Almirall 1st-qtr 2011 financial results impacted by health reforms

Spain’s largest drugmaker Almirall (ALM: MC) yesterday announced results for the first quarter of 2011, saying it is on track to attain the yearly financial guidance. As of March 31, net sales dropped 12.3% to 212.7 million euros ($308.6 million) with stable evolution of the international business in Europe (+0.1%), and lower performance from the domestic business (-14.0%).

Sales were materially affected by the uneven year-on-year comparison. While the first quarter of 2010 was not yet impacted by the two health care reforms in Spain, the first quarter was fully impacted by the price erosion linked to these reforms. Generic competition has also hindered sales performance, especially in the case of Prevencor (atorvastatin), sales of which plunged nearly 42% to 13.2 million euros.

Gross Profit stood at 132.9 million euros (62.5% of sales) reflecting the unfavorable impact of the mandatory discount of 7.5% on patented products implemented in Spain in mid 2010. Despite this, gross margin in the quarter as a percentage on sales was improved vs FY 2010 (61.9%). Both EBIT and EBITDA pulled back to 37.9 million euros (-39.7%) and 53.3 million euros (-31.8%) respectively in a context material sales drop due to price erosion and generic competition. In this context, net income reached 30.6 million euros (-40%). Yearly guidance is confirmed and normalized net income (net income less non recurrent elements) is expected to decline by a mid-teen percentage, said Almirall.