Банкеръ Weekly



Stock brokers expcted an agreement between the two leading medicine producers Balkanpharma and Sopharma for the division of Pharmachim Holding and the Scientific Research Chemical and Pharmaceutical Institute (SRCPI). They, however, joined the bidding on June 3, organized by the Privatisation Agency (PA) without any preliminary agreements and the State profited from the competition between the two firms. The holding's price exceeded the minimum price by BGN4.3MN, reaching BGN9.202MN. Sopharma, represented at the open bidding by its Executive Director Ognyan Donev, was the winner. Thus, the circle, behind which according to rumours are the Sofia Mayor Stefan Sofiansky and the Greek businessman Vardinoyanis, is about to acquire its fourth company in Bulgaria. In addition to Sopharma the group owns one more enterprise in Sofia - Unipharm, and intends to acquire the firm Vramed (operating in the village of Vrabevo, near Toryan). In end-2001 Sopharma acquired the syrup manufacturer Rossbalkanpharm in the Russian town Rostov on the Don.However, the procedure for the acquisition of Pharmachim Holding will be finalized after the Commission for the Protection of Competition (CPC) extends its ruling. Sopharma's lawyers have already filed to the commission an application for permitting the merger, but the CPC may delay its answer by up to three months. However, experts do not foresee any problems with CPC's approval.Sopharma's companies hold about 14% of the domestic market of medicines. By the purchase of Pharmachim and SRCPI it went up to about 15%, but is nevertheless smaller than Balkanpharma's sales.Sopharma's lawyer Ventseslav Stoev from the lawyers' office Batkov, Stoev Co explained that the contract with the PA could be signed and CPC's permission waited for afterwards. The other news is that the CPC has already allowed the purchase of the samll enterprise in the village of Vrabevo and the ownership can be transferred to Sopharma.The purchase of Pharmachim Holding is important because of the trade mark, which is very popular in the former Soviet Union. The Sofia-based pharmaceutical enterprise will be able to export without any problems its medicines under the trade mark Pharmachim. Thus, it will save money that should be otherwise spent on imposing its own trade mark on the ex-USSR market. SRCPI holds about 2% of the domestic market of medicines. Mr. Donev underlined that everybody who wants to, would be able to use the trade mark Pharmachim in the future at the same conditions as before.Sopharma will pay for Pharmachim Holding and SRCPI by its own money, Mr. Donev pointed out. The company acquires the two enterprises, but will also have to service their ZUNK liabilities, worth USD10.9MN. Not much additional investments in SRCPI will be needed because its products comply with GMP's (Good Manufacturing Practice) standards, which will become obligatory in Bulgaria as of April 2003.However, Sopharma will have to make considerable expenses over the next two years. The most significant amount is the USD500,000, which the company remits each month to BULBANK due to the credit, drawn by the enterprise's majority shareholder Elpharma, during its privatisation. Moreover, the enterrpsie will have to bring its production in compliance with GMP's standards. It will pay BGN9.202MN for the purchase of Pharmachim and SRCPI, as well as their debts. Mr. Donev complained that Sopharma's sales were not going well since the beginning of 2002. January was the weakest month, when the chaos in connection with the introduction of VAT on medicines prevailed, and the new taxation placed importers in a more adantageous position. Nevertheless, Mr. Donev forecast that the sales on the domestic market would be slighly higher than in 2001, and the growth might be due to the exports, which are developing at fair rates.

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