Ovidiu Buluc, the majority shareholder in the drug distributor Farmexim, one of the main players on the domestic market, says that distribution profits depend on the trend of the exchange rate, and on the discounts each distributor grants to pharmacies.
"The margin (set by the Health Ministry) is 8.5% for distribution and 7.5% for imports, that is 16% overall. The margins were last year reduced from 22%, and this was felt in the profits of all players," says Ovidiu Buluc.
Farmexim last year registered income worth 4 million RON (1.1 million euros), and the company expects to double this figure this year, amid an increase in turnover. "For 2006, we target turnover worth approximately 100 million euros, a 32% increase from 2005. The advance will be generated by market growth and rising volume in sales of certain products, as well as by the expansion of the customer base and product portfolio," specified Ovidiu Buluc.
In the first three months of this year, the company posted turnover worth 76.5 million RON (21.4 million euros), up around 22% compared with the similar period last year.
Regarding investments, the company has earmarked a budget of 4 million euros. "Investment will mainly be used to develop and modernise company infrastructure, establishing new headquarters and warehouses, in compliance with European guidelines on pharmaceutical distribution," Buluc says.
At present, Farmexim owns 13 warehouses located in Bucharest, Cluj, Constanta, Craiova, Bacau, Brasov, Galati, Targu Mures, Timisoara, Sibiu, Ploiesti, Iasi, and Oradea. All these warehouses have an area that ranges between 600 and 1,000 square metres, except the Bucharest-based warehouse, which has an area of 2,600 square metres.
Farmexim currently accounts for 7.13% of the market, according to Cegedim data quoted by the company, and at the end of this year intends to reach a 9% market share.
Ovidiu Buluc estimates the Romanian drug distribution market will go through a process of concentration.
"At present, around 40 distributors are operating in Romania, with the first ten owning approximately 76.5%," says Buluc. The following years will see several medium-sized distributors disappear from the market, which is a natural progression. "To survive, one has to invest in warehouses, transportation, communication and agents. This is in fact what consolidation means. No more than 6 distributors will be left on the market over the next 3-4 years".
Farmexim was set up in 1990 and originally operated as a drug importer until 1992, when it entered the drug distribution sector.
The main rivals of Farmexim in the drug distribution sector are Mediplus, part of A&D Pharma, Relad, Fildas Trading, Europharm Distributie or Farmexpert.
Farmexim
* Originally set up in 1990 as a drug importer, in 1992 entered the distribution sector
* In 2005 derived income worth 4 million RON and this year plans to double this figure
* In the first 3 months of this year posted turnover worth 76.5 million RON, up 22% from the same period of last year
* Has earmarked investments worth 4 million euros for this year
* Owns 13 warehouses countrywide.
ioana.david@zf.ro
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