Rising Global Wealth And Aging Populations Will Expand Dermatology Markets

Key Takeaways

• Strong uptake of key drugs and expanding indications position Almirall for outsized revenue and margin growth beyond current analyst consensus.
  
• Strategic market trends, pricing power, and innovative pipeline support continued long-term outperformance and leadership in dermatological therapies.
  
• Heavy reliance on a narrow dermatology portfolio and concentrated European market presence exposes Almirall to regulatory pressures, competition, and revenue volatility amid limited innovation output.

Catalysts

Operates as a skin health-focused biopharmaceutical company in Spain, Europe, the Middle East, the United States, Asia, and Africa.

• Analysts broadly agree that Ebglyss and Ilumetri are driving substantial near-term revenue growth, but this may be understated as current uptake data show Ebglyss outperforming previous benchmarks for atopic dermatitis launches and rapidly scaling to high double-digit market share in new territories, which could drive revenue well above consensus projections.
  
• While analyst consensus expects double-digit net sales growth through 2030, the pace of new label expansions (such as Ilumetri in psoriatic arthritis and future upside from broader indications in autoimmune skin diseases) and recent successful R&D results suggest a step-change in the addressable market, with significant upside to both long-term revenue and margin expectations.
  
• There is an emerging structural tailwind as increased awareness and destigmatization of dermatological conditions is driving higher diagnosis rates and patient engagement, leading to potential sustained volume growth above demographic trends and lifting top-line revenues.
  
• Almirall's proven ability to swiftly secure favorable reimbursement and premium pricing in major European markets, combined with potential for future European drug price increases given global price convergence dynamics, opens room for net margin expansion not captured in consensus.
  
• The company's pipeline of next-generation therapies-including multispecific antibodies in collaboration with Simcere and multiple first-in-class development programs-offers the prospect of launching disruptive therapies into highly underserved autoimmune and chronic skin disease markets, creating a foundation for above-peer long-term earnings growth.

Almirall Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Almirall compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Almirall's revenue will grow by 12.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 2.0% today to 13.7% in 3 years time.
• The bullish analysts expect earnings to reach €205.4 million (and earnings per share of €0.98) by about September 2028, up from €21.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 21.8x on those 2028 earnings, down from 112.9x today. This future PE is lower than the current PE for the GB Pharmaceuticals industry at 30.1x.
• Analysts expect the number of shares outstanding to grow by 0.62% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.49%, as per the Simply Wall St company report.

Almirall Future Earnings Per Share Growth

Risks

• Almirall's overdependence on a limited portfolio of dermatology products, specifically Ilumetri and Ebglyss, significantly increases its exposure to future loss of exclusivity, generic or biosimilar launches, and heightened competition, which could negatively impact its long-term revenues and earnings stability.
  
• Persistent pricing pressure and aggressive cost-containment measures from European regulators-Almirall's core market-may result in tightening reimbursement rates and restricted market access, which is expected to squeeze gross margins and constrain revenue growth over the coming years.
  
• Slower than anticipated productivity from Almirall's R&D pipeline, alongside a lack of major breakthrough innovations, poses a risk that fewer high-value product launches will materialize, translating to muted revenue growth and potential deterioration of net margins.
  
• Geographic concentration in Europe leaves Almirall vulnerable to region-specific regulatory reforms and currency fluctuations; this concentration exposes its reported revenues and earnings to volatility, especially if adverse policy changes or macroeconomic shocks occur in the region.
  
• Intensifying competition in dermatological treatments from both large pharmaceutical multinationals and nimble biotechs, as well as emerging non-pharmaceutical (digital) solutions, is likely to erode Almirall's market share, increase marketing and R&D spending, and ultimately put downward pressure on future revenue streams and net profit margins.

Valuation

• The assumed bullish price target for Almirall is €16.57, which represents two standard deviations above the consensus price target of €13.3. This valuation is based on what can be assumed as the expectations of Almirall's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €17.5, and the most bearish reporting a price target of just €11.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €1.5 billion, earnings will come to €205.4 million, and it would be trading on a PE ratio of 21.8x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of €11.22, the bullish analyst price target of €16.57 is 32.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.