Status: 03/22/2022 10:37 a.m
Hardly any other German drug manufacturer is as strongly represented in Russia as Stada. The group is sticking to this business despite the Ukraine war. But it weighs on the balance sheet.
The pharmaceutical group from Bad Vilbel near Frankfurt has invested heavily in the Russian market and makes an important part of its sales there. And despite the war of aggression waged by Kremlin ruler Vladimir Putin against Ukraine, the company intends to continue doing business with Russia. However, this is now shrinking – mainly because of the weak ruble.
The demand from Russia for products such as cold medicines or dietary supplements is still high, said CEO Peter Goldschmidt. One challenge, however, is to ensure the supply chain and production. “From an economic point of view, the development of the ruble is crucial,” said Goldschmidt. Stada reports in euros, so sales in Russia will shrink accordingly if the ruble continues to depreciate.
Second most important market
Stada does not make its deliveries to Russia available. The country is one of the most important markets for Stada and contributes around 14 percent to sales. This makes Russia the second most important market for Stada after Germany, ahead of European countries such as Italy, Great Britain and Spain.
The group employs 2,100 people there, about a sixth of the global workforce. Possible losses there could be “compensated for in the medium term with growth in other countries,” says CEO Goldschmidt.
The war in Ukraine also affects Stada on site. The group employs around 440 people there. In Kyiv, Stada operates a factory near the military airport. She’s still standing, but rockets have landed nearby. The production has been stopped for a long time. Most recently, Ukraine’s share of sales was one percent of Stada’s total revenues.
Acquisition for 600 million euros
With double-digit growth rates, Russia has been one of the pillars of Stada’s sales strategy in recent years. In 2019, the Hessian company bought the pharmaceutical business of its Japanese competitor Takeda in Russia for around 600 million euros.
Last year, Stada was able to increase its sales by eight percent to 3.25 billion euros, as the company announced today. The profit grew by almost 45 percent to 264 million euros. Last year, Stada was able to compensate for the low demand for cold medicines in the pandemic, for example through acquisitions and increasing sales of dietary supplements.
According to Stada, it is the fourth largest provider of over-the-counter medicines and generic medicines in Europe. In addition, the group is increasingly focusing on special pharmaceuticals such as Parkinson’s therapies. In 2017, the company was taken over by the financial investors Bain and Cinven.