PHARMACEUTICALS : AbbVie for Apogee? Implications for EU Pharma

Research evidence excerpt

PHARMACEUTICALS : AbbVie for Apogee? Implications for EU Pharma

Investment case, valuation and risks

Galderma (Outperform, Target Price CHF185)

Investment case

With its premium brands, renewed focus, enviable pipeline and strong management

team, we believe Galderma is well positioned to benefit from the attractive growth

trends in aesthetics/skincare markets and unlock an acceleration in growth through

launch of new first-in-class drug, Nemluvio and its new neuromodulator Relfydess. We

expect our target price to be achieved as Galderma executes on these launches and

continues to drive strong growth of its business through geographic expansion and

portfolio premiumisation/innovation.

Valuation methodology

Our target price is based on a DCF approach (WACC 8.1%, TGR 2.5%).

Risks

To the upside:

Sales of Nemluvio could exceed our forecasts, particularly driven by further market share

gains, increased biologics penetration and potential expansion into additional

indications. Demand for Galderma's aesthetics and self-care portfolio could exceed our

expectations. Relfydess could more materially cannibalize Dysport - a tailwind to

margins. Galderma could execute on value accretive business development or M&A that

could drive upside to our assumptions.

To the downside:

Approval and launch of Relfydess in the US still requires regulatory sign off which could

negatively impact our forecasts if delayed. Nemluvio's unique positioning might get

neutralized by emerging competition over the coming years. Biologics penetration might

take longer than assumed to materialize.

Sanofi (Neutral, Target Price EUR87)

We have prosecuted a positive view on Sanofi for a number of years, arguing an

improving growth and margin outlook would finally be joined by a pipeline story that