Headcount reduction steps, the halt to investments and the rising weight of OTC drugs have not helped preserve the profits of most producers and distributors operating domestically in 2008.
Thus, after an extremely good period up to 2007, when profit margins could go as high as 30%, the pharmaceutical industry has been seriously hurt by last year's RON decline, as well as by the overall economic context.
"The 2006-2007 period was highly positive for the entire pharmaceutical industry, with sales increases in volume of as much as 25-30%. As regards profits, too, values were positive and permanently rising during this period," said Ovidiu Buluc, majority shareholder of Farmexim distributor.
The company in 2008 reported its first losses since it was set up, 6.6m euros.
Thus, five top ten distributors posted overall losses of 36.1m euros, while the profits of the other five stood at only 24.9m euros.
Buluc says it is difficult to estimate the trend of profit margins in the entire industry this year. Farmexim has budgeted a 3-4% profit margin for the end of 2009.
In drug production, the first losses emerged in 2008, after several years when the two-digit profit margins attracted the foreign firms that bought into Romanian factories.
The latest example is LaborMed, a company that was taken over by Advent International investment fund for 123 million euros last year. LaborMed has in its turn recently started making acquisitions, buying Ozone for 24m euros (according to Ozone data).
"The business was influenced by factors such as the acquisition and then restructuring, by changes at the level of prescription, by RON depreciation and distributor and drugstore payment terms last year," said Stephen Stead, CEO of LaborMed.
According to LaborMed, the company's total sales reached 35 million euros last year. @N_P
