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Serbian pharmaceutical giant expands to Russia with EBRD help
EUR22 million supports cross-border investment; promotes competition
The EBRD is lending Hemofarm a.d., the largest pharmaceutical producer in Serbia and Montenegro, €22 million to help the company expand to Russia, its largest export market.
Hemofarm will use the loan to buy new equipment and build a packaging and production pharmaceutical plant in Obninsk, a small town 100 km south-west of Moscow. It will be among the first in Russia to comply with Good Manufacturing Practice standards, the international benchmark for producing pharmaceutical products.
The move to expand into Russia is part of Hemofarm’s strategy to build on its existing strong distribution network in the country. With around 50 per cent of export revenues under the Hemofarm brand generated by Russia, it is only natural to set up a new plant in this country, said Miodrag Babic, President of Hemofarm. By having a local presence, the company is aiming to further promote the Hemofarm brand in Russia.
The EBRD’s role is essential to Hemofarm’s strategy. The eight-year finance provided by the Bank is currently unavailable from the local commercial loan market. The EBRD will, nevertheless, aim to syndicate half the loan to foreign commercial banks, a move that could establish strong links between the company and foreign banks that could result in long-term financing in the future.
Olivier Descamps, Business Group Director for Southern and eastern Europe and the Caucasus at the EBRD, said Hemofarm’s aspirations to grow beyond its own borders fit in well with the Bank’s strategy to promote cross-border investments. The project is also expected to benefit Russia, through foreign direct investment into the country, as well as promoting competition in the Russian pharmaceutical sector.
The EBRD loan builds on an existing relationship with Hemofarm. In 2002 the Bank lent the company €18 million to help modernise and expand its facilities in Serbia and Montenegro. Established in 1960, the company specialises in generic pharmaceutical products. Dragica Pilipovic, EBRD Director for Serbia and Montenegro, said Hemofarm has a dedicated management team and staff that are making the company a success story, one which the EBRD is happy to support.
The EBRD is the largest investor in Serbia and Montenegro, with more than €500 million invested in 25 projects.
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