The group, which comprises wholesaler Mediplus, retail pharmacy chain Sensiblu and a marketing and sales division, expected EUR800 million consolidated revenue last year.
“We achieved a good performance in 2012. We grew more than the market did, which I estimate increased by 5% to 6% (…) We barely attained the target in the wholesale budget. I don’t care as much about sales figures, though. I care about profitability, because we can sell double as much and make half of what we make now,” Popescu told Ziarul Financiar in an interview.
Popescu, 47, has been running A&D Pharma since 2008 and says that last year was the toughest for the pharmacy network because of competition. Sensiblu is an about 400-pharmacy network, after having added 90 previously owned by City Pharma in a EUR15 million deal last year.
“With Sensiblu we ended the year less happy than we had expected because of several reasons. We made a really large acquisition and that creates integration problems, which translate into temporary losses budgeted for. It’s one thing to buy 100 pharmacies from 20 or 50 companies and another to integrate many pharmacies. Then there is also the huge pressure on the market,” Popescu said.
About 7,000 retail pharmacies are operating in Romania, according to the National Statistics Institute, and the pressure Popescu was talking about mainly comes from the decline in purchasing power. To achieve the same figures as before retailers have to conduct promotions or come up with other attractive offers which carry a “substantial cost”.
“We did not attain our profitability target (for Sensiblu i.e.) even though we got our sales figures where we set out to with great effort. I think integrating our largest acquisition did not drag us down as much as the competition on the market did.”
The number of Sensiblu pharmacies increased from about 200 in mid 2010 to some 400 now. Most networks continued to expand, which can only be done by buying licenses. The number of actual pharmacies in a city is set by the law.
“We’ve grown at a rate of almost 100 pharmacies a year in the last couple of years. I cannot confirm we will keep the pace for one reason: we have to adjust our expectations to the performance of the existing and acquired pharmacies. We are reconsidering our acquisition policy. I don’t rule out acquiring 100 pharmacies in 2013, but our analysis may show it’s best that we stop,” Popescu said.
A&D Pharma may pay for the potential acquisitions with loans, after having reached an agreement with banks on a credit facility for this purpose specifically. The facility may reach EUR40 million.
The A&D Pharma group is controlled by businessmen Walid Abboud, Roger Akoury, Ludovic Robert and Michel Eid. The group was also listed on the London Stock Exchange in 2006-2011.
The group also has a regional presence, after having bought via its marketing & sales unit several companies in the same business in the region in 2010 and paid EUR19.1 million for them. The regional business is developing “at its own pace” and generating EUR70 million to EUR80 million revenue.
Inquired about a potential sale of A&D Pharma, Robert Popescu answered:
“A company like A&D Pharma is a very attractive target for many potential buyers (…) It is a company that can reach EUR1 billion sales in two or three years unless something wrong happens on the market, and is always on the radar of those interested. We’re constantly receiving expressions of interest. We are not doing anything formally about this for now. On the other hand, it is up to the shareholders to decide whether they find some offer too interesting to miss.”
The pharmaceuticals market amounts to more than EUR2.6 billion a year and the largest wholesalers are Mediplus, Farmexpert, Farmexim, Fildas, Europharm, ADM Farm, Polisano. The largest retail pharmacy chains include Sensiblu, Catena, Dona, Help Net.
(English version by Loredana Fratila-Cristescu)