ADDRESS OF THE CEO/MB PRESIDENT

Year 2011 was marked by Alkaloid’s 75th anniversary, a diamond jubilee worth of respect and admiration. Jubilee which is pride for all – the employees of Alkaloid AD Skopje, generations that were selflessly building this company before us, shareholders who gave us the trust to run the company through this turbulent times; a jubilee of all stakeholders who trust the quality that we offer from every aspect.

RESULTS

I remember back in 2005, when I was assigned to the position director of the Profit Centre Pharmaceuticals we set a goal to reach sales level of EUR 100 Mil., which from that perspective was hardly attainable. 6 years later, I am proud to emphasize that we have reached total consolidated sales of EUR 109.5 mil., which represents a growth of 14% compared to year 2010 and retrospectively, this figure is doubled compared to the same parameter of year 2005.

In 2011, we noted growth of the individual sales of 8%; domestic sales were raised by 12% and the consolidated export sales reached EUR 64.1 mil., which represents a growth of more than 14%. The sales in South Eastern Europe region have risen by 9%, the growth in Russia and CIS was 28% and sales in EU and EFTA countries sales have risen 30%. Sales in the USA also note an upward trend rising to 67%, all compared to year 2010. The growth of the consolidated net profit was 7%, from MKD 574.339 millions in 2010 to MKD 616.253 millions in 2011. EBITDA noted growth of 9% from MKD 944.523 millions in 2010 to MKD 1.028.096 millions in 2011.

 
The four basic programs of the Company also noted growth in their respective sales levels, those being: Pharmaceuticals 12%; Chemistry 73%; Cosmetics 6% and Botanicals 12%.

 
In the course of year 2011, Alkaloid had 97 new employments in the Republic of Macedonia.

STOCK EXCHANGE OPERATIONS

INVESTMENTS

In 2010, the overall investments of Alkaloid AD Skopje amounted to MKD 333.729 millions and in 2011 these have risen at MKD 578.948 millions mostly allocated in additional equipment for the production capacities and other facilities connected with the production operations.

Besides the existing, we have invested additional EUR 405.000 in Alkaloid’s operations Republic of Serbia by registering a new company Alkaloid Wholesales Ltd Belgrade with main activity wholesale trading with pharmaceutical products on the Serbian market and we have initiated operations for equipping a quality control laboratory for the requirements of our proper production in Serbia. In both subsidiaries in Belgrade, we have implemented ISO 9001 and 14001 standards, which represents the first corporate certification made 15 years after the introduction of quality assurance and environmental protection systems at the base of Alkaloid in Skopje.

In 2011, with the rollout in Zagreb, this subsidiary became the second SAP operated company of Alkaloid that now functions with the world leading enterprise resource planning system.

PRODUCTS

In 2011, Alkaloid obtained 134 marketing authorizations. 150 are renewals of existing registrations and 239 are applications for new pharmaceutical products, out of which 107 are intended for 12 countries in the European Union. In the production portfolio of PC Pharmaceuticals, we have introduced a new category of medical products: food supplements and medical appliances for which we have provided 44 authorizations in nearly 10 countries. As projects under development, we have 34 products, 26 of which are our own production and another 8 are made in cooperation with foreign partners.

In the course of 2011, we have completed the redesign of the leading brands of PC Chemistry, Cosmetics&Botanicals:

- Our Sattwa skincare collection got a brand new image;

- Young Derm the teenage skincare collection was also adapted to the requirements of its own target group. 

Alkaloid introduced a new portfolio under the Good Nature umbrella brand: Good Nature Energy – product group comprising healthy food products aimed to satisfy the most exquisite demands of discerning consumers of healthy food products.

Besides the successful ongoing cooperation with Aveda, in 2011 Alkaloid with its Good Nature brand started cooperation with the American Arbonne International and entered into new production agreement with Swanson Health Products, a US based industry leader in vitamins, supplements and natural health care products.

Following the audit performed of the Chemistry program - Medical Appliances by DEKRA, a renowned certification body from Netherlands, PC Chemistry, Cosmetics and Botanicals were issued a certificate for implementation and meeting the requirements of ISO 13485:2003. The scope of this Certificate refers to the design, development, production and distribution of medical appliances: X-ray films and concentrated haemodialysis solutions, as well as subcontracted production, packaging, labeling and distribution of cartridges for haemodialysis and X-ray film developer liquid and fixers.

PC Pharmaceuticals and PC Chemistry, Cosmetics and Botanicals have successfully passed the audits of their production and distribution facilities made by national and international authorities, as well as the audits made on behalf of our international partner. Of special importance for PC Pharmaceuticals is the GMP compliance certificate granted upon the audit of the Bulgarian Drugs Agency to the plant for production of solid pharmaceutical forms - hard gelatin capsules and the Slovenian Agency for Medical products and Medical Appliances for the production of liquid dosage forms.

In line with the Good Manufacturing Practice principles and in order to comply with the national and the EU legislation as well as for the purpose of integrated prevention and control of the pollution, in 2007 Alkaloid AD – Skopje began preparations for obtaining integrated environmental A-type license, a venture for which over EUR 500.000 have been invested. In 2011, this license, that recognizes Alkaloid AD – Skopje as a responsible company dedicated to integrated prevention and control of environmental pollution in the course of everyday manufacturing operations, was granted to the company by the Macedonian Ministry of Environment and Urban Planning.

CORPORATE SOCIAL RESPONSIBILITY

The concept of social responsibility is an integral part of the business strategies and operations of The Company.Being one of the few companies in the world that own Fair Wild certificate, a unique confirmation of the ecological, social and economic aspects of operation – in November 2011 Alkaloid was granted the national corporate social responsibility award by the National Coordination Body for Corporate Social Responsibility in competition with 63 projects from the country.

 
The Foundation “Trajche Mukaetov” granted 40 new scholarships to students of pharmacy and medicine at the respective faculties at the University Sts. Cyril and Methodius. Out of 184 students who received scholarships from this Foundation, and 57 graduated ones, 12 have started their careers with Alkaloid. At the humanitarian happening organized on the occasion of marking our diamond jubilee, in only one-day-and-a-half the employees of Alkaloid donated a sum of MKD 425.500 at the Foundation “Trajche Mukaetov” intended for equipping the Child Oncology Department of the Pediatric Clinic at the Clinical Centre in Skopje. These assets were used for purchase of infusion pumps for application of cytostatic therapy in children, inhalators, portable monitors for measuring various parameters and portable ECG apparatus, all for the needs of these Clinic.

 
Alkaloid will continue supporting the children suffering from cancer. In February 2012, we have initiated the project“Be My Friend” in cooperation with NGO “Borka – For Each New Day”and the Pediatric Clinic. By means of this project, Alkaloid will donate funds effectuated from the sales of one of its leading brands: Becutan for the purposes of equipping the Child Oncology Ward of the Pediatric Clinic at the Clinical Centre in Skopje.

PROSPECTS AND PRIORITIES

2011 brings exceptional uncertainties. We face many uncertainties connected with the Euro-zone crisis and eventual consequences that may reflect Macedonia and our operations as well. In order to fulfill the set goals, we must remain flexible and competitive above all. The professionalism, quality performances and maximum dedication will remain to be the main feature of our organizational behavior and organizational culture. 

Faced with such great challenges, we must remain efficient, proactive, flexible but competitive above all. We must keep the course of growth, continue investing in production facilities and modern technologies, personnel and the community in general. 

The management of Alkaloid will remain devoted to its strategic goals: continuation of the growth trend on the domestic and foreign markets, strengthening of the market positions, product portfolio extension, building new partnerships and cutting costs in the non-productive segments.

The potentials of Alkaloid were positively assessed by the President of the Republic of Macedonia, H.E. d-r Gjorge Ivanov, the US Ambassador to Macedonia, Honorable Paul D. Wohlers, the Chinese Ambassador to the country and we have received other distinguished acknowledgements.

Our capability to remain on top lies in our competence of finding a vigilant approach that would optimize our achievements … yet, an approach that would be in conformity with the rules of the game in the race with the competitors. Let the successful Macedonian story continue.

Zhivko Mukaetov

CEO/MB President