A heavy sword of Damocles hangs over European pharmacies.
If they continue to defend one of the last bastions of traditional trade on the Old Continent, it will be difficult for them to remain eternally behind the times in the face of their online competitors.
In this respect, even if online sales of pharmaceutical products remain hesitant in France and Southern Europe, they are making steady progress in Northern Europe. The latest annual results from Redcare Pharmacy, formerly known as Shop Apotheke, bear witness to this.
The Redcare platform has established itself as the European leader in the sector by 2022. Following the merger with Mediplus, a specialist in the delivery of medication for long-term conditions, the gap with Switzerland's DocMorris - formerly known as Zur Rose - widened the following year.
Redcare now claims 12.5 million customers. That's twice as many as five years ago, and almost ten times as many as ten years ago. The year just ended was marked by the debut of electronic prescriptions in Germany, five years after the law that introduced the system.
This will lead to a 64% increase in sales in the prescription segment of the platform by 2024. The over-the-counter segment maintained a satisfactory growth rate of 21%. On a consolidated basis, total sales rose by 32%, well above the annualized growth rate observed since 2020, which had already reached 23%.
A few weeks after this strategic development for Redcare, its stock market valuation fell by almost a quarter. The market was anticipating an unfavorable impact on operating profit, given that neither Redcare nor DocMorris have yet managed to achieve profitable growth.
Although Redcare's accounts are still not in the black, the Group has been giving the market a pledge since 2023 - as it did at the start of the pandemic - by posting a very modestly positive operating profit before investments and stock options.
It has to be said that it has little choice, as the financing context has dried up for growing companies in Europe. In 2023, for example, the Group had to finance the acquisition of 51% of Switzerland's Mediplus with its own shares, at a time when their valuation was well off its highs.
Still valued at one times sales, Redcare continues to burn cash, albeit in reasonable and, above all, well-controlled proportions. Let's hope that this meticulous management will enable the company to prepare for a forthcoming refinancing that will give it the means to achieve its ambitions.
In any case, one thing is certain: posting a frankly positive EBITDA next quarter - thanks in particular to the boom in electronic prescriptions in Germany - would give a significant boost to its valuation, which has been languishing on the same plateau for far too long.
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