Boiron – Spreading homeopathy around the world

Boiron SA is a company based in Messimy, France, listed on the Euronext Paris stock exchange. It specializes in the production of homeopathic products.

Homeopathy has often been the object of controversy in the past because of the way it works. Nevertheless, the company’s revenue is equal to €600 million and its market value is about €1.5 billion (as of December 2017).

Boiron manufactures both branded homeopathic medicines, called specialties, and non-proprietary homeopathic medicines. Sales in these two categories are almost equal. Unfortunately, reading the balance sheet, I haven’t found any data about their profitability.

Boiron history

Boiron was founded in 1932 by the Boiron brothers in Lyon, France. Over the years, thanks to both organic and external growth, it has managed to become the leader in the global homeopathic industry. In 1983, the firm acquired the American company Borneman & Sons, Inc., taking its first step into the U.S. market (1).

In 2005, the reduction of the health fund reimbursement of homeopathic products in France from 65% to 35% negatively influenced the company’s financial performance (2). Shortly after, Boiron bought Dolisos Laboratoire, which at the time was the second largest French homeopathic firm by sales, leading it to control almost all the sales of its industry in the French market (about 90%) (3).

In 2017, Boiron acquired Laboratoire Ferrier for €1.8 million (4). Laboratoire Ferrier is a small firm active in the French homeopathy industry. With this move, Boiron demonstrated its ability to constantly monitor its industry and its determination to protect its leadership position.

Today, the company’s goal, as stated by General Manager Christian Boiron, is spreading homeopathy in the world as much as possible.

Boiron’s financials

Boiron’s revenue rose from 2007 to 2013, but stopped increasing from 2013 to today. The company is now the world leader in the homeopathic industry, but the slowdown of revenue growth represents a bad signal. The company must figure out a way to get back to growth, maybe by expanding in other markets, like developing markets. In fact, it relies too much on the French and the European markets (in the latter, sales are decreasing), and it could benefit from the economic growth of developing markets where its presence is still too low but has good growth potential.

From a financial standpoint, the company is in good health. In fact, it presents good margins in the income statement, a low leverage and good ROE and ROI.

The graph above shows that the company’s main markets are France and Europe, whereas its presence in North America and Asia is still limited.

The graph above shows that France is by far the most important market because it is where almost all the operating income is being made.

Boiron stock price

From January 2012 to today, Borion’s stock price has almost quadrupled. In the last two years, it has moved laterally after a previous period of strong growth from mid-2012 to mid-2015. If we consider the last five years, the company has performed better than the CAC Mid & Small index (used as benchmark). But, if we consider only the last two years, it is possible to see how the company’s stock price has slowed its pace and is underperforming compared to the index.

The stock price stopped growing mainly because, as I wrote before, the company’s revenue growth has suffered a slowdown since 2013, mainly produced by the constant reduction of sales in Europe (excluding France) that negate the growth generated in both France and North America.

The main shareholder is the Boiron family who controls about the 63% of shares and 75% of voting rights. This implies that the family has a big influence on the company’s strategy and top decisions. The firm’s history is closely linked to the Boiron family, which has managed to keep its control since its founding, showing a significant longevity.

Conclusions

Boiron is in a key moment of its history. In the past, it has managed to get past difficult times by getting bigger and bigger, and now it has to address the problem of growth before it gets worse. Besides the good financials, the drop in sales in Europe (excluding France) and the slowdown of the growth in France make it necessary for the company to look for and penetrate other markets in order to keep growing as it has always done since the day of its founding.

What do you think about Boiron? Let me know in the comments below.

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References

1. Boiron USA. Our story. [Online] [Cited: November 6, 2017.] http://www.boironusa.com/about/our-story/.

2. thepharmaletter. Boiron counts on Dolisos merger to relaunch growth. thepharmaletter. [Online] March 14, 2005. [Cited: November 6, 2017.] https://www.thepharmaletter.com/article/boiron-counts-on-dolisos-merger-to-relaunch-growth.

3. reference for business. Boiron SA. [Online] [Cited: November 6, 2017.] http://www.referenceforbusiness.com/history/Be-C/Boiron-S-A.html.

4. capital.fr. Boiron a finalise l acquisition du laboratoire ferrier. www.capital.fr. [Online] April 7, 2017. https://www.capital.fr/entreprises-marches/boiron-a-finalise-l-acquisition-du-laboratoire-ferrier-1220638.

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