Банкеръ Weekly



Despite the scams that shook the pharmaceutical branch in the last few months, Bulgarian medicine producers saw off the first half of the current year with champagne. The main players on the market - Actavis Bulgaria and Sopharma - registered considerably better financial results as compared to the same period of 2003. Each of the two companies holds some 12-13% of the domestic market of medicines and 30% remain for the other 11 enterprises. More than half of the medicines sold in Bulgaria are still imported. The Icelandic group Actavis which bought Balkanpharma, renaming it to Actavis Bulgaria, reported EUR221.1MN in proceeds for the first six months of 2004, up EUR63MN from January-June, 2003. The company, which owns more than 200 ready pharmaceutical products, marked a EUR3MN increase of its net profit, which already exceeds EUR34MN. These are obviously hopeful results for the managers who intend to list the company on the London Stock Exchange in the beginning of 2005. The contribution of Actavis Bulgaria's three outfits - in Razgrad, Troyan and Doupnitsa - to that success cannot be yet assessed. The CEO of the Troyan-based enterprise Dimiter Obretenov only noted that the factory's profit increased from last year. However, it produces two of the best-sellers - Almagel and Troxevasin. Since 1990 Actavis Bulgaria has invested EUR50MN in the development of its Bulgarian outfits and intends to make further investments as well. It's main local rival - Sopharma - also plans to expand its investments. A new, modern warehouse will open doors near the enterprise in the beginning of 2005. The facility will cost about BGN7-8MN. The company has signed two credit contracts - with Bulgarian Post Bank (for EUR6MN) and with the Greek Piraeus Bank (for USD4MN).The first half of 2004 was especially profitable for Sopharma. Its non-consolidated financial report shows that its net profit has double year-on-year, reaching BGN10.5MN. According to Boris Borisov, director of relations with investors, the good financial results were mainly due to the advantageous foreign exchange rate, earning BGN2.4MN from it for the first half of this year, up from BGN533,000 for the same period of 2003. Russia and the Ukraine still remain Sopharma's major markets, where the company exports 45% of its output. Sales rose by BGN6MN, totalling BGN53.2MN. Proceeds from interest rate should not be ignored either - BGN1.8MN, up from BGN800,000 for the first six months of 2003. Additional occasion for joy at Sopharma was the decision of the Commission for the Protection of Competition, which in April allowed it to buy 50% of Kazanluk-based enterprise Bulgarian Rose Sevtopolis. Immediately after that the enterprise's financial results began to improve. It still operates at a loss but it has been reduced to BGN261,000, down from BGN1.4MN a year ago. In the beginning of August the Supreme Administrative Court backed the Sofia-based pharmaceutical manufacturer, proclaiming it the sole holder of the Analgin trademark, after the argument for it between Sopharma and the Plovdiv-based Biomeda had dragged on for five years.Currently, the majority share (86.66%) of Sopharma's capital is in the hands pf Elpharma, which on it part is owned by Electroimpex AD (with a 60% stake) and Unipharm (holding 40%). Biovet of Peshtera is one of the new players on the market of products for human medicine. Until now the company (set up back in 1961) had mainly specialized in veterinary items). After its privatisation, however, the new owner, Bulgarian Pharmaceutical Company invested EUR20MN-plus for launching new products. The results are already evident - Biovet's net profit for the first half of 2004 has also increased from the same period of last year, reaching BGN1.9MN. But its aggregate proceeds dropped down from BGN30.7MN in the first six months of 2003 to BGN26.2MN in January-June 2004. There are a total of 13 medicine producers in Bulgaria at present: Actavis Bulgaria's three enterprises (in Doupnitsa,Troyan, and Razgrad), Biovet, Sopharma, Unipharm, NIHFI, Chaikpharma, Bul Bio-NTSZPB, National Centre for Haemathology and Transfusiology, Inbiotech, Biomeda and Vet Prom. If statistics could be believed, good future lies in store for all of them, because sales of medicines in Bulgaria increase by approximately BGN100MN annually. Market turnover exceeded BGN600MN in 2003. Medicines worth USD78.8MN were exported last year, sales abroad for the first four months of 2004 amounted to USD29.4MN. More than half of the exported quantities go to the Russian, Polish and Ukrainian markets. New export opportunities will open in front of Bulgarian producers after the country's accession to the European Union in 2007. Unlike many other branches the pharmaceutical industry seems to be prepared for that challenge. April was the deadline for pharmaceutical companies to introduce the Good Manufacturing Practice (GMP) quality standard. USD150MN has been earmarked for the purpose so far.

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