Pilulka - Fortune favours the bold

Pilulka can be thought of as a market disruptor offering customers online purchase of pharmaceutical products. The Company is run by the Kasa brothers, who have a wealth of experience in e-commerce business. We value Pilulka at Kč 750 mil on a pre-IPO money equity basis and an assumed subscription of new shares worth Kč 150 mil on entering the PSE START platform. Pilulka is one of the three largest pharmacy chains in Czechia with 32 owned and 120 franchise branches. The Company also became the largest online pharmacy in Czecho-Slovakia in 2019. Pilulka entered the Romanian pharmacy market at the end of 2018 and expansion to Hungary is planned during 2021. Revenues should increase three-fold by 2024 and the firm should break even in 2021. The Company was founded by Petr and Martin Kasa in 2013. They built on the success of their previous e-commerce project, kasa.cz, which they sold in 2009. Dynamic development and fast growth is therefore incorporated in Pilulka's DNA. Pilulka represents the concept of a market disruptor, currently offering customers an easier and faster way of purchasing OTC and, when market regulations allow in the future, of Rx drugs. Swiss Zur Rose and German Shop Apotheke could serve as examples. The Covid 19 pandemic accelerated the consumer shift to the online segment. The trend is clearly visible in better fundamentals of online firms as well as their share price outperformance. Zur Rose and Shop Apotheke valuations have risen two- to three-fold since March 2020. A comparison with domestic and foreign peers suggest a valuation of Pilulka at Kč 650-850 mil pre-IPO. The valuation hinges on the company's ability to grow rapidly, to manage foreign expansion and to source the finance for such fast growth.