Orpea, the biggest fall of the SBF 120 at the end of Wednesday 14 September 2022 – – 14/09/2022 at 17:51

(AOF) –

Orpea

(-6.37% to 14.25 euros)

Pension house group title Orpea finished the day at the back of the pack. The company is still experiencing the deleterious effects of the sharp drop in its margins in the first half, a drop that could continue in the second half of the year.

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Key points

– European number 1 in the complete assistance of the dependence with more than 120,000 beds and almost 2,000 establishments in 23 countries, created in 1989;

– Turnover of 4.3 billion euros, distributed between France-Benelux for 60%, Central Europe for 26%, Eastern Europe for 9%, Iberian Peninsula and Latin America (Brazil, Chile and Uruguay) for 5% then China;

– Value creation model based on an organization adapted to international development in places with high purchasing power, 50% real estate ownership (46% in 2021, for a value of €8.2 billion);

– Divided capital (14.5% for the Canadian pension fund CPPIB and 5% for FFP of the Peugeot family), and the governance renewed in July: Guillaume Pépy presiding over the board of 14 directors, Laurent Guillot being retained as director general;

– Tight budget, the group having signed a loan agreement accompanied by a program of sales of real estate assets of 1 billion euros by the end of 2023, and of 2 billion euros by 2025.

Challenges

– Development of the transformation plan in 4 points: quality of support and well-being of the inhabitants, strengthening the dialogue with the actors, ambitious policy of human resources and renewed management practices;

– Strategy of innovation and anticipation of the management of human frailty: Open innovation with 108 projects around health and assistance, catering and hospitality, construction and processes, university research with almost 30 innovative projects;

– Environmental roadmap 2023: 100% of tenders including a CSR assessment, 100% of suppliers signatory to the responsible procurement charter, 100% of new buildings certified HQE, launch of a green loan;

– Reservoir of growth provided by the 26,000 beds under construction (3,000 beds open in 2022).

Challenges

– The preliminary results of the two independent companies on the practices of the group: discounts granted, even by suppliers of products financed by public funds, erroneous declarations of employment accounts, non-compliance in the contractualisation of fixed-term contracts and the use of intermediaries, including a former prefect, organization of a situation of lack of staff but absence of situations of shortage or rationing regarding the residents;

– Lack of financial visibility, the CNSA (Caisse de solidarité autonomie) and the group discussing the extent of undue funding;

– After a 14.4% increase in revenue on 1

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semester, 2022 expectations confirmed: continuation of revenue growth momentum published in 1

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quarterly but exceptional charges related to the crisis of confidence in the group’s practices and the group’s operating margin, already down to 1.5% in 2021, affected by the inflation of energy and salary costs.

An inevitable rush for new blockbusters

The patent for Merck’s star product, the cancer drug Keytruda, which accounts for more than 35% of its sales, expires in 2028. Despite the loss, from 2019, of the patents for its three-star products (Avastin, Herceptine, Rituxan) Roche was able to renew its portfolio by bringing new molecules to market. However, the discovery and launch of new drugs are increasingly expensive. AstraZeneca spends about $6 billion a year on R&D in a pharmaceutical industry where the life of a patent lasts only ten to fifteen years. This leads laboratories to withdraw from certain activities. So J&J, Pfizer, GSK and, no doubt, Novartis will soon be quick to refocus on specialty drugs and abandon any ancillary activities.

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