To offset that the company is in talks for strategic partnerships.
“We talked with the highest level management of Ropharma Brasov yesterday (Tuesday). There are many advantages to such a partnership. For instance, it’s one thing for us to go buy 21 million leu-worth of drugs a month and another to buy 60 million leu worth because we can get a better discount,” explains Robert Peloiu, general manager of Farmaceutica Remedia Deva.
“Second, if we already have a warehouse in a specific city our partner does not need operate its own in the same city.”
The company officials say there can also be partnerships for promotion through their own respective retail pharmacy chains, benefiting both companies.
Ropharma (RPH.RO) and Farmaceutica Remedia are the only drug wholesalers listed on the main market of Bucharest Stock Exchange.
The company plans to diversify its range of products to improve profitability, from the current focus on selling prescription drugs whose price is regulated by the Health Ministry.
“People are not accustomed to buying cosmetics from pharmacies but if we can do it or sell food supplements, a line of business not hampered by restrictions, that will be a step forward,” said Valentin Tarus.
Another strategy the company is considering in order to improve its margins is to merge with other players of about the same size. Remedia is one of the top ten pharmacy chains in Romania and its market share stands at 2%.
“I hope floatation on the stock market will help us find partners so as to reach that critical mass we need to have a say on the market,” said Farmaceutica Remedia’s owner at the celebration of four years since floatation on the Bucharest Stock Exchange.
The company plans to develop its service business, which should include house calls by physicians in partnership with a company offered to loyal customers and implementation of home delivery of drugs.
Farmaceutica Remedia Deva general manager says he gets two or three offers to buy from independent pharmacies but is in no rush because sellers have high expectations.
“We bought pharmacies for as little as EUR20,000 to EUR30,000 last year. There are about 7,000 pharmacies on the market, some 2,500 of which are part of chains and the rest are independent. I think this trend of independent pharmacies being taken over by chains and market concentration will continue,” Peloiu said.
The arrival of a strong retailer on the market by buying several major pharmacy chains, as rumor has recently spread would be beneficial for the company, Peloiu said.
Remedia plans to consolidate its own network by 5 to 10 new pharmacies a year but does not rule out boosting the number to 20 if an offer too good to pass up comes along.
The company has 72 pharmacies that generate one third of its revenue and plans to get to 80 this year.
Remedia says chains like Sensiblu and Catena, which are aggressive buyers of pharmacies can afford to pay prices otherwise not justified in terms of investment because they consolidate their position on the market this way.
“If we pay EUR100,000 for a pharmacy, I don’t know whether we’ll get our money back in three, four or five years and no one knows how things will go in five years from now,” Remedia officials said.
(English version by Loredana Fratila-Cristescu)