The move out of the Pipera district, where the company is currently headquartered, started this year and is the company’s main project at present. Pipera has become difficult to access in the past few years and Farmexim was one of the last companies with logistical operations there. Once this project is finalized, Farmexim will enter a new stage, with lower growth rates.
“2013 and 2014 will be years of consolidation. We will return to lower growth rates, but with a focus on profitability,” says Ovidiu Buluc, the company’s general manager.
This year wholesaler Farmexim, which posted a EUR230-million turnover last year, will record a 16% rise, according to Ovidiu Buluc’s estimates, while for 2013 it budgeted a 14% rise. The company’s profit margin will be 1% this year.
The distributor is part of the group of the same name, which also includes Help Net drugstores and an importer of dermo-cosmetics and food supplements, Green Net.
By the end of this year the drugstore network could reach 150 units, 25-30 more than at the beginning of 2012.
Going towards RON2B
The group controlled by Ovidiu Buluc’s family, could end 2012 with a turnover of 1.7 billion lei (over EUR370 million), and hit the RON2-billion mark next year.
“There is a trend both in Romania and worldwide. As the patent of a product expires, five generic drugs replace it. This means a rise in volume, but a decline in value because generic drugs are cheaper. We as distributors have to have all the generic products because we don’t know what doctors will prescribe,” Buluc says.
Under the circumstances, the businessman says he decided to move some storage facilities to larger centers as volumes increased. He has moved the facilities in Cluj, Craiova and Oradea into larger locations.
Farmexim, which has reached 650 employees, is one of the largest players in local drug distribution, and according to data cited by Ovidiu Buluc, the company has reached a 10% market share in retail.
“The ongoing crisis, which will continue, is a crisis of confidence. People don’t trust the euro, the dollar, banks anymore,” he says.
The problem is linked to the two speeds, the different work productivity, with Germany for instance having a very good work productivity. “This was a concern for the country since back in 2007, it anticipated the crisis.”
According to him, Romania’s ability to adjust to the new economic reality is low and the sooner people will be able to understand the new model, the better.
“The problem of 2012-2013 is a lack of ability to adjust to a new module, a new business system. The business module of 2000-2008, based on consumption, real estate, is no longer valid,” the businessman said.
Crisis meant a restructuring in 2008 and cautious spending
About the crisis years, Buluc says he was cautious about spending and learned to be a better administrator.
In 2008, the businessman closed down several subsidiaries, cut personnel and says this was the most difficult decision he has had to make during this time.
“Lehman Brothers collapsed in [the autumn of] 2008. We felt back in August we had to do something. We analyzed each subsidiary based on the turnover volume, personnel and profit. (…) We cut personnel at each subsidiary. In the subsequent two years, 2009 and 2010, we did not hire any new personnel and during these two years we boosted our turnover by over 50%,” Ovidiu Buluc says.
The bottom line is that the three companies have not had problems since 2007, boasting two-digit turnover increases.
About the pharmaceutical industry he says it has been affected by the crisis, with the impact being seen in the increasingly long payment deadlines and in the healthcare budget, which is set to be cut.
The difficult period also affected the growth rate of the pharma industry, which fell to a single-digit rate, from two digits during the “good years.”
The drug distribution market amounts to over EUR2.6 billion, with the biggest distributors including Mediplus, Farmexpert, Farmexim, Fildas, Polisano, Europharm Distributie, and ADM Farm.
(English version by Daniela Stoican)