"We’re growing faster than the market"

Header article - Interview of Flemming Ornskov

Just before Easter, the Swiss pure‑play dermatology company Galderma made a triumphant debut on the Swiss stock exchange. Its CEO, Dr Flemming Ørnskov, spoke with Swissquote Magazine.

By Bertrand Beauté

The IPO was a stunning success. Last month, on 22 March, the dermatological skincare company Galderma, based in Zug in German‑speaking Switzerland, took its first steps on the SIX Swiss Exchange. Although the IPO price had initially been set at CHF 53 per share, the stock closed its first day of trading at CHF 64. That extra 20% increased the company’s market capitalisation to CHF 15.4 billion. Galderma consequently raised more than CHF 2 billion, making it Switzerland’s largest IPO since smart meter manufacturer Landis+Gyr went public in 2017. On 15 April, Galderma shares were still trading at around CHF 63. And its Danish CEO, Flemming Ørnskov, couldn’t be happier. We spoke to him to hear more...

Galderma’s IPO went very well. Did you expect it to be such a success?

Yes, I think our IPO can be described as a success. Before going public, we managed to garner a great deal of interest among Swiss, European and US investors. And our shares ended up being oversubscribed in the book building process, meaning that demand exceeded supply. I’m also pleased to see that we managed to attract long‑term investors, which is particularly important for a company like ours that is focused on innovation.

Galderma is not very well known in Switzerland. Why did you choose to list on the SIX?

It’s our company’s heritage. Galderma was created in 1981 as a joint venture between Nestlé and L’Oréal. Therefore, we started out as Swiss and French. But in 2014 Nestlé bought out L’Oréal’s 50% stake before selling the company to a consortium of funds in 2019. So we’re from Switzerland, and I think the SIX was the right choice for us. This IPO will bring us greater visibility, and we are very attractive.

In the autumn of 2021, Galderma’s plans to go public were discussed then put on hold. Why did you decide to go ahead with the IPO now?

The financial environment in 2021 was hardly a good time for an IPO. Now was the ideal time. We have met our financial targets over the past two years, which gave us credibility in the eyes of the markets. The time had also come for some of our historic investors to sell their stakes in Galderma. 

Galderma raised CHF 2 billion in this IPO, not including the over‑allotment. What do you intend to do with the funds?

We’re going to use most of it to scale down our debt. By the end of the year, the net debt‑to‑EBITDA ratio should fall to between 2.25 and 2.5. In the medium term, we expect it to rapidly come under 2, on the back of strong forecast growth in our EBITDA.

On 15 April, Galderma shares were trading at around CHF 63. Do you think that’s a fair valuation? How do you see the company’s share price developing over the next few months?

That’s not for me to say. Investors will decide how much the company is worth. My job is to make sure that we continue to reach our targets. And I’m very confident that we’ll get there. That will also enhance the appeal of our company.

"In 2023, we generated revenue of $4.082 billion, an increase of 8.5%"

In recent years, Galderma has grown faster than the dermatology market as a whole. How do you explain that success?

In 2023, we generated revenue of $4.082 billion dollars, an increase of 8.5%. That means we’re growing faster than the dermatology market as a whole, which is showing growth of around 7%, and the beauty market (up 5%). We hope to continue on this path over the next few years and project annual sales growth of 7% between 2023 and 2027.

One reason for this performance is that we are a pure‑play dermatology category leader. Our employees wake up thinking about skin care and go to bed thinking about skin care. Our competitors are giants that sell lots of different products, such as L’Oréal. These companies do their job very well, but they are not as in tune as we are to the dermatology needs of their users because they’re diversified. We, on the other hand, are entirely focused on skin care. Our goal is to become the world leader in the dermatology market. 

What are your main activities?

We’re active in three areas. First, injectable aesthetics [ed. note: hyaluronic acid, neuromodulators, etc.] accounted for 52% of our sales in 2023 and are a fast‑growing sector. Second, dermatological skin‑care (30% of sales in 2023) is also showing strong growth, especially for our premium brands. And third, therapeutic dermatology [ed. note: prescription‑based] is a more mature market, with 18% growth. Dermatological skincare posted the strongest growth in 2023 (up 12.1%), ahead of therapeutic dermatology (up 8.7%) and injectable aesthetics (up 6.5%).

The general public knows about Galderma mainly through its Cetaphil skin care brand (cleansers, anti‑ageing creams, etc.), which generates over $1 billion sales a year, or 25% of the company’s revenue. Isn’t it risky to be so dependent on one brand?

No, it’s an advantage. There aren’t many dermatology products that make more than a billion dollars in sales. This is the case with the Cetaphil range, which is recommended by many dermatologists. The line features products with several areas of application and is available from a large number of sales outlets. Online sales are also very strong. On top of that, we have two other blockbusters in our pipeline, i.e., products that could eventually generate more than $1 billion a year in revenue.

One of these is the antibody nemolizumab, used to treat atopic dermatitis (a chronic condition that causes itchy skin). What is its potential and when will it be launched to market?

Nemolizumab is a medical product with two potential treatment applications: atopic dermatitis, which affects more than 230 million people worldwide, and nodular prurigo – a chronic inflammatory skin disorder. With these two applications, we estimate that nemolizumab could eventually generate revenue of €2 billion a year. It’s currently undergoing the approval process by the US and European authorities. If approved, it could be sold as early as next year for use with both conditions.

What is the other blockbuster in development?

It’s QM‑1114, a highly active, ready‑to‑use neuromodulator. It is designed as a liquid formulation, meaning it doesn’t have to be prepared from powder before injection, which eliminates variability. 

How important is research and development for you?

It’s essential. Since 2019, we have conducted more than 700 clinical trials. We currently spend around CHF 300 million a year on R&D, coming out to around 7.5% of our revenue. And this figure is set to rise over the next few years as our sales increase.

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