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Company profile

The strategy

STADA’s business model focuses on the health care market. At the center of the internationally oriented business activities is the pharmaceutical market with obvious growth potential.

STADA has focused on selected segments within the health care and pharmaceutical market. With regard to costs and risks, STADA deliberately does not conduct any own research on, or marketing of new active pharmaceutical ingredients, but rather focuses on the development and marketing of products with active ingredients – generally active pharmaceutical ingredients – which are free from commercial property rights, particularly patents. These products from STADA are then commercially positioned in the two core segments of Generics and Branded Products.

The strategic success factors of the STADA Group include, in particular, a comprehensive product portfolio, strong product development, an international sales structure with a local focus and an accelerated acquisition policy, including long-standing experience in integration management. In addition, a high degree of flexibility due to short decision-making processes, functional centralized reporting structures and efficient cost management are part of STADA’s success story.

Successful product development with the “time and cheap to market” strategy

One success factor of STADA is the strong product development. Based on the product pipeline, which remains well-filled, STADA will continue in the future to constantly expand the Group portfolio – particularly in the core segment Generics. In addition to sales and earnings achieved in the context of new product launches, the opportunity also exists to attain an improved margin mix as well as for economy of scale effects insofar as the new products can be launched with margins that are initially better than the Group average or that they can be launched within the scope of existing sales structures in the individual national markets. In the context of a “time and cheap to market” strategy, STADA pursues the goal of launching new products not only at the earliest point in time in the respective national markets, but also at the best possible cost of sales.

Functionally organized Group with close to market sales companies

Among the Group’s further success factors is the international sales structure in currently 33 countries which has enabled STADA to market the products from the Group portfolio in a way which is adapted to the different regulatory and competitive framework conditions in the individual national markets. STADA intends to further expand this sales network in order to further reduce dependence on individual national markets, to be able to better counteract local challenges and risks in individual markets and to optimally use the respective growth opportunities.

Organic growth complemented by acquisitions with concentration on high-growth emerging markets and high-margin branded products segment

In the context of the accelerated acquisitions policy pursued by the Group, the Executive Board aims to continue, on the one hand, the regional expansion of business activities in selected markets, preferably in high-growth emerging markets and, on the other hand, the expansion and internationalization of the Generics and Branded Products core segments. Against the backdrop of increasing pressure to reduce costs, to which the individual national health care systems are exposed, the Executive Board sees further growth opportunities in particular in the Branded Products segment as well, which is generally characterized by better margins and less regulatory intervention. The Executive Board generally does not exclude, also in the future, cooperations with a significant capital investment. For larger projects such as acquisitions or cooperations with capital investments, appropriate capital measures continue to be imaginable if the burden on the equity-to-assets ratio from such acquisitions or cooperations is not too high.

High degree of flexibility with short decision-making processes and centralized functional reporting structures

The high degree of flexibility with short decision-making processes, the decentralized sales organization with close market proximity and the centralized functional reporting structures also count among the Group’s established success factors. This is of particular importance with regard to sales activities, because the ability to react in the short-term to structural, regulatory or competition-related changes, plays an essential role in both exploiting opportunities and reducing risks. For this reason, STADA will continue to pursue an aggressive price policy in individual cases with, if necessary, an associated decrease of operating margins, in order to achieve a better market position or a higher market share. The goal for this approach continues to be, however, that the business activities in the relevant market are profitable or become so within a foreseeable time.

Efficient cost management

In the context of earnings development, efficient cost management is of high importance in the Group. Because cost of sales represents by far the Group’s largest cost item, STADA, in the scope of ongoing cost optimization, will continue to focus on this item and all costs within this context such as procurement costs of the active pharmaceutical ingredients and auxiliary materials as well as the costs which can be allocated to pharmaceutical production. These include, among other things, measures that involve suppliers in the market risk such as price escalation clauses or renegotiations as well as selecting suppliers in low-cost countries.

Consistent implementation of the program “STADA – build the future” with the aim of strengthening the mid and long-term earnings potential

The further consistent implementation of “STADA – build the future” will also contribute in particular to strengthening the mid and long-term earnings potential. The Executive Board continues to expect that this project will allow additional earnings contributions to be achieved, which with the gradual implementation of the individual measures will add up to annual savings in the double-digit million euro area. As planned until the end of 2013, increased investments and burdens on the income statement due to project-related one-time special effects will continue to be associated with this approach.