The Competition Council is analyzing a deal through which pharmaceutical companies Grin-Farm and Birivofarm intend to gain control over the Moldovan-Hungarian joint venture RihPanGalPharma and its affiliated pharmacy chain Gedeon Richter. 

The buyer of the assets is Moldovan entrepreneur Dorian Berdos. It is he who owns Grin-Farm and Birivofarm, which operate the Felicia chain of pharmacies. Today, it has 120 pharmacies nationwide and ranks third after Farmacia Familiei (182 pharmacies) and Hippocrates (141 pharmacies). If the merger deal goes through, Felicia has a good chance of moving up to second place and increasing its pharmacy retail coverage by a third. 

The reason for the sale is not publicized, but as LP has learned, the Hungarian Richter Group is now prioritizing the production of medicines, and that is where it intends to concentrate. The company has sold almost all of its joint ventures in foreign markets, gradually getting rid of its own wholesale and retail assets. 

In Moldova «Gedeon Richter» owns the largest wholesale division «RihPanGalPharma» and a network of 40 social pharmacies. Over 20 years, the Hungarian party has invested about 12 million euros of direct investments in its Moldovan project. This provided it with the highest market share (more than 6%) and sales volume of 10 million euros per year. 

The buyer’s turnover is lower. According to official data, in 2019, Grin-Farm’s sales revenue amounted to 250 million lei (+34% compared to 2018), while its net profit increased from 1.85 million lei to 4.35 million lei. «Birivofarm» is larger: its turnover doubled to 368 million lei, while net profit increased by 13% to 5 million lei. The two companies employ a total of 735 people. 

At first glance, this deal may seem strange. In the pharmaceutical business, Dorian Berdos’ structures have always focused on retail, but not on wholesale. Whereas the Hungarians are exactly the opposite. 

«RihPanGalPharma» created a powerful wholesale division by building two European-level wholesale warehouses in Chisinau and Balti. The investments in this project exceeded 5 million euros, but they justified themselves. 

The presence of its own representative office, opened back in 1997, as well as a wholesale and retail chain, allowed Hungarians to implement a vertical model of drug movement — the only one in Moldova. Today, there are no other companies on the local pharmaceutical market that have their own distributor, which directly purchases medicines from the factory, an official representative office and a branded pharmacy network. This system excludes the emergence of costs in the supply of medicines and increase of their prices in the pharmacy retail.

Today, RihPanGalFarma ranks third in the ranking of pharmaceutical warehouses in Moldova. In 2019, its sales volume amounted to 716 million lei, tripling over the last ten years. In the sales stream, 57.7% are products of foreign manufacturers, 10% are local, while the share of «Gedeon Richter» medicines is 32.3%.

RihPanGalFarma’s customers are both pharmacies and medical institutions in the country (48%) and other pharmaceutical wholesalers (40%). About 12% of medicines are supplied to its own retail.

In 2019, the turnover of Gedeon Richter pharmacies amounted to 113.2 million lei. The objects of the network are located mainly in Chisinau, in places with good traffic. Some of them are owned by the company.

Dorian Berdos has not yet commented on such an expensive purchase. However, it is known that the deal will be made on borrowed resources. 

Cut: Meanwhile, 70 million packs of medicines were sold in Moldova. Despite a painful year, the pharmaceutical business earned a little.

Pharmaceutical Marketing Group (PMG), an analytical company, told Logos Press that the total retail market amounted to 177.7 million euros — plus 2.5% compared to the same period of 2019. In physical terms (in packs), it grew by 3% to 69.7 million units. The overall performance was affected by the failed April and May, when drug sales fell by 50%-60% due to the March rush.

A total of 1,021 pharmaceutical manufacturers were present in Moldova last year, 15 of which were Moldovan. During the year, the industry lost 22 supplier companies that closed their activities on the local market. 

Retail rating of TOP-10 companies in Moldova in 2020 (PMG)

№	Company	Market share for 2020, %
1	Richter Gedeon	5,7
2	Berlin-Chemie Menarini Int	5,32
3	KRKA	5,02
4	World Medicine	2,89
5	Bayer Healthcare	2,59
6	Sanofi	2,31
7	Nobel Ilac Sanayi Ve Ticaret AS	2,08
8	Balkan Pharmaceuticals Moldova	1,99
9	Bilim Pharm	1,81
10	Specchiasol SRL	1.37

Irina MATENKO, Economicheskoe Obozrenie «Logos Press»