Solutions to shelter distributors' businesses in the pharmaceutical sector

The insolvency of drug distributor Montero last year and the petition filed in the case of Relad International are putting drug producers in the position of having to look for ways to protect their sales.

The more cautious ones have been working for several years with commercial loan insurers, such as Euler Hermes and Coface, while others are only now starting negotiations.

“We have been working with Coface for several years. It is a reinsurer. If a client goes bankrupt, Coface repays a percentage we have agreed on, which is modified on a monthly basis,” says Dan Ivan, country head of Sanofi-Aventis, leader of the Romanian drug market. Sanofi posted 891.4 million RON (212 million euros) in turnover and had a 9.4% market share between October 2009 and September 2010, according to data of market research company Cegedim Romania.

Sanofi has been insuring its business for at least five years, and Ivan says “it is not cheap”. Eugen Anicescu, credit insurance manager of Coface Romania Credit Management Services SRL, says the price of a commercial loan insurance policy ranges between 0.2% and 0.9% of the turnover, based on criteria such as the volume of sales insured, the payment deadlines, previous losses and other criteria.