Biocurious: Consumer health minnow Wellnex Life gears up for company-making Eurotrip

Wellnex is undertaking a $16 million capital raising ahead of a dual listing on London’s AIM exchange.

All aboard, guv: Next stop is the AIM. Pic: Getty Images

• Wellnex is in the process of raising up to $16 million ahead of a secondary London listing

• The company has transformed from a low-margin brand broker to an own-brand powerhouse

• WNX has a contract manufacturing deal with Haleon, owner of the Panadol name

Wellnex Life (ASX:WNX) managing director Zack Bozinovski admits that local investors don’t fully understand the power and potential of the company’s suite of fully owned and third-party consumer healthcare brands.

To mitigate this, the company is preparing for a dual listing on London’s AIM market by early March, having cleared up the issues that led to the listing being delayed last year.

“We probably haven’t had the hearing we would have liked to have had, while in the UK they tend to understand our business much better,” he says.

“There’s also more money in this part of the world.”

This week, Bozinovski was in back-to-back investor meetings in the Old Dart, tapping the deeper funding pool for a capital raising of up to £8 million ($16 million).

“We are happy to raise as much as they will give us,” he says.

Brand Power 

The AIM listing is not just a follow-the-money exercise, but reflects management’s belief that there are untapped opportunities for long-standing products with an innovative tweak.

Bozinovski should know even more about brands than Sally Williams, the long-time face of those irritating – but effective – Brand Power adverts.

In 2010 he founded Brand Solutions Australia (BSA) which, as the name suggests, developed and wrangled brands on behalf of other parties.

He helped an ASX-listed client, Wattle Health, to become a stockist to Chemist Warehouse.

In mid-2021, BSA was vended into Wattle Health, which changed its name to Wellnex in June 2021.

“I was really excited about the opportunity to take my business onto the ASX and growing it,” Bozinovski says.

Wakey Wakey! Growth opportunities abound

Over time, Wellnex has shifted from low-margin brokerage to owning its brands, as well as joint-venture products with Chemist Warehouse and contract manufacturing for the likes of Haleon (which split from consumer health giant GSK Plc in 2022).

Wellnex’s ‘hero’ own brands include Nighty Night, an ashwagandha (herb) based sleep aid and the caffeine and guarana-based antidote, Wakey Wakey.

In its biggest gambit to date, the company acquired the 25-year-old Pain Away range of topical pain relief for around $22 million.

“We have a beautiful mix of brands that have been well established and (are) still doing really well,”  Bozinovski says.

“Sleep and energy are the growth categories in Australia and also complement Pain Away.”

Panadol: a painless growth opportunity

Bozinovski says he’s often asked how a Melbourne-based minnow has become the contract manufacturer for Haleon, owner of killer brands including Panadol, Sensodyne, Voltaren, Advil and Centrum.

The answer is that Wellnex developed a liquid soft-gel paracetamol, for which it gained Australian Therapeutic Goods Administration approval.

This week, Wellnex won further TGA authorisation for a liquid paracetamol plus caffeine combo, adding to the previous approvals for liquid paracetamol, liquid paracetamol plus ibuprofen and liquid mini ibuprofen.

Wellnex launched the products in Chemist Warehouse and six months later was approached by Haleon (then GSK) for manufacturing authorisation to use the soft gels as Panadol brands.

In 2022 the parties struck a three-year licensing and supply agreement – since extended – by which Wellnex licensed and supplied the soft gel range to GSK.

“They (Haleon) are also about to launch the same gel in a Panadol brand in the UK under the Panadol name,” Bozinovski says.

The soft gel foray highlights an opportunity missed by the larger players, the result of higher-dose liquid paracetamol being harder to make than lower-dose soft gel ibuprofen tablets.

“Research showed consumers were paying 20-40% more for an ibuprofen liquid tablet than a solid one.”

“First or fast” to market – or both

Bozinovski says the Wellnex mantra is to be “first or fast” to market.

“We don’t want to be the fourth or fifth player in a market.

“We want to be smart first or second, but it has to be built on innovation because consumers are looking for something new and innovative.”

In its December quarterly report, Wellnex disclosed receipts of $3.89 million, 36% higher year-on-year, with cash outflows of $803,000.

Sales in November and December rose to a record $3 million, with 56% of the turnover driving from Wellnex’s brands.

Chemist Warehouse merger creates opportunities

Meanwhile, Wellnex has a joint venture with Chemist Warehouse, covering analgesics products (ibuprofen and paracetamol or a combo of both) under the Wagner Health name.

Bozinovski believes next week’s reverse merger of Chemist Warehouse into the listed Sigma Healthcare will create opportunities for Wellnex, such as easier access to Sigma’s wholesale drug distribution business and the chemists to which it supplies.

These include not just Sigma’s ‘banners’ such as Amcal, but independent apothecaries.

Wellnex and Chemist Warehouse also own the medicinal cannabis brand Wellness Life – a side pursuit that delayed the AIM listing because UK authorities look darkly on medical marijuana pursuits.

“But we are a prescription product, we are not harvesting ourselves,” Bozinovski says.

“It took a while to clarify we are really above board and that’s what slowed the listing.”

Expanding margins

In 2023 WNX derived around $28 million from its brand broking; now the figure is virtually nothing.

“But our margins have gone from 15-18% to 30-40% and beyond," Bozinovski added.

Currently Wellnex derives almost all of its revenue from Australia – including some exports to New Zealand – but the European foray should ensure a more balanced geographic mix.

As well as the UK, the company is eyeing four additional European markets and is looking for distributors.

“We will do these countries as phase two,” Bozinovski says. “We are working through some Asian opportunities as well.”

The capacious but tricky US market remains off the agenda –  at least for the time being.

“I know and understand the European market more than the US market,” he says.

“I would love to be in the US and it is on our radar for down the track, but we will focus on what we understand best and what will work for our brands.”

Worth less than the sum of the parts

Bozinovski rues that Wellnex’s $21m market cap is less now than the worth of Pain Away – let alone the other brands.

The shares have lost about 40% of their value over the last 12 months, which doesn't help.

But he expects the UK adventure to rectify this measly valuation – not just because of the weight of money but because of what the company s bringing to the market.

“If we do it right, we will be first to market with no competition in our categories”.

At Stockhead, we tell it is as it is. While Wellnex is a Stockhead advertiser, the company did not sponsor this article.

Originally published as Biocurious: Consumer health minnow Wellnex Life gears up for company-making Eurotrip