ADDRESS OF THE CEO/MB PRESIDENT
Year 2010 was marked by the slow fading of the economic crisis in the region. Differing from the past two years, marked by the consequences of the world economic crisis,the regained interest of the investors in the region was a timid movement in positive direction.
The functioning of the business subjects in this specific circumstancesrequires lots of precautions, detailed analysis of all conditions and activities, consolidation of all available resources for the purpose of finding ideal balance betweenthe growth rate and liquidity shortfalls.
RESULTS
As a person who heads the biggest pharmaceutical industry in Macedonia that ranks No. 6 in the SEE region, I could say that I am pleased with the results presented from thebusiness operations of Alkaloid Group.
We achieved total consolidated sales of EUR 96.5, which represents an increase of nearly 8,5%. The growth rate of the individualsales was 10%; domestic have risen by 11% and the export sales reached over 56 million Euros, which represents a growth of about 6,5%. The growth of the nonconsolidated net profit from MKD 503.267 million in 2009 to MKD 581.587 million in 2010 represents a rise of 16%. The growth of the consolidated net profit was 3%, from MKD 558.485 millions in 2009 to MKD 574.339 millions in 2010. The four basic programsof the Company also noted growth in their respective sales levels, those being: Pharmaceuticals 8%; Chemistry22%; Cosmetics 8% and Botanicals 2%.
Alkaloid Cons Ltd., our daughter company with accumulated experience of over three decades in non-domicile representations and consignment stocks, besides the existing contracts with renowned multinationals such as Pfizer, Novartis, Sanofi-Aventis … in 2010 entered into new agreements with F. Hoffman La Roche, Glaxo Smith Klein, B/Braunand Actavis totaling 17 foreign companies in its portfolio.
According to the information of the Macedonian Stock Exchange, the shares of Alkaloid AD Skopje in 2010 were onceagain among the most traded and most liquid ones. 3.437 transactions were made, with traded 72.709 shares, being 5.08% of the share capital of the Company, with total value of EUR 4.950.497. According to the information of this institution, Alkaloid AD Skopje, as one of the leading companies on the Macedonian Stock Exchange, in the regular stock operations participated with over 18% in the total recorded turnover on the first official market. The price of Alkaloid shares ranged from MKD 3.299 to MKD 5.100 with average of MKD 4.157.
SOCIAL RESPONSIBILITY
The concept of social responsibility is an integral part of the business strategies and operations of The Company, representing a sort of tradition for Alkaloid that in 2010 was recognized on national level. Within the framework of the project entitled Corporate Social Responsibility in the Republic of Macedonia, conducted by the Ministry of Economy in association with the Macedonian Enterprise Development Foundation, the Association of the Chambers of Commerce of Macedonia and the Connect Association, Alkaloid was presented the National Award for Ethical Management for the year 2009 for the project: Code of Ethical and Business Conduct. Two other projects were verified with recognitions received – Human Resources Management 2009-2011 granted in the category Relationship with the Employees and Social Responsibility Policy of Alkaloid AD- Skopje – Symbiosis for Healthier Life and Future granted in the category Investment in the Community.
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. Starting from 2007, this Foundation supported 144 students. 11 of the scholarship graduates stared their careers at Alkaloid. Through the Foundation, which represents a sort of incubator for development of future quality staff, Alkaloid has once again confirmed its determination of building brand as an employer and successful example of corporate governance of socially responsible company.
INVESTMENTS
Out of our 2010 investment ventures, I would emphasize the completion of the works of our Centre for Information Technology named “Trajche Mukaetov” which is now in fullfunction and is presently one of the most secure and most sophisticated centers of this type in the region. As far as the IT segment is concerned, the Company completed theimplementation of Business Continuity / Disaster Recovery Project for data protection, archiving and recovery for the purpose of unobstructed functioning of the business operations in event of disasters, damage, destruction of part or the entire information and telecommunication equipment from its primary location.
In January 2011 Alkaloid CONS Ltd. Skopje, our daughter company, switched to operating in SAP, the the world leader in Enterprise Resource Planning systems. Thus Alkaloidwas the only Macedonian company to have conducted a RollOut of SAP ERP.
Alkaloid made significant investments in modernization and automation of its production facilities in Serbia, and the continuous investment ventures in equipment for the production facilities, are yielding their results.
Following the inspection of the renowned agency KEMA Quality B.V, member of DEKRA Group from Netherlands, one of the largest certification agencies in the world, Alkaloid AD Skopje obtained the CE Certificate of conformity for the production of concentrated hemodialysis solutions. Along with the ISO 13485 certificate for medical appliances, and the renewed CE Certificate of conformity for our X-ray films, these products can be placed in all EU markets.
Based on the inspection conducted by IMO – Institute for Marketology from Switzerland, Alkaloid AD Skopje has been granted the Fair Wild Standard, Version 2 (08/2010) Certificate for its teas from the Botanicals portfolio that ensures that the botanical products are in compliance with the requirements set forth in the Fair Trade principles forSustainable Collection of Wild Medicinal and Aromatic Plants, which guarantee the safety, quality and effectiveness of the teas produced.
PC Pharmaceuticals successfully passed the GMP inspection for solid dosage forms performed by the MHRA from UK, the GMP inspection for cephalosporines made onbehalf of the Romanian Drugs Agency as well as the inspection made by the multinational F. Hoffman La-Roche for our license production.
As a part of the management endeavors for entry into the EU markets, we have made the first placements of our pharmaceutical products in the Czech Republic and the first export of artificial fertilizers in the Republic of Greece. In order to strengthen our EU based operations, Alkaloid made additional investments in opening a new subsidiaryin Ljubljana.
PROSPECTS
The pharmaceutical industry stands for the most dynamic industry looking at a global scale. Following the slow growth of the global pharmaceutical market in 2010,according to one of the latest IMS Health Reports, the industry will rebound somewhat in 2011, growing at a rate of 5–7%, compared with only 4–5% in 2010, to reach US$ 880billion.
Although the opening up of the markets is a bitter pill for some pharmaceutical industries, the governments are trying to open up the pharmaceutical sector in many countriesin order to reduce its cost burden. The markets are being deregulated to allow foreign drugs to compete, which in turn, should lead to lower prices and should reduce thehealth budgets for many countries.
The Generic pharmaceutical industry is a special segment that bases its lifeblood on choosing the molecules that will yield the best ROI in the market when an original brandloses patent exclusivity. The process of molecule selection and opportunity evaluation is the cornerstone of building a successful portfolio. In 2011, we will witness the patentfalls of some iconic brands and a promising new wave of innovation, where the fastest and smartest players will have lots of success.
On the global scale, pharmaceutical companies find many different ways to ally, and it is a common practice worldwide. Several the pharmaceutical companies in the regionwere examples of interesting ventures and irresistible opportunities to Western giants due to their well developed work forces, strong in-house R&D departments, and distinctive brand names.
Although Business Monitor International scored CEE and SEE region with 51 .5 out of 100 in Pharmaceutical and Healthcare Business Environment Ratings for Q1/11, BMIalso projects that this markets will record single to double digit compound annual growth rates in US$ between 2009 and 2014. On the other hand, many developed countries willoverhaul their healthcare systems. Non-healthcare companies will increasingly enter the medical services sector, thereby ranking this industry as a valuable investment.
Compared to the Western and Central European countries, the pharmaceutical market of Southeastern Europe is still not developed enough – the expenses per capita in thisregion are on average 183 $ compared to the average of 495 $ spent per capita in the Western part of Europe. The SEE region has a really good potential for growth in thepharmaceutical segment.
The competitive advantage of Alkaloid in the SEE Regionlies in its well spread sales and marketing network covering a market of nearly 60 million inhabitants (excluding USA and Russia). According to the recently conducted marketresearch, Alkaloid has well established and reputable brand name and its two leading brands: Caffetin, an icon for struggle against pain and baby cosmetic brand Becutan,both enjoy special emotional appeal with their consumers. It is a stable and reliable company, a recognized partner with years of international experience open for new partnerships and forms of cooperation.
PRIORITIES
2011 brings exceptional uncertainties. Due to the fear of the financial institutions from repetition of the world economic crisis, the access to money is still difficult. The companies and the funds in the country and in the region are still recording liquidity shortfalls.
On the threshold of the year marking our 75th anniversary, the Management of Alkaloid will remain devoted to its strategic goals: continuation of the growth trend on thedomestic and foreign markets, strengthening of the market positions, expansion of the product portfolio, building new partnerships and cutting costs in the non-productivesegments.
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 themain feature of our organizational behavior and organizational culture.Alkaloid shall continue to direct its efforts on further development of the pharmaceuticals segment via entry into new foreign markets, increase in the production and sales volume,building higher brand awareness, licensing and license agreements with foreign companies and other forms of cooperation.
It is our vision to turn the current perception of the company for being a partner of choice, to become an opportunity one cannot miss, and that is a stable partner for the future.
