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EBRD mulls first investment in Ukrainian pharmaceuticals industry

October 5, 2006 Kyiv Post
With imported medicines predominant on pharmacies’ shelves in Ukraine, the European Bank for Reconstruction and Development is mulling its first investment into the country’s pharmaceuticals industry aimed at helping a top 10 Ukrainian drug manufacturer bring its products in line with international quality standards and increase its market share in Ukraine and abroad.

According to the EBRD’s project summary, disclosed Sept. 11, the Bank could inject $40 million into Farmak, “one of the leading manufacturers of pharmaceutical products in Ukraine” as part of a proposed $110 million project to upgrade Farmak’s existing production facilities and create new facilities in line with Good Medical Practice (GMP) standards applied in the world pharmaceuticals industry. If implemented, the project will also introduce “new efficient technologies ... staff training and export in the industry.”

“The proposed transaction may lead to greater competition in the pharmaceutical sector by strengthening the role of a local, low-cost manufacturer in the production of new, higher quality products, some of which are currently imported,” the EBRD’s project summary said.

EBRD’s board of directors is scheduled to decide whether to approve the $40 million allocation, part of which the EBRD plans to syndicate to commercial banks, on Oct. 17.

Farmak’s financial director, Aleksey Ivanchenko, told the Post Sept. 26 that the loan period will be seven years.

“During this time, the Bank will provide $40 million. The rest of the sum [of the planned $110 investment] will come from the company’s resources,” he said.

Farmak produces more than 130 medicinal products in various dosage forms, including parenteral (intravenous), drops, ointments, tablets and capsules, Ivanchenko said.

According to Ivanchenko, Farmak spends 70 percent of its net profit modernizing its production facilities and creating new ones, as well as increasing its portfolio of medicines by around 20 new products, each year.

He said that bringing a greater share of Farmak’s production in line with GMP standards will play a key role in boosting the company’s export potential.

According to Farmak’s website, in 1998, the company began developing its quality system in line with GMP requirements, and in 2001, launched the creation of an integrated quality management system in line with GMP and International Organization for Standardization [ISO] 9001:2000 standards. Farmak currently manufactures a number of product lines with international and Ukrainian ISO 9001:2000 certification.

“Having GMP certified production processes will enable our company to present more products on the world market,” Ivanchenko said.

Anton Usov, EBRD’s communications adviser for Ukraine, said that while the EBRD has substantial experience investing in pharmaceuticals producers in neighboring countries, including Russia, Croatia and Hungary, the Bank’s proposed foray into Ukraine’s pharmaceuticals market was more of a function of that market’s maturation rather than hesitation on the EBRD’s part to enter it.

“We’ve been trying to find investments in the Ukrainian pharmaceuticals sector for a long time. There have been negotiations and meetings with a number of companies. However, we didn’t come to any agreements,” Usov said.

“As the Ukrainian pharmaceuticals market became more competitive in the last several years, some companies came to understand that investing their own funds into production and business development may not be enough for them to maintain their positions on the market and be competitive exporters,” he added.

This is the Bank’s first project in Ukraine’s pharmaceutical industry.

  • Full name
    European Bearing Corporation
  • Registration country
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