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2008-10-21 Financial crisis puts a break on M&A in the pharmaceutical industry

The international financial crisis has led to a drop in the appetite of international players for acquisitions in the local pharmaceutical market, due to problems these face on their home markets. “What I can say is that at present no one is considering making any change. External distributors are all standing by, and have momentarily lost interest in expanding to any country, not just to Romania,” according to Radu George, General Manager of the Fildas drug distributor, the 5th largest local player.

“This crisis is in fact a chain reaction. They have problems there, and we have even more problems than elsewhere. Foreign players are waiting for things to settle first in Romania, at the legislative level: this is regulated, but any foreign distributor is fearful when a law that is in effect is not respected,” added the Fildas official. As concerns internal consolidation of players, George believes this process will not happen, because all distributors are affected by the situation on the domestic drug market, regardless of the size of their business.

Dragos Dinu, former CEO of A&D Pharma, indicated that major international distributors are waiting for the liberalization of Western European retail markets. “No doubt the financial situations of distributors will not look very good in 2008, and companies will be expecting at least a positive trend in order to negotiate from another position,” said Dinu.

There are some 30 companies operating on the local drug distribution market, with leaders Mediplus, Relad, Fildas, Farmexim, and Farmexpert. Although previously the year 2008 was expected to be the year of consolidation of this market, the drop in profit margins, combined with the recent financial crisis, has led to a period of waiting.

Source: www.financiarul.ro