Several months of difficult negotiations later, British group GlaxoSmithKline, the world's second-largest drugmaker, yesterday bought all the shares it did not own yet in Romanian pharmaceutical company Europharm Brasov, under a transaction estimated at $10-$15 million.
The shares (35%) were mostly held by Mihai Miron, the company founder, and by several other individuals. The deal comes after months of differences between the GSK managers and the Romanian shareholders over Europharm's future, sources on the market say.
The Romanian shareholders were at the same time displeased with the performance of the company over the last couple of years and with the fact that part of the former Europharm management team had relinquished their positions more or less willingly.
Europharm's market share has gone down from 5% to 3.5% over the last three years, during which almost no new products were launched, despite the drug market surge. The reason for the decline was the change in GSK's strategy for Romania, which focuses on the representative office that imports the drugs made by the group abroad, as they are more profitable than those Romanian-made. In other words, although the joint market share of the representative office and of Europharm is 11.5% (GSK is the Romanian market leader), this was mainly due to the sales of imported drugs. According to market sources, one of the reasons for the dissatisfaction of Europharm's Romanian shareholders was the trend of the Brasov-based company's profit.
Although rumours about the disputes within Europharm had leaked to the market months before, the GSK officials did not comment on the information merely saying, "the relation between the group and the minority shareholders is very good."
GSK, however, took advantage of its pre-emption right that extended until this year and bought the Romanian investors out.
"This is a natural strategic move for us at this time in our development and is in line with our commitment to Romania. We would like to prove our confidence in Romania's development potential once again, as well as our long-term commitment to this country," Roberto Musneci, GSK's general manager for Romania says.
The controlling interests in Europharm were bought by UK's SmithKlineBeecham for $29.25 million in 1998, which turned into GSK in 2000, following the merger with GlaxoWellcome.
The main sellers in 1998 were American Largo Import-Export, which held 50% and Mihai Miron.
Between 1998 and 2000, when the merger took place, it was precisely Mihai Miron that headed SmithKlineBeecham's Romanian operations, the representative office included. Miron maintained Europharm's development strategy and pursued an increase in the sales of the representative office at the same time.
After the SmithKline-Glaxo merger, Mihai Miron was replaced by Italian Roberto Musneci, who changed the group's strategy for Romania, favouring the representative office and promoting the drugs it sold. Which pushed Europharm's market share down and alarmed the Romanian shareholders that feared a possible decline in the company's value. laurentiu.ispir@zf.ro
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