Pharmaceuticals distributor Farmexpert, one of the main players in its industry, has secured part of its cash flow this year by using bank hedging, with the value of the contracts to stand at 20 million euros.
"We are not looking to get any special profit from hedging, as this is an additional cost to have some protection against the potential depreciation of the RON," said Octavian Iacob, chief executive of Farmexpert DCI.
The distribution of pharmaceuticals has had its profits badly hit since mid-last year, given the depreciation of the RON.
The Health Ministry sets the price of drugs in RON and distributors pay producers in reference currencies so that they undertake all exchange rate fluctuations.
"Unfortunately, despite all the financial instruments we used, we've accumulated losses caused by the exchange rate fluctuation worth 1.58 million euros in net amount in the financial year 2007. The impact in the second half of the year was really strong, which is because the consumption of pharmaceuticals is much higher in autumn and winter," the Farmexpert representative continued.
Farmexpert expects 2008 turnover to reach 205 million euros and profit to amount to 1 or 2% of this turnover.
"The profit figures we report at the end of the year include the profit made from other operations of the almost 600 people of the Farmexpert team, such as logistics services, medical representation, merchandising," says Octavian Iacob.
Iacob took over as chief executive at the beginning of this year and replaces Iulian Trandafir who retired after a ten-year stint with the company.
At the same time, the procurement department was created this year as was the position of procurement manager to go with it.
"Because of the development of the business and of the commercial ties with a large number of suppliers we decided to expand our procurement team," says Iacob. The management of Farmexpert also decided to appoint Titi Sava (Ploiesti), Dragos Vrinceanu (Cluj), Florin Sorodoc (Timisoara), Marius Tanase (Bucharest) as branch managers.
Farmexpert is a group of distinct territorial entities, grouped under the same umbrella and founded by Eugen Banciu in 1996. All the branches of the group will merge to form a single company, Farmexpert DCI, based in Bucharest.
The projects the distributor ran in the first half of the year include the implementation of Ipharma, an online ordering software firm, an increase in storage space, investments in upgrading three warehouses: Ploiesti, Cluj and Brasov and equipping the vehicle fleet with cooling systems.
Farmexpert ranked fourth among distributors on its market at the end of May, with a market share of 9%, according to data provided by the company officials.
"All preliminary data reveals that we are very close to where we planned to be, which is 97% of the turnover in the first half, but we will have the exact figures early in August," Iacob says.
Farmexpert shareholders are German group ANZAG (60%) and businessman Eugen Banciu.
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