Interview Transcript Valentin-Norbert Tarus, General Director & President of the Board, Farmaceutica Remedia S.A For publication in Die Welt

 

 

Read the full interview & country report here.

Farmaceutica Remedia S.A., a Romanian pharmaceutical distributor, listed at the BVB ( Bucharest Stock Exchange – symbol RMAH) holds a significant position in the market. Handling over 5,500 products and interacting with more than 250 suppliers and 3000 customers the company operates nationwide, reaching a constant annual growing turnover during the last 5 (five) years, achieving in 2023 a turnover of about €120 million, 10% higher than the previous year. Remedia has carved a niche in providing value-added services, such as support in regulatory affairs, product promotion in healthcare settings, and specialized logistical services, while also involving itself in crucial healthcare initiatives and pharmaceutical activities beyond mere logistics. Guiding the company is Valentin-Norbert Tarus, the General Director & President of the Board, whose pragmatic leadership is informed by over 30 years in the industry. Tarus has steered the company through various evolutionary phases of the pharmaceutical industry in Romania, engaging in both privatization and international collaboration. He navigates the company with a steady hand, ensuring it remains agile and adaptive amidst larger competitors while also keeping an eye on sustainability and innovative developments in pharmaceutical distribution, despite the industry’s typically low-margin nature. Under his leadership, Remedia welcomes potential partnerships and investments, with a straightforward approach towards shareholder involvement and a concrete record of consistent dividends in recent years. (a dividend average of more than EUR:1 million over the last five years – with a declared dividend policy of paying more than 50% of net profit)

What is Remedia’s current position in the marketplace, and from your perspective, what unique competitive advantages do you believe set you apart from your competitors?
Remedia ranks as the ninth or tenth distributor in Romania, placing us outside of the primary league. In this premier category, there exist three or four companies that are up to ten to twelve times our size in terms of volume. Nevertheless, we believe that the agility, adaptability, and service level we provide to our partners — which includes both suppliers and customers — may surpass what larger companies can provide.
How might potential partners leverage your ability to bring drugs to the market effectively?

We have not been solely a logistics company throughout our history. From early on, we placed significant emphasis on understanding the market needs, which entails recognizing the requirements of doctors, new treatments, and new medications in Romania. Historically, Remedia has been a traditional partner for introducing new companies to the country, especially in the early 90s, and facilitating marketing efforts for companies not previously present within the nation.
Moreover, we continue to maintain a regulatory department, providing numerous companies with services related to product registration and updating product variations, which is indeed a value-added service. While most large companies have their own regulatory departments, occasionally they require additional workforce and activities, which we are equipped to provide.

Additionally, we engage in the promotion of pharmaceuticals through our marketing and sales teams, operating in hospitals and other healthcare settings, and also exploring niche activities. For instance, in the realm of transplantation, we have registered and brought to the market some of the most vital products for preventing organ rejection, immunosuppressants and also most of the solution for preserving organs.
We’ve engaged in numerous activities, such as congresses, meetings, and associations related to transplants and patients, striving to establish our presence across various fields of activity. Our aim is to extend our reach beyond merely executing drug orders in terms of numbers, price, and time. In essence, we seek to transcend the logistical aspects of our industry.

Could you provide an overview of the company’s current national market presence as of 2023-2024 In which regions or areas are you currently active?
We operate nationwide with 3000 customers, maintaining more than 5,500 products in our range. While this does not categorize us as a full-range distributor, it does position us close to being one. Additionally, we work with over 250 suppliers and have managed to grow and handle these significant volumes, achieving in 2023 a turnover of ~ €120 million.
Remedia is also carrying out a share buyback program to implement a Stock Option Plan, granting for free to the employees 3% of the total number of the company shares, on the basis of performance and working period criteria.
What is the current status of your relationships with Germany, both in terms of the country itself and its key stakeholders or players?

Currently, the prominent players in big pharma are multinational. Even if a company originated in a specific country, such as Germany, it presently operates as a global entity, a multinational corporation. While we maintain relationships with these major enterprises, we also engage with smaller German companies. Our connections with German entities are not only robust but also stem from longstanding and positive relations.
There has been a sudden surge of interest in the Romanian market, particularly noticeable in the pharmaceutical sector. This interest peaked notably in the early 90s when the Romanian pharmaceutical market opened, attracting numerous companies to Romania to handle drug registrations, promotions, and sales. Currently, while the market may not be as saturated as those in Western countries, it remains competitive. I believe there are still big opportunities for German companies not only to introduce medicaments but also to offer related and specialized logistical services for pharmaceuticals.

How can German companies become integral to your growth story in Romania?
We have amassed extensive expertise over more than 30 years of activity in the pharmaceutical industry, ranging from market information and studies to statistics. Additionally, we are a company that is very open to welcoming German shareholders. Remedia is listed on the Bucharest stock exchange ( https://bvb.ro/ ), making its shares available for purchase by anyone through a straightforward process. While I hold the majority of the shares, making me the majority shareholder, I am not necessarily intent on maintaining this status indefinitely.

It’s worth noting that Remedia is a profitable company. Over recent years, we have consistently paid dividends, approximately €1 million per year. According declared dividend policy this represents minimum 50% of the net profit. Although this may not be especially significant for a profitable German company, and only represents about 1% of turnover, it is notable in the pharmaceutical distribution sector. From my research, the average profit for pharmaceutical companies in Romania, particularly focusing on the most significant 10-12 companies, is around 1.86% of the turnover, over the EU average. Even in Germany, the profit margin for distribution companies tends to hover around 2%, or perhaps slightly less. Thus, pharmaceutical distribution is characteristically a high-volume, low-margin business.

As of now, what growth opportunities do you envision for individuals interested in entering the market, whether through share acquisition or proposing new ideas or products?
The pharmaceutical market is notably elastic, presenting a unique duality of being stable yet simultaneously very flexible. Annually, new products emerge, often replacing others and frequently being more expensive, necessitating the navigation of gaining market access each year. New players enter the market and bring innovative ideas for promoting their tracks. Those involved in the pharmaceutical business recognize the perpetual opportunities for growth, particularly in pharmaceutical distribution. In this context, it’s imperative to enhance logistics and develop e-commerce platforms, always ensuring adherence to regulations.

Currently, in Romania, certain products, specifically prescription products, cannot be sold on internet, in the same manner as they are in Germany. However, as part of the European market, we are aligned, and security features are extensively developed. Recognition mechanisms, such as facial recognition, are sophisticated and multifaceted, ensuring no issues in tracing prescription products. Eventually, Romania’s market will likely open further, possibly even to robots. Imagine placing an order from home, then going to an external terminal at the pharmacy, inputting your QR code, and a robot delivers the medicaments you ordered and paid for with a prescription from home. While this is not yet regulated in Romania, or in other countries, it’s plausible to foresee its future implementation. Growth will inevitably follow. Being 71 years old, I may not personally engage with most of these future opportunities. However, those who succeed me will encounter numerous challenges and, correspondingly, a wealth of opportunities.

Do you have any specific plans for investments in innovation and digitalization that you believe will provide you with a competitive advantage?
In recent years, we, as a distributor ranked approximately tenth in the market, have had to compete with significantly larger players possessing extensive international expertise. Phoenix, for instance, is the largest pharmaceutical distributor and health provider in Europe. They have a presence in almost all European countries, operating pharmacies, e-commerce platforms, and warehouses. Additionally, there’s Alliance, an American company, and Dr. Max, a substantial player based in Czech Republic, but operating in several EU countries.

Currently, we are in a phase of optimization. We initiated this by introducing the first pharmacy in Romania to utilize a robot. Our ongoing plans and work focus on further optimizing our warehouse. While it’s partially optimized now, our plan involves introducing automation solutions, particularly leaning on pharmacy robots produced in Germany, by the company BD Rowa that we represent in Romania, Bulgaria and Moldova.

What is your take on sustainability?
Promoting sustainability principle is central to my professional conscience. You know, when I started business, nobody was talking about sustainability. Public discourse on the topic was lacking, and explicit commitment to sustainable practices, was absent from organisational dialogues. However, some entities were tacitly expressing their concern for the environment and engaging in actions to reduce impacts or waste generation, even if specific targets were not being declared or formalised. Now, it is essential to mobilise all stakeholders, especally our team at Remedia, in a collective effort to promote nature conservation and implement sustainable practices, in all our activities.

With your 30 years of experience in the industry, can you reflect on how the business landscape has evolved over this period? How does it compare to the early years of your tenure?
I’ve been deeply involved in this business from its inception and have primarily concentrated on this field. I’ve also ventured into a few collateral businesses; for instance, I owned an art gallery in Vienna and we are publisher for the British Medical Journal in the Romanian language and Medica Academica – a Romanian medical journal.

To provide a bit of historical context – before 1990, during the socialist era, Romania had 16 regional pharmaceutical companies for distribution and operating pharmacies. These companies were spread throughout the country, each responsible for an area spanning two or three counties. These were state-owned entities, including one in the region of Hunedoara / Deva, in Transylvania, where I was born and started studies in German language.

In 1991, these entities were privatized, the minority 49%, with free shares being distributed to the population. Farmaceutica Remedia was established as a majority state owned company.

In 2000, when the company was underperforming and the government was in need of funds, a tender was organized to sell the majority stake (51%) of all these state-owned companies. We* participated in this tender and with risk taking and luck, acquired the majority stake.
Regarding *V.TARUS RoAgencies was the first company I established; it was a traditional agency founded in 1994. Consequently, we continued pharmaceutical operations under the name Remedia from 2006 onwards.

What aspect of running your business continues to excite and motivate you the most?
I thoroughly enjoy visiting here, observing the processes, enhancing workflows, engaging with people, and discussing ideas and projects. However, I’m at a point where my primary challenge is preparing the company to operate without my direct involvement. I’ve been in this transitional phase for over a year now. I’ve delegated numerous activities and am no longer involved in the day-to-day operations. Nevertheless, I continue to set targets, objectives, and timeframes, while identifying individuals who are committed to carrying forward these tasks.
What factors do you believe make this the right time for investors to consider doing business in Romania, and what unique qualities or opportunities does this country offer?
Perhaps we should not consider Romania in isolation but view it as part of Europe. Every day, Romania is increasingly aligning with EU regulations and laws. The registration of medications is no longer confined to a single country. Even though there are national procedures for registration, everything is becoming more global. Consequently, a company’s strength increasingly lies in its regional and global presence and actions. German investors tend to be quite successful here, finding a culture that holds a very positive orientation towards German quality, education, and behaviour.

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