Market Giants and Financial Paradoxes: 4 Takeaways from Selçuk Ecza’s 2025 Performance

In the high-stakes theater of the Turkish healthcare system, Selçuk Ecza Deposu functions not merely as a company, but as a systemic dependency. While global pharmaceutical giants provide the chemistry, Selçuk Ecza provides the connectivity, acting as the invisible backbone that links manufacturers to nearly every medicine cabinet in the country. With a distribution network that achieves unrivaled density, the company’s 2025 performance offers a masterclass in the “Profit Paradox”: how a market leader can expand its dominance while simultaneously navigating a bottom-line deficit.

Note: For global analytical clarity, all financial figures have been converted to USD at an exchange rate of 35.00 TRY to 1 USD.

1. The Logistics Moat: Unrivaled Distribution Density

Selçuk Ecza’s market position is defined by a scale that is effectively impossible to replicate in a high-inflation environment. Serving approximately 27,000 of Turkey’s 30,000 pharmacies, the company maintains a staggering ~38% market share. This is not merely a commercial lead; it is a structural moat built upon 110 warehouses (27 main hubs and 83 regional branches) and a fleet of over 2,300 vehicles.

In a highly regulated sector where service continuity is a matter of public health, this infrastructure creates a “systemic dependency.” The Turkish state relies on Selçuk Ecza’s logistics to maintain the social contract of healthcare. This mission is codified in the company’s strategic philosophy:

“güven, denge, istikrar” (trust, balance, stability)

However, this stability comes with the burden of a “regulated utility” profile. While the company possesses unrivaled market penetration, its ability to extract value is strictly governed by state-mandated margins, making it a giant that is both indispensable and constrained.

2. The Profit Paradox: Margin Compression in a Regulated Market

The most significant takeaway from the 2025 fiscal year is the sharp divergence between top-line growth and bottom-line reality. Despite a revenue increase of $100 million, the company transitioned from a healthy profit to a deficit.

Strategic Financial Comparison (2024 vs. 2025)

The “smoking gun” of this paradox is the 1.84% drop in gross margin. This compression is a direct result of the “DSF barem” (Distributor Sale Price) lag. In Turkey’s regulated pharmaceutical landscape, distributors operate within fixed price brackets. As inflation drove operational costs upward, the government’s adjustment of these brackets failed to keep pace, creating a “perfect storm” of rising overhead and stagnant margins.

There is, however, a late-breaking “light at the end of the tunnel.” A 2025 decree finally allowed for distributor margins to be updated in line with Euro exchange rate fluctuations. This regulatory relief likely underpinned the company’s ability to maintain its “AA (tr)” credit rating despite the immediate fiscal loss.

3. Foundation-Led Governance: Stability vs. Minority Influence

Selçuk Ecza’s resilience is anchored by a unique, iron-clad governance model. The company is effectively controlled by the Ahmet and Nezahat Keleşoğlu Foundation through Selçuk Ecza Holding, which owns over 82% of the entity.

This model is reinforced by a dual-class share structure designed to resist market volatility:

• A-Group Shares: These “nama” (registered) shares, held by the Holding, carry 10 votes per share.
• B-Group Shares: Publicly traded shares carry only 1 vote per share.

While this structure provides the “stability” the company’s motto promises—ensuring it can survive a loss-making year without a management shakeup—it raises questions for the retail investor. The Foundation-led model prioritizes long-term social missions and institutional continuity over aggressive, retail-friendly growth. Interestingly, the company maintained its commitment to “stability” by paying out dividends in 2025 (0.4000 TL gross per share) based on 2024 profits, signaling that even in a deficit year, the Foundation’s policy of consistent returns remains paramount.

4. The Solar Pivot: Operational Efficiency as Strategy

To counter the margin erosion caused by regulated pricing, Selçuk Ecza is weaponizing its physical footprint. The “Solar Pivot”—utilizing warehouse roofs for Solar Power Plants (GES) in Esenyurt, Konya, and Antalya—is a strategic cost-mitigation play rather than a mere ESG checkbox.

In 2024, these installations produced 764 MWh of renewable electricity, preventing 338 tons of CO2e emissions. By generating its own power, the company is effectively “clawing back” margins from operational overhead. This effort is being paired with a broader logistics overhaul, including “filo elektrifikasyonu” (fleet electrification) and deepened digitalization to squeeze every possible efficiency out of a 2,300-vehicle operation. In a business where profit is determined by the “barem” (bracket), survival depends on lowering the floor of operational costs.

Conclusion: A Growth Distributor or a Regulated Utility?

Despite the bottom-line deficit of 10.85 million, the company’s treasury management remains sophisticated. The Capital Markets Board (SPK) recently approved a massive **342.85 Million USD** (12 Billion TL) borrowing limit. This limit, specifically for “qualified investors,” allows for the issuance of commercial paper and bonds, giving the company the liquidity needed to wait out the regulatory lag.

However, the 2025 results pose a provocative question for the future: Is Selçuk Ecza becoming a “regulated utility” rather than a “growth-oriented distributor”? While its “AA (tr)” rating and dominance are secure, the company’s future depends on whether its sustainability pivots and the new Euro-linked pricing decrees can restore the margins that its massive infrastructure deserves. In a market where you reach 90% of the pharmacies, scale is no longer the challenge—profitability is.

Briefing Document: Selçuk Ecza Deposu 2025 Annual Report Analysis

Executive Summary

This briefing document synthesizes the operational and financial performance of Selçuk Ecza Deposu Ticaret ve Sanayi A.Ş. for the fiscal year ending December 31, 2025. Despite a challenging macroeconomic environment characterized by high inflation and regulatory margin constraints, the company maintained its dominant position in the Turkish pharmaceutical distribution market.

Critical Takeaways:

• Market Leadership: The company holds a significant market share of approximately 37.60% (by value) and 37.84% (by volume), serving roughly 27,000 of Turkey’s 30,000 pharmacies.
• Financial Downturn: For the 2025 period, the company recorded a net loss of $11.17 million, a sharp decline from the $79.26 million profit recorded in 2024. This was primarily driven by increased operational expenses and the implementation of high-inflation accounting (TMS 29).
• Infrastructure & Logistics: The group operates a massive logistical network comprising 110 warehouses (27 main, 83 regional) and a fleet of 2,383 vehicles.
• Financial Resilience: Despite the net loss, the company maintains a strong equity structure of 881.55 million** and a total asset base of **2,380.20 million.
• Sustainability Progress: The company has integrated ESG (Environmental, Social, and Governance) into its strategy, notably producing 764 MWh of renewable energy via solar installations in 2024/2025.

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Note: All currency values have been converted from Turkish Liras (TL) to USD at an exchange rate of 1 USD = 34.00 TRY, as per the directive.

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1. Corporate Structure and Governance

1.1 Ownership and Capital

• Registered Capital Ceiling: $22.06 million.
• Issued Capital: $18.26 million.
• Principal Shareholder: Selçuk Ecza Holding A.Ş. holds a 77.32% direct stake, with an effective control of approximately 82.42% including market purchases.
• Public Float: 20.01% of shares are traded on Borsa İstanbul.
• Control Entity: The Ahmet and Nezahat Keleşoğlu Foundation owns 51% of the parent Holding company.

1.2 Board and Management

The Board of Directors consists of 9 members (3 independent), led by M. Sonay Gürgen (Chairman and General Manager).

• Board Benefits: Total benefits provided to board members and senior executives in 2025 amounted to 7.69 million**, of which **3.08 million consisted of performance bonuses.
• Committees: The board operates five specialized committees: Audit, Corporate Governance, Nomination, Early Detection of Risk, and Remuneration.

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2. Operational Performance

2.1 Market Presence

The group continues to dominate the pharmaceutical distribution landscape in Turkey:

• Network: 110 total warehouses.
• Reach: Active business relationships with 90% of all pharmacies in Turkey.
• Personnel: The total workforce decreased slightly from 6,157 in 2024 to 5,971 employees in 2025.

2.2 Historical Market Share Data

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3. Financial Analysis

3.1 Profitability and Income

The 2025 results show a significant contraction in margins compared to the previous year.

3.2 Balance Sheet Strength

3.3 Inflation Accounting (TMS 29)

The company applied TMS 29 (Financial Reporting in Hyperinflationary Economies) for its 2025 financial statements. This adjustment is a primary reason for the discrepancy between operational volume and net profitability figures.

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4. Investment and Financing

4.1 Capital Expenditures (CAPEX)

As of December 31, 2025, the company’s tangible fixed assets at cost were valued at $458.05 million. Major categories include:

• Buildings: $204.05 million.
• Land: $63.53 million.
• Motor Vehicles: $75.40 million.
• Ongoing Investments: $2.06 million (includes Aksay regional warehouse construction and various renovations).

4.2 Debt Instruments

The company actively manages liquidity through the issuance of bills and bonds:

• New Limit: The Board approved a new issuance ceiling of $352.94 million for 2026.
• 2025 Repayments: The company successfully redeemed a 102.94 million** finance bond in January 2025 and a **14.71 million corporate bond in March 2025.

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5. Risk Management and Ratings

5.1 Credit Rating

JCR Eurasia Rating (October 2025):

• Long-Term National Rating: AA (tr) / Stable.
• Short-Term National Rating: J1+ (tr) / Stable.
• Long-Term International Rating: BB (tr) / Stable.

Key Rating Factors:

• Positive: Strong cash buffer, dominant market share, and satisfactory equity levels.
• Negative: Operational expenses pressuring EBITDA, intense competition, and state-regulated profit margins.

5.2 Legal Contingencies

As of end-2025, the Group is involved in various legal proceedings:

• Claims by the Group: Totaling $8.81 million in lawsuits and executions.
• Claims against the Group: Totaling $0.65 million. Management does not anticipate these will significantly impact financial stability.

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6. Sustainability and Social Responsibility

6.1 Environmental Impact

• Renewable Energy: Solar power plants in Esenyurt, Konya, and Antalya produced 764 MWh in 2024, preventing approximately 338 tons of CO2e emissions.
• Strategy: The 2030 and 2035 sustainability roadmaps focus on fleet electrification, renewable energy expansion, and waste reduction.

6.2 Social Contributions

• Donations: In 2025, the Group donated $1.12 million to educational institutions, archaeological excavations, and foundations.
• Employee Rights: The company adheres to ILO standards and maintains a strict non-discrimination policy.

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7. Dividend Policy

The company maintains a policy of distributing at least 15% of distributable profit, provided net profit margins exceed 2.5% and revenue growth meets GDP benchmarks.

• 2025 Distribution: Despite the 2025 loss, the company distributed dividends from the 2024 profit totaling $7.31 million (approx. $0.012 per share) in April 2025.

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8. Related Party Transactions

The Group conducts significant business with affiliates under the Selçuk Ecza Holding umbrella:

• Purchases: The largest related-party supplier is Menarini Sağlık, with purchases totaling $86.53 million in 2025.
• Construction: Selçuklu Turizm ve İnşaat A.Ş. provided construction services worth $8.26 million for warehouse developments.