptionally high in the first half of 2021, growth in the segment amounted to 7.1%. «Logistics & IT» thus performed more or less in line with the overall market, which recorded growth of 7.1% (IQVIA, Pharmaceutical Market Switzerland, first half of 2022). Sales in «Wholesale» were also driven by the more intense flu season and numerous illnesses caused by the coronavirus Omicron variant as well as new customer acquisitions in the wholesale business with pharmacies and doctors.
The adjusted1 operating result (EBIT), i.e. excluding the impact of the IFRS 16 (Leases) accounting standard, decreased by 3.7% year-on-year to CHF 25.4 million. The adjusted1 return on sales (ROS) for the first half of 2022 amounted to 1.8% (first half of 2021: 1.9%). The reported EBIT amounted to CHF 25.4 million (previous year CHF 26.4 million). Adjusted for the EBIT contributions from additional sales in connection with COVID-192, which were exceptionally high in the first half of 2021, the «Logistics & IT» segment achieved strong adjusted1 EBIT growth of 15.6%.
1) Excluding the effects of IFRS 16. See chapter «Alternative performance measures».
2) Sales of COVID-19self-tests, EBIT contributions estimated.
«Wholesale» sector
Net sales development
Sales in the «Wholesale» sector increased by +3.8% to CHF 1,379.4 million. Adjusted for additional sales of COVID-19 self-tests, which were exceptionally high in the first half of 2021, sales growth amounted to 6.9%. The strong sales growth is based on the one hand, on increased sales of OTC products as a result of the more intense flu season compared to the previous year and increased illnesses with flu-like symptoms caused by the coronavirus Omicron variant. On the other hand, further market share gains were realised with physicians and medical practices, so that sales in this segment increased by an impressive 8.4%. Services for oncologists and rheumatologists were the main contributors to this. In this customer group Galexis was able to position itself as a partner for specialist doctors.
The negative impact on sales development due to the government-mandated price reduction also continued and amounted to -2.0% in the reporting period. Excluding this effect, net sales in the sector would have risen by 5.8%.
By way of comparison, the physician market developed by 6.0% in the first half of 2022 and the pharmacy market by 8.5%. The hospital market also grew by 5.4%. (IQVIA, Pharmaceutical Market Switzerland, first half of 2022).
Other customers in the physicians segment
In the first half of 2022, Galexis entered into a partnership with additional customers in the physicians segment. As a specialist partner, Galenica 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.
Galexis undertakes expansion works
The renovation and modernisation of the company’s distribution centre in Lausanne-Ecublens continued in the first half of 2022. The office wing was completed at the end of 2021 and staff have been moving into the offices and commencing operations over the past few months. The conveyor system and shelf storage were also assembled in June 2022. In the second half of 2022, construction work in the warehouse will be completed and the modernised distribution centre in Lausanne-Ecublens will resume full operation.
At the Niederbipp site expanding work also started on the storage capacities during the first half of 2022. Around 6,500 storage spaces will be created for around 25,000 additional cosmetics and care products by September 2022, with a further 18,000 storage spaces to follow by 2025.
Additional loading areas were also created in the incoming and outgoing goods departments. Measuring 60 metres long, the factory building was extended by 5 metres for this purpose. As a result of this expansion, Galexis now has 58 loading stations for transportation vehicles at its Niederbipp location.
Investments in sustainability
In addition to expanding the capacity and renovating the Lausanne-Ecublens and Niederbipp sites, Galenica is also investing in renewable energies. A photovoltaic system has been installed on the roof of the modernised distribution centre in Lausanne-Ecublens, which will supply up to 50 kWp of electricity over a surface of 300m2 and thus contribute an important part of the building’s energy requirements. A photovoltaic system will also be installed in Niederbipp. The system, which covers an area of approx. 16,000m2, is expected to deliver an electricity output of up to 1.7 MWh for Galexis and thus save over 300 tonnes of CO2 per year.
UFD further develops the E-BOX
Unione Farmaceutica Distribuzione (UFD) has been offering the «Busta 2.0» version of its E-BOX since May 2022. This new solution makes it possible for products from the distribution centres in Lugano and Oensingen to be dispatched fully automatically in a narrow cardboard box instead of via parcel. Not only does this save on shipping costs, as shipping via envelopes also means that less packaging material is used, it is also more environmentally friendly. Since its launch, 21% of UFD’s order volume has already been processed via the «Busta 2.0» E-BOX.
«Logistics & IT Services» sector
Net sales development
The «Logistics & IT Services» sector generated net sales of CHF 63.8 million (+26.2%) in the first half of 2022. 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.
Alloga on track to meet its energy targets
Alloga has been using a new heat pump since early 2022. Modern heating technology helps to save around 120 tonnes of CO2 emissions every year. The heat pump provides Alloga with an additional heating system, which reduces current gas consumption by around two-thirds. In addition, installing a heat pump supports Alloga’s fundamental energy-saving goal to reduce CO2 emissions by 80% and energy consumption by around 20% within ten years. The company has also added further insulation to the 25,000m2 roof of the Burgdorf warehouse building. This new insulation means that further energy savings of 10-15% per year can be achieved. The new insulation also allows for the future expansion of the existing photovoltaic system which, with an output of 1,200 kWh in full sunshine, is one of the largest installations in the Burgdorf region.
ERP roll-out is in full swing
The introduction of ERP at Alloga made further progress in the first half of 2022. Over the past six months, work has been completed on the roll-out for a further six customers. A total of 22 partners are to be moved to the new ERP system by the end of 2022.
HCI Solutions develops the digital vaccination check
In the first six months of 2022, HCI Solutions developed a digital vaccination check that streamlines the tightly scheduled day-to-day operations of pharmacies and medical practices. The new algorithm checks whether patients are fully vaccinated, when their next vaccination is due and whether this is associated with risks. According to the Medical Devices Ordinance, the CDS.CE solution from Documedis® is a Class I medical device. Because the data is not stored centrally, it is also protected against misuse. The Swiss vaccination plan published by the Federal Office of Public Health forms the basis for the vaccination check. The vaccination plan includes the vaccinations available in Switzerland, such as hepatitis A and B, rabies and influenza. In addition to the basic vaccinations for all members of the population, there are a range of recommended complementary vaccinations as well as those for high-risk groups.
Additional e-prescription pilot projects launched
The technical functionality of e-prescriptions was thoroughly tested in the first half of 2022, with further pilot projects being launched in summer 2022 with doctors, patients and pharmacies to validate the suitability of e-prescriptions for everyday use. Based on the experience gained thus far, the digital solution is set to be finalised and integrated into as many types of software as possible, which will make it possible for e-prescriptions to be offered and used by many doctors, hospitals and pharmacies. In addition to process reliability, e-prescriptions offer real added value in terms of simplicity and greater safety for patients.