Swiss renowned dermatology skincare brand, the parent company of Cetaphil, Galderma, released its third-quarter report for 2023, setting a historic record with a net sales revenue surpassing $3 billion, reaching $3.09 billion. Galderma stated that all product categories have shown strong growth momentum. In June this year, Galderma raised $1 billion through a private placement. Galderma stated that the company’s ambition to become the leading global dermatology company suggests that an Initial Public Offering (IPO) is the probable next move. With the continued enthusiasm for dermatology skincare, Galderma is poised to become a new member of the global top ten beauty company rankings.
Net sales for the first three quarters reached a record high
The Swiss dermatology skincare company Galderma, which owns Cetaphil, disclosed its performance for the first three quarters of 2023. In the first nine months of this year, Galderma achieved a net sales revenue of $3.09 billion, marking an 8.9% year-on-year growth on a constant currency basis. This milestone represents Galderma’s first-ever surpassing of $3 billion in net sales for the first three quarters, setting a historic record.
Flemming Ørnskov, the CEO of Galderma said, “We are very pleased with our strong performance, having continued to drive growth and outpace the market, leveraging our truly differentiated integrated dermatology strategy. Galderma has the largest dermatology portfolio in our industry, and innovation remains at the forefront of our priorities to build the leading dermatology platform in the world, with notable updates for the quarter in liquid neuromodulators, the expansion of Alastin Skincare and positive phase III trial results for nemolizumab.”
Galderma stated that throughout the first three quarters, the company experienced robust growth across all product categories, with a balanced contribution in terms of sales across volume, pricing, and brand mix.
Globally, rapid growth was notably observed across various product categories in burgeoning markets like Asia and Latin America, encompassing China, India, and Mexico. In the U.S., the quarter exhibited strong performance, albeit the first-half growth was affected by a high comparison base in 2022 specifically in Injectable Aesthetics. However, Galderma maintained its market share in Injectable Aesthetics in the region and secured the top position for combined fillers and biostimulators.
Galderma’s continual performance and efforts to reduce debt showcased progress, utilizing the entirety of the funds from the $1 billion private placement. As a result, all three prominent rating agencies upgraded Galderma’s credit rating.
In the realm of Dermatological Skincare, Galderma witnessed a double-digit increase in net sales year-over-year during the first nine months of 2023, calculated at a consistent currency rate. The growth, surpassing market trends, stemmed from its primary brands, Cetaphil and Alastin Skincare.
Cetaphil, known for over 75 years as a leader in sensitive skincare, sustains its robust growth, consistently surpassing market trends. Its remarkable performance in Asia and Latin America was propelled by effective e-commerce strategies, expanded distribution networks, and innovative approaches. This year, Cetaphil introduced novel product lines like the recently launched Healthy Renew and pioneering solutions such as its digital AI-based skin analysis tool.
During the first three quarters, Alastin sustained strong growth, particularly notable in the U.S. across various distribution channels, propelled by fresh innovations like the ReSURFACE Skin Polish and C-RADICAL Defense Antioxidant serum. In terms of global expansion, Galderma introduced Alastin in the UK during the quarter, following a successful launch in Mexico. Additionally, Galderma opted for direct distribution in Canada, a market previously served through a partner.
Driven by dermatology, the IPO has been put on the agenda
Amidst sustained performance growth and the ongoing fervor in dermatology, the Galderma IPO has been reintroduced onto the agenda.
Established in 1981, Galderma was jointly formed by Nestlé and L’Oréal. In 2014, Nestlé acquired full ownership of Galderma from L’Oréal. Subsequently, in 2019, Nestlé sold Galderma to a consortium comprising EQT VIII Fund, Abu Dhabi Investment Authority (through its wholly-owned subsidiary Luxinva), PSP Investments, and other institutional investors for $10.2 billion.
Galderma’s performance in 2022 exceeded expectations, with net sales reaching $3.76 billion, marking a 13.9% year-on-year growth at fixed exchange rates. Additionally, the company’s profits surpassed projections, with a core EBITDA growth rate of 14.5% year-on-year at fixed exchange rates, reaching $791 million. With consistent performance growth, Galderma’s parent company aims to reposition itself in the capital market.
Reports in early March this year indicated that EQT AB, the Swedish investment firm and Galderma’s parent company, would reinitiate the IPO plans for Galderma. Galderma had started preparing for the IPO over a year ago but had to postpone the plans due to challenging capital markets in 2022.
EQT had anticipated raising as much as €3 billion through the IPO. Sources indicated that if successful, Galderma’s valuation might reach 20 billion Swiss francs. This prospective IPO could mark Europe’s largest in 2023, though Galderma faced challenges in its plans to go public this year. However, according to Reuters citing data from the SIX Swiss Exchange, if Galderma succeeded in its listing, it would be Switzerland’s largest IPO since 2000.
However, on March 29 this year, due to global market turmoil caused by a crisis of trust in the banking sector, EQT decided to postpone Galderma’s IPO plans.
In June this year, Galderma announced a plan for a private placement of new shares, aiming to raise approximately $1 billion. Investors in this private placement included existing shareholders, new investors, and management. Galderma intended to utilize the raised funds from this private placement to strengthen its balance sheet and drive organic growth fueled by its distinctive comprehensive dermatology strategy.
In its announcement, Galderma reiterated its plans to pursue the proposed IPO, considering it a key aspiration in its quest to become a leading global dermatology company.
According to the third-quarter report, Galderma stated that the $1 billion raised through the private placement had been fully utilized. The company’s credit ratings were upgraded by the three major rating agencies, showcasing its consistent performance in deleveraging its business, and marking significant progress in private placement financing.
Following the banking collapses in countries like the United States and Switzerland earlier this year, global IPOs, including those in the beauty industry, experienced suspensions. However, as the banking sector crisis gradually eased, the beauty industry’s IPOs began to resurface on the agenda.
On May 4th this year, Kenvue, spun off from Johnson & Johnson’s consumer health business, successfully went public, marking the largest IPO in the U.S. since 2021, with Kenvue’s market value briefly surpassing $50 billion. Subsequently, Germany’s largest cosmetics retailer Douglas, and Spanish beauty giant Puig also hinted at plans for IPOs in 2024.
Considering Galderma’s performance over the past couple of years, the recent completion of a new round of financing this year, and the ongoing alleviation of the global banking crisis, Galderma’s IPO may be on the brink, positioning it as another significant player in the global beauty industry.
Just a step away from the global top ten beauty companies rankings
Looking at the data from the first three quarters of this year, the companies in the global top ten list for beauty industry revenue remain unchanged, although there have been some shifts in rankings.
During the first three quarters, Estée Lauder, which had consistently held the third position, was overtaken by Procter & Gamble, albeit by a narrow margin. Estée Lauder has continually revised its sales expectations for the fiscal year 2024 due to persistent challenges in global travel retail. In the first quarter ending on September 30th, Estée Lauder achieved net sales of $3.518 billion, marking a 10% year-on-year decline, while the company’s net profit plummeted over 90% from last year’s $489 million to $31 million. Tracey Travis, the CFO of Estée Lauder, expressed pessimism regarding the company’s ability to recover its previous levels in travel retail. As a result, Procter & Gamble is poised to potentially consolidate its third position in 2023.
LVMH and Beiersdorf previously had a narrow gap between them. The margin between Shiseido and Natura, the parent company of Avon, was also relatively small. However, due to Natura’s continuous divestiture of significant assets such as Aesop and The Body Shop this year, Natura’s position might further decline.
In comparison, Kenvue, which ranked tenth in the first half of the year following its spinoff from Johnson & Johnson’s consumer health business, reported a beauty business revenue of $3.38 billion for the first three quarters of this year. Meanwhile, Galderma’s revenue for the first three quarters has already reached $3.09 billion, bringing the two very close together.
Dermatological has become a focal point for global beauty conglomerates this year.
In February this year, Myriam Cohen-Welgryn, the Global President of L’Oréal’s Active Cosmetics Division, announced on her LinkedIn account that the division had officially been renamed L’Oréal Dermatological Beauty from L’Oréal Active Cosmetics. This division encompasses La Roche-Posay, Vichy, CeraVe, Decléor, SkinCeuticals, and the medical skincare brand Skinbetter Science acquired in 2022.
With L’Oréal’s heightened focus, the L’Oréal Dermatological Beauty division has been the fastest-growing segment for L’Oréal since 2022.
Beyond L’Oréal, Shiseido also views dermatology as the next growth point for the group. On May 22nd, Shiseido announced that starting from January 1st, 2024, Shiseido Japan Corporation would take over Shiseido Pharmaceutical Co., Ltd.’s business through a company split (absorption-type split). Shiseido stated that on February 10th, the group launched its midterm strategy, “SHIFT 2025 and Beyond,” identifying “Clean & Dermatology” and “Inner Beauty” as the next growth drivers.
Additionally, Spanish beauty giant Puig appointed Marc Toulemonde, who served at L’Oréal for over 20 years, as the new President of its Derma division. Beiersdorf acquired Belgium-based life sciences company S-Biomedic NV in December 2022 to accelerate the development of its microbiome-based skincare products.
With the continuous fervor in dermatology in recent years, Galderma is poised to enter the global top ten beauty rankings. Moreover, if successful, Galderma would be the only dermatology-focused enterprise among the top ten global beauty conglomerates, indicating vast prospects for the development of dermatological sciences.
