Galderma, the Swiss skin care specialist, has begun talks with international investors for a possible initial public offering of $ 22 billion in the first half of next year.
CEO Flemming Ornskov, the former boss of rare disease specialist Shire, told the Financial Times that Galderma and his owners have accelerated strategic planning after two years of great growth, thanks in part to the Covid-19 pandemic.
Galderma was spun out of Nestlé in 2019 and bought by a consortium for $ 10 billion led by the private equity house EQT and including Singapore’s GIC and the Abu Dhabi Investment Authority.
Ornskov said that since then, growth in the markets in which Galderma operates has “accelerated significantly”. “We have experienced double-digit top and bottom line growth. Last year, we reached $ 3 billion in top-line sales. We expect it to be $ 3.5 billion plus this year. “
The pandemic, coupled with the growing power of social media, has fueled the market for non-invasive aesthetic and specialist skin care turbo, Ornskov said.
“Digitization and social media have underlined something that has always been part of this [business] – the emotional part. The skin is the largest organ in the body and we look at it every day. We respond to that. We look at people and their skin and we judge whether they are healthy or in a good mood. . . Many hours spent on screens have enhanced this. ”
Ornskov said he could not comment on the timing or outcome of the company’s strategic talks, but confirmed that banks had been appointed and said a decision on Galderma’s future was imminent.
He added that “the growth profile, the size of the company” means that an IPO “is obviously one of many [options] but it is definitely a realistic one ”.
According to senior advisers to the company, Lazard has been appointed chief IPO adviser, with Goldman Sachs, Morgan Stanley and Credit Suisse as joint global coordinators. Bank of America, BNP Paribas, Citi, Jefferies and UBS are joint accountants. Banks told the group that a valuation of $ 22 billion is possible.
“I would assume that our owners get second opinions from very capable people, including investors, about the attractiveness of markets and how we act,” Ornskov said. “I think we’ll do well on that scorecard, because if I look at our growth and how the market is performing, we’ve got everything ready to one day be the world’s leading dermatology company.”
Galderma is nevertheless still largely dependent on a portfolio of historical products – many of whose patents have begun to lapse. Stagnant profits and a slim pipeline of new products were key reasons behind Nestlé’s decision to sell the business.
Ornskov’s appointment was an early sign that his new owners expected radical change.
The 63-year-old Dane has already promised to pump significant capital into research and development, and has moved to reposition Galderma’s existing range – in which he says there is still great value – by sharpening the company’s marketing focus.
The “vast majority” of advertising revenue, for brands that include Cetaphil and Proactiv, is now spent online and on social media, Ornskov said. “This is not a set of skills that was there in 2019.”
In spite of criticism of investors for its “excessive” pay package, Ornskov has built a reputation for maximizing shareholder value at Shire – by using a tight grip on product portfolio and marketing to lead the FTSE 100 company to a final $ 63 billion takeover by Japan’s Takeda.
Galderma’s owners – and Ornskov himself – believe he can repeat the trick.
Referring to his track record at Shire, he said: “I want to build the world’s leading dermatology company, I want to be the one known for the broadest portfolio, the best products, the most innovative – so that a consumer, or a patient or a dermatologist will always use us as a reference. ”