“Historically, this was our best quarter in terms of sales volumes. We also recorded an improvement in the net profit, which – though lower than expected – was better than the figure posted in Q1 2007,” says Jacek Szwajcowski, PGF’s President. “Following the completion of our investment programme in 2007, the Group’s potential is enormous. However, to leverage that potential to our best advantage, we need to work on the Group’s internal organisation and streamline its processes. Similar efforts were undertaken seven years ago, after we effected a series of mergers and acquisitions,” adds Jacek Szwajcowski.
In the second and third quarters, PGF intends to take a number of steps towards the Group’s reorganisation, planned since the beginning of the year. The first stage, completed by the end of March, involved several personnel changes - namely the leaders of individual business lines were selected. Four new persons were appointed by the Management Board of PGF to the following key positions:
- General Director, responsible for the development of the PGF Group’s wholesale business,
- President of DOZ S.A., responsible for the “APTEKI dbam o zdrowie” programme and for optimising the retail business,
- Management Board Proxy for hospital sales,
- President of CEPD, responsible for international expansion.
The second stage involves reorganisation of the Group into wholesale and retail divisions, while improving the operational efficiency after the development period in 2007. As a result of the large takeovers made by PGF, its headcount rose by almost 1,700 employees, to the record-high level of 6,800. “We have experience, unrivalled by the industry, in quick offsetting of the effects of takeovers. To efficiently run such an organisation as ours, we had to streamline its structure, but also reduce the workforce by 300 full-job equivalents,” says Jacek Szwajcowski. “Development comes at a price, not only in terms of investment outlays and a temporary increase in debt, but also in the sense that the effects of development projects become visible only after some time. That is why we plan to generate savings to add to the expected financial benefits and prepare for our envisaged expansion in Central Europe.” After the retail and wholesale segments are separated, the Management Board expects that the synergy effect connected with the vertical integration will be exploited even better.
Furthermore, in the second quarter, PGF intends to implement its plans and introduce Pharmena, in which it holds a 47.64% interest, to the New Connect market. Proceeds from the issue, expected to amount to several million dollars, will be used to finance the next stage of the clinical trials on an innovative anti-sclerosis drug, carried out in USA and Canada. The trials are conducted by Pharmena North America (PNA), under Pharmena’s licence. Among the project’s participants is the American fund Domain Associates, one of the world’s largest organisations specialising in investment in new promising pharmaceutical enterprises. The fund manages assets worth USD 2bn.
If the results of the trials are successful, the drug will be the first drug developed by Polish scientists to be registered in the USA. “The product has obtained patent protection in all the important countries of the world. Once the research work is completed, we may launch the drug on the market worth some USD 40bn ourselves. This is the largest and the fastest growing segment of the pharmaceutical industry,” explains Konrad Palka, President of Pharmena. Alternatively, the company may sell the patent to a drug manufacturer.
In 2006, Kos Pharmaceutical was taken over by Abbot for USD 3.7bn. The product portfolio of Kos Pharmaceutical includes Naispann, a drug which is a direct competitor to the substance currently being tested in the USA. “The competitive advantage of our drug is that it has an additional effect of protecting blood vessels,” explains Konrad Palka. The results of the clinical trials conducted by PNA will be released in Canada – by the end of 2008 and in USA – by mid-2009. The product is expected to be commercially launched in 2010.
Consolidated financial results of Polska Grupa Farmaceutyczna
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