S&P rates Neopharmed Gentili, notes B

S&P said it assigned preliminary B ratings to Neopharmed Gentili SpA and its planned €750 million senior secured bond due in 2030. The preliminary recovery rating is 4 (recovery range: 30%-50%; rounded estimate: 40%) and the outlook is stable. The company also plans to secure a €130 million super senior revolving credit facility.

Neopharmed benefits from a large, diversified portfolio of branded off-patent products, with a leading market position in Italy. In our view, Neopharmed has adequate diversification by therapeutic area, with cardiovascular accounting for 40% of total sales in 2023, neurology representing (22%), allegro-respiratory (15%), and musculoskeletal and others (23%). We positively note that the company's portfolio of 124 products does not show any significant concentration, and there is no significant dependency on any single drug,” S&P said in a statement.

However, the agency noted,” Our view of the business is constrained by Neopharmed's modest scale of operations and high geographic concentration in Italy, which exposes the company to competition and regulatory risks. With revenue of about €266 million in 2023, Neopharmed has significantly smaller scale than other players in the industry, including rated peers such as Cheplapharm or Recordati.”

Nepharmed plans to use the notes to refinance its capital structure.

S&P said it forecasts the company’s adjusted debt to EBITDA at about 6.5x-7x in 2024 and 6x-6.5x in 2025 and the EBITDA interest coverage ratio improving to 1.8x-2x in 2024 and remaining above 2x thereafter.

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