Stock Analysis & Valuation Dermapharm Holding SE (DMP.DE)

• Previous Close: €34.85
• Sector Valuation Confidence Level: High

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	40.50	16
Intrinsic value (DCF)	16.11	-54
Graham-Dodd Method		n/a
Graham Formula	25.27	-27

Strategic Investment Analysis

Company Overview

Dermapharm Holding SE is a leading German specialty pharmaceutical company specializing in off-patent branded pharmaceuticals and healthcare products. Headquartered in Grünwald, Germany, the company operates through three key segments: Branded Pharmaceuticals and Other Healthcare Products, Parallel Import Business, and Herbal Extracts. Dermapharm develops, manufactures, and markets branded generics, over-the-counter (OTC) drugs, and natural remedies under well-known brands such as Dekristol, Allergovit, and Tromcardin. The company serves a broad range of healthcare needs, including dermatology, allergology, pain management, cardiovascular support, and gynecology. Additionally, it offers medical devices like bite away and Herpotherm, as well as herbal extracts for phytopharmaceuticals and cosmetics. With a strong presence in Germany and international markets, Dermapharm supplies pharmaceutical wholesalers, pharmacies, hospitals, and health food stores. As a subsidiary of Themis Beteiligungs-Aktiengesellschaft, the company leverages its expertise in branded generics and parallel imports to maintain a competitive edge in the specialty pharmaceutical sector.

Investment Summary

Dermapharm Holding SE presents a compelling investment case due to its strong position in the off-patent branded pharmaceuticals market, diversified product portfolio, and stable revenue streams. The company benefits from a well-established brand presence in Germany and expanding international operations. However, investors should be mindful of risks such as regulatory pressures in the pharmaceutical industry, competition from generic drug manufacturers, and potential margin pressures due to pricing controls. The company's moderate beta of 1.18 suggests some volatility relative to the market, but its consistent dividend payout (€0.88 per share) and solid cash flow generation (€201.4M operating cash flow) provide stability. With a market cap of €1.92B and a net income of €113.8M, Dermapharm remains a mid-cap player with growth potential in the European healthcare sector.

Competitive Analysis

Dermapharm Holding SE competes in the specialty and generic pharmaceuticals market, where differentiation is driven by brand recognition, regulatory expertise, and distribution networks. The company's competitive advantage lies in its diversified product portfolio, which includes branded generics, OTC drugs, and herbal extracts, reducing reliance on any single product category. Its parallel import business (under the axicorp brand) provides additional revenue diversification. However, Dermapharm faces intense competition from larger pharmaceutical firms with greater R&D budgets and global reach. Its focus on the German market, while a strength in terms of local brand loyalty, also exposes it to regional regulatory risks. The company’s ability to maintain pricing power in an increasingly cost-sensitive generic drug market will be critical. Additionally, its herbal extracts segment competes with both pharmaceutical and nutraceutical companies, requiring agility in responding to shifting consumer preferences. Dermapharm’s mid-sized scale allows for operational flexibility but may limit its bargaining power with suppliers and distributors compared to industry giants.

Major Competitors

• Stada Arzneimittel AG (STADA.DE): Stada is a major competitor in the European generics and OTC pharmaceuticals market, with a broader international footprint than Dermapharm. It has strong brand recognition and a diversified product portfolio, including biosimilars. However, Stada’s larger scale may lead to less agility in niche markets where Dermapharm excels.
• Ratiopharm GmbH (subsidiary of Teva Pharmaceutical Industries) (RAT.DE): Ratiopharm, owned by Teva, is a dominant player in the generics market with extensive distribution networks. Its parent company’s global reach provides advantages in pricing and supply chain efficiency. However, Dermapharm’s focus on branded generics and parallel imports allows it to differentiate in specific therapeutic areas.
• Heidelberg Pharma AG (HEI.DE): Heidelberg Pharma specializes in oncology and antibody-drug conjugates, differing from Dermapharm’s broader OTC and generic focus. While not a direct competitor in most segments, Heidelberg’s innovative pipeline highlights the contrast between Dermapharm’s off-patent model and cutting-edge biopharma.
• Teva Pharmaceutical Industries Ltd (TEVA): Teva is a global leader in generics and biosimilars, with significant economies of scale. Its vast product portfolio and international presence pose a competitive threat, but Dermapharm’s regional expertise in Germany and branded generics strategy provide a counterbalance in local markets.
• Salzgitter AG (via its subsidiary, Salutas Pharma) (SZG.DE): Salutas Pharma, part of Salzgitter’s healthcare division, competes in the German generics market. While smaller than Dermapharm, it benefits from vertical integration within Salzgitter’s industrial conglomerate. Dermapharm’s stronger brand focus and parallel import business give it an edge in certain segments.