EBRD strengthens market competition in the Georgian pharmaceutical sector

By Sergiy Grytsenko

The EBRD is helping to boost competition in the Georgian pharmaceutical market with a loan of US$ 4 million to ABC Pharmacia, the country’s fourth largest distributor of pharmaceutical goods.

The company has been growing steadily since it was established in 1999 and it currently manages 35 pharmacies. It will use the loan to expand its reach further into the country and aims to be able to serve customers throughout the whole of Georgia by the end of 2012. This will increase ABC Pharmacia’s competitiveness in a market that is currently dominated by just two enterprises.

The expansion will include the establishment of another 21 PharmaDepot and 19 M’curnali pharmacies, ABC Pharmacia’s well-recognised brands.

The financing, provided under the EBRD Medium-Sized Co-Financing Facility (MCFF) through the local JSC TBC Bank, will be used to buy product stock, store hardware and software, and to cover other start-up costs such as initial monthly salaries. The new ABC Pharmacia stores are expected to create 200 jobs across Georgia.

“Rapid growth of our turnover with the development of the drugstore chain requires financing, so the EBRD loan is essential to meet set goals,” says Enrico Beridze, General Manager and co-founder of ABC Pharmacia. “Moreover, associating with the EBRD contributes to the credit and goodwill of our company.”

During the expansion phase, the company will be assisted by consultants from the EBRD donor-funded TurnAround Management (TAM) Programme*. They will cooperate with the company to further improve the management of the retail network, logistics, risk control and marketing activities.

In addition, the EBRD is helping ABC Pharmacia to become more competitive in the international market by implementing financial statements consistent with the International Financial Reporting Standards (IFRS). It is planned that the company will get assistance through the new Accounting Improvement Programme (AIP).

“The Bank developed this Programme to improve financial reporting of small and medium-sized enterprises in the early transition countries,” explains Chris Clubb, EBRD Director of the Early Transition Countries Initiative (ETCI). “Better financial information will not only help small and medium-sized enterprises make confident development plans but also facilitate obtaining loans from financial institutions”.

ABC Pharmacia is the first enterprise in Georgia to participate in the AIP, which is funded by the ETC Fund and the EBRD Shareholder Special Fund (SSF) and is implemented jointly by the EBRD’s ETC Initiative (ETCI) and the Business Advisory Services (BAS) Programme*.

*The TAM/BAS Programme in Georgia is financed by the EBRD’s donors such as the European Union, the EBRD Shareholder Special Fund, the Netherlands, Japan, Italy, Canada and the United Kingdom.