| Valuation method | Value, CHF | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 46.91 | -51 |
| Intrinsic value (DCF) | 31.84 | -67 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 45.99 | -52 |
Galenica AG is a leading Swiss healthcare service provider with a diversified business model spanning pharmacy retail, logistics, and IT solutions. Operating under brands like Amavita, Sun Store, and Coop Vitality, the company manages 520 pharmacies (368 owned, 152 partner pharmacies) across Switzerland, offering medication, consumer health products, and specialized healthcare services. Its Products & Care segment focuses on pharmaceutical distribution and home treatment solutions, while the Logistics & IT segment provides pre-wholesale services, data management, and pharmacy software solutions. Founded in 1927 and headquartered in Bern, Galenica plays a critical role in Switzerland's healthcare ecosystem, combining retail reach with B2B logistics expertise. With a market cap of CHF 4.42 billion, the company benefits from stable demand in Switzerland's robust healthcare sector, supported by an aging population and high healthcare spending. Its vertically integrated model—spanning distribution, retail, and technology—positions it as a key infrastructure player in Swiss healthcare.
Galenica presents a defensive investment case with stable cash flows from its pharmacy network and healthcare logistics operations. The company's low beta (0.293) reflects its resilience to economic cycles, while its 3.3% dividend yield (CHF 2.30/share) offers income appeal. However, margins are constrained by Switzerland's regulated pharmacy market, with net income representing just 4.7% of revenue. The capital-intensive pharmacy ownership model (CHF 37M annual capex) limits rapid expansion, though debt levels remain manageable at 0.53x EBITDA. Growth depends on incremental market share gains in Swiss pharmacy retail and cross-selling IT solutions to partner pharmacies. Regulatory risks persist given healthcare policy scrutiny, but Galenica's integrated model provides competitive insulation. Valuation appears fair at 12x diluted EPS (CHF 3.67), pricing in stable but modest growth prospects.
Galenica's competitive advantage stems from its dual role as both Switzerland's largest pharmacy retailer and a critical pharmaceutical logistics provider. Its 520-pharmacy network (20% market share by outlets) benefits from prime locations and trusted brands (Amavita/Coop Vitality), creating customer stickiness in the prescription drug market. The vertical integration with logistics allows cost efficiencies in inventory management that pure-play pharmacies lack. However, its retail dominance faces pressure from online pharmacies like Zur Rose and non-specialist retailers expanding OTC sales. In logistics, Galenica's Swiss-focused pre-wholesale operations face competition from global players like McKesson Europe in high-volume distribution, though its niche in last-mile pharmacy supply provides defensibility. The IT segment's pharmacy management software holds strong adoption (used by 70% of Swiss pharmacies), but faces SaaS-based disruptors. Regulatory protection of pharmacy ownership in Switzerland (restricted to licensed professionals) shields Galenica from mass-market competition, but also caps growth avenues. The company's scale provides bargaining power with drug manufacturers, though this is partially offset by mandatory price controls in Switzerland's healthcare system.