GSK feeds $45m into Romanian division

GlaxoSmithKline (GSK), world’s second leading drug maker, will increase the share capital of its companies in Romania by $45 million, GSK Romania officials yesterday announced.

The money will be primarily used to boost working capital and invest in technology.

GSK operates through three main divisions on the domestic market: GSK Romania (which imports and sells original GSK products), Europharm Brasov (generic drug factory acquired in two stages, 1998 and 2003) and Europharm Holding – the distribution and drugstore division.

These companies thereby GSK is the leader of both the drug market, where it accounts for 11.6% and of the drug distribution market – some 10%.

The GSK officials did not care to specify how large the investments in each of the group’s divisions would be.

Roberto Musneci, GSK Romania’s general manager says the decision to increase the share capital shows both GSK’s development process in Romania and its confidence in the development of the local market.

Which market in the last few years has given players both reasons to be satisfied (it has doubled from 1996 through 2004) and to be concerned, given that the health care system registers hundreds of millions of dollars in debts to suppliers every year.

The decapitalisation of the drug making companies, as a result of the delayed bill collection, is therefore something hardly out of the ordinary for the Romanian market.

Not even the branches or offices of the major international pharmaceutical groups have managed to avoid this, as they have often found themselves in need of support from their respective parent companies to fund their day-to-day business.

A significant part of the $45 million capital inflow from GSK in its Romanian companies will therefore be used to boost the working capital.

It is precisely the funding from parent companies supplied during a difficult time for the market that has helped branches and offices of the foreign drug makers to gain a lot of ground at the expense of the Romanian producers over the last few years.

Drug imports have therefore come to account for approximately 70% of the drug market in Romania, as market surveys show.

GSK’s main competitors on the Romanian market are Novartis-Lek (6.6%), Pfizer (5.4%-5.8%), Sicomed Bucharest (5-5.5%) and Terapia (3.9%).

The State’s debts to providers of medical services and suppliers of drugs were as high as $300 million at times in 2003.

Although partly paid, the debts were still worth $190 million in November last year, $120 million of which had been carried over since 2002.
laurentiu.ispir@zf.ro