| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 38.30 | -47 |
| Intrinsic value (DCF) | 23.19 | -68 |
| Graham-Dodd Method | 7.00 | -90 |
| Graham Formula | 1.10 | -98 |
Laboratorios Farmaceuticos Rovi, S.A. (ROVI) is a leading Spanish pharmaceutical company specializing in the research, development, production, and commercialization of innovative medicines and biosimilars. Headquartered in Madrid, ROVI operates across Spain, the EU, OECD countries, and internationally, with a diversified portfolio that includes low-molecular-weight heparins (Hibor, Becat), cardiovascular treatments (Neparvis), cholesterol management drugs (Absorcol, Vytorin), respiratory therapies (Hirobriz Breezhaler), and ADHD medications (Medikinet). The company also provides contrast agents for diagnostic imaging (Iomeron, Multihance) and contract manufacturing services for prefilled syringes, vials, and other pharmaceutical forms. ROVI gained global recognition through its collaboration with Moderna to manufacture mRNA COVID-19 vaccines, enhancing its biotech capabilities. With a strong presence in hospital and specialty pharmaceuticals, ROVI combines proprietary R&D with strategic licensing partnerships, positioning itself as a key player in the European pharmaceutical market. Its vertically integrated model—spanning development, manufacturing, and distribution—ensures control over the supply chain and enhances margins.
ROVI presents a compelling investment case with its diversified pharmaceutical portfolio, high-margin contract manufacturing business, and strategic Moderna partnership providing revenue stability. The company's low beta (0.42) suggests defensive characteristics, while its 3.3% dividend yield (€0.894/share) offers income appeal. However, reliance on heparin biosimilars (≈30% of sales) exposes it to pricing pressures, and the wind-down of COVID-19 vaccine production could impact top-line growth. Strong cash flow generation (€136.6M operating cash flow) supports continued R&D investment in high-potential areas like cardiology and biosimilars. Investors should monitor EU pharmaceutical regulation changes and biosimilar competition.
ROVI competes in the mid-cap European pharmaceutical space by leveraging three key advantages: 1) Niche leadership in biosimilar heparins (Becat) with complex manufacturing know-how that creates barriers to entry, 2) Vertical integration combining proprietary drug development (14.5% revenue from R&D) with high-value contract manufacturing (notably for Moderna), and 3) Strategic focus on hospital-administered specialty drugs (70% of portfolio) that face less pricing pressure than retail pharmaceuticals. Unlike large-cap peers, ROVI maintains agility in targeting underserved therapeutic areas (e.g., ADHD with Medikinet) while avoiding primary care market saturation. Its diagnostic imaging division provides stable cash flows but lacks the growth potential of innovative biologics. The Moderna partnership demonstrated adaptability but created temporary capacity constraints. Going forward, ROVI must balance biosimilar commercialization risks with higher-margin innovative drug development to maintain its 17.9% net margin—above many EU generic pharma peers.