• Europe’s leading “pure-play” e-commerce pharmacy plans a listing on SIX Swiss Exchange
• Intention to raise at least CHF 200 million to implement growth strategy
• Best positioned to capitalise on and realise attractive growth opportunities
• DocMorris’ accelerated growth in the first quarter of 2017, with sales up 17.4 per cent, underscores the vast potential

Zur Rose Group AG is preparing an initial public offering (IPO) with a capital increase (offering of primary shares) this year – supportive market and other conditions provided – in order to boost its growth strategy. It is envisaged to raise at least CHF 200 million. Zur Rose Group intends to use these funds to increasingly take advantage of the market opportunities in order to further expand its strong position in the European pharmaceutical e-commerce sector. In preparation of the IPO, an Extraordinary General Meeting will be held on 19 June 2017 for the purpose of resolving the creation of authorised capital and to revise the Articles of Association as required for a listing. The shares shall be listed on SIX Swiss Exchange under the International Reporting Standard.

With its scalable business model and position as Europe’s leading e-commerce pharmacy, Zur Rose Group faces numerous growth opportunities. According to GfK market research, “Zur Rose” in Switzerland and “DocMorris” in Germany are the two brands with the highest brand awareness^[1] in the pharmacy segment in their respective markets. Zur Rose Group intends to take advantage of this excellent position and continue its established long-term growth strategy by stepping up marketing activities. Here, the Group benefits from the irreversible, long-term market trend of an ageing population with increasing medication needs, the steadily rising cost pressure in healthcare, and consumers who are ever better informed and aware of health-related matters. In addition, digitalisation in the healthcare sector is significantly lagging behind other consumer goods industries, as is particularly evident in its considerably lower online penetration. These trends support the continued high structural and steady growth potential for Zur Rose Group and its innovative business model in the years to come.

Growth acceleration in Germany – The 17.4 per cent sales growth generated by DocMorris in the first quarter of 2017 and the 15.3 per cent generated in the segment “Germany” (in local currency) underscore the vast potential of Zur Rose Group. Comparable year-on-year growth rates were achieved in the months of April and May 2017, with a particular pick up in the sales of prescription drugs (Rx). Prescription drug mail-order is an attractive core business for DocMorris potentially allowing for double-digit growth rates, considering the substantial opportunities offered in the German market with its more than 20 million chronically ill people. Consequently, DocMorris will continue the extensive TV-based media campaign launched in Germany in autumn 2016 to accelerate the acquisition of new customers. There has been an over fivefold increase in the number of new Rx customers acquired in the first quarter of 2017 compared to the same period last year. The campaign also creates a considerable conversion impact on DocMorris customers for non-Rx products. In addition, these trends are being fuelled by the European Court of Justice’s decision in October 2016 to lift the German bonus ban for e-commerce pharmacies located in other EU member states.

Market consolidation in Germany – Zur Rose Group anticipates that the German pharmacy market will undergo a phase of structural changes in the years ahead, including a consolidation in pharmaceutical e-commerce. The Group is seeking to play an active role in this market consolidation and has signed a letter of intent with the owner of a German e-commerce pharmacy focused on non-Rx products regarding an acquisition of its business operations. Zur Rose Group’s management expects that completion and successful implementation of the acquisition would increase sales of the segment “Germany” by more than 10 per cent. Signing is targeted for the third quarter of 2017, subject to satisfactory due diligence and the fulfilment of certain other conditions. For now, Zur Rose Group has not yet taken any decision whether or not to pursue this potential acquisition.

Solid Swiss core business with further potential – In the stable physicians’ supply business in Switzerland, Zur Rose Group focuses on providing high-quality customer service under the “Zur Rose” brand with customised services and patient-focused digitalisation solutions at the interface of patient, physician, pharmacy and health insurer in order to improve the safety and efficiency of medication processes.

Driven by the rising cost pressure in healthcare, many health insurers are increasingly recommending their policyholders to use e-commerce pharmacies as they contribute to medication safety and the reduction of healthcare costs through high-quality, cost-effective supply. An empirical study recently published by Helsana[2] has shown that patients obtaining their medication from a bricks-and-mortar pharmacy have a 25 to 30 per cent higher probability of receiving potentially inappropriate medication (PIM) than patients obtaining their medication and consultation from an e-commerce pharmacy. In addition, by granting discounts and waiving pharmacy fees, Zur Rose Group is also generally less expensive than bricks-and-mortar pharmacies on Rx drugs.

As part of its omni-channel strategy, Zur Rose Group will complement its strong mail-order platform with shop-in-shop pharmacies in Switzerland to meet the customers’ need for a comprehensive shopping experience and to continue growing in the B2C business. Zur Rose offers the same price benefits across all its channels. The cooperation with Migros announced in December 2016 is an element of this omni-channel approach. Zur Rose Group plans to open its first shop-in-shop pharmacy in the Migros branch at Marktgasse in Bern in July 2017 and extend the cooperation with more shop-in-shop pharmacies should the pilot phase prove successful.

“Digitalisation” to drive growth – By continuing to expand its digital service portfolio with so-called “big data” initiatives, Zur Rose Group aims to contribute further to improving therapy compliance. The digitalisation efforts around the electronic prescription, which was launched by Zur Rose and has a proven track record of over 16 years in Switzerland, are further helping the company to position itself as an innovative medication service provider. The Group is also aiming to introduce digitalisation solutions that have already been successfully established, such as the electronic prescription in Switzerland or the DocMorris Pharmacy App in Germany, in other markets.

International expansion – The ongoing liberalisation in other European countries offers opportunities for Zur Rose Group to expand its service offering into further geographical markets. Most European countries apply no restrictions on mail-order of non-Rx products. Today, the Group’s logistics centres already provide a high level of scalability, allowing to manage further growth.

Public offering and listing on the stock exchange – By way of a capital increase in connection with the planned listing on SIX Swiss Exchange, Zur Rose Group AG aims to raise approximately CHF 200 million. If the greenshoe option is exercised, the Group will receive further proceeds of up to approximately CHF 30 million. In addition, members of the Board of Directors, Group management as well as other management members intend to offer existing shares, representing approximately 3 per cent of the shares outstanding before the IPO, to ensure coverage of the selling shareholders’ tax liabilities arising from their shareholdings, inter alia.

Currently, it is planned that the offering will consist of a public offering in Switzerland and private placements outside Switzerland, including a private placement to qualified institutional investors in the U.S. pursuant to Rule 144A of the U.S. Securities Act of 1933, as amended. The free float before the offering amounts to 63.9 per cent and will further increase after completion of the offering.

The funds raised by Zur Rose Group AG in the IPO will mainly be used to develop its market leadership in Germany, to expand internationally into new and existing markets, primarily through acquisitions, to fund the digitalisation initiatives and to refinance the CHF 50 million corporate bond maturing in December 2017.

[1] Source: GfK | Zur Rose 2015, DocMorris 2017

[2] Source: https://www.helsana.ch/en/service-providers/documents-and-downloads > PIM Poster