Newarch Investments set to change its business model

Businessman Radu Tudorache (photo), who, together with his brother, controls a group of firms grouped under the umbrella of Newarch Investments, which derived 150m-euro turnover last year, plans to change the business model he operates in the pharmaceutical industry, after feeling the full effects of a RON decline. “The distribution model has to be reconsidered as we must pass the non-payment risk of under-capitalised drug stores, with very small margins, on to producers. We will most likely become a logistics operator and transfer the non-payment risk to producers,” says Tudorache, summarising his strategy in the field of distribution. Drug distribution – via Montero, is in fact the biggest business of the group in terms of revenues, and in 2007 reached 100m-euro turnover and a profit margin of below 5%. Business on this segment suffered the impact of the RON decline against the euro and drug price freezing. The 2008 budget will be downwardly revised as drug deliveries were suspended for more than two weeks at industry level. The group includes 15 companies and the strategy for the following period entails cost reductions in the fields where this is possible. Newarch Investments also operates real estate investments, with part of them being on hold, due to the international crisis.