Liquidity injection for Poland’s pharma chain Pelion

• PLN 110 million (€24.3 million) short-term liquidity support for Pelion
• Company managing working capital needs caused by coronavirus crisis
• Critical importance for the stability of the national pharma market

Faced with increased market volatility by the coronavirus pandemic the pharma retailer Pelion is taking proactive steps to manage the challenges ahead with a loan of up to PLN 110 million (€23.4 million equivalent) provided by the European Bank for Reconstruction and Development (EBRD).

The financing will offer short-term liquidity that will allow the company to actively manage working capital needs across business lines in Poland and Lithuania. Pelion, owned by the holding company Korporacja Inwestycyjna Polskiej Farmacji Sp. z o.o., is the largest wholesale and retail pharma distributor in Poland and as such of critical importance to secure the availability of pharmaceuticals.

The transaction is the EBRD’s first project in Poland since it adopted a Resilience Framework for existing clients as part of its efforts to respond to the unprecedented economic challenges posed by the Covid-19 crisis. The package includes liquidity support, short-term working capital and restructuring of exposure for viable enterprises under temporary stress. In total the EBRD expects to dedicate its entire engagement with up to €21 billion in the period 2020-21 to combating the impact of the coronavirus.

The company plans to use the EBRD financing to build a liquidity buffer, actively respond to changing payment terms and increase inventory levels ahead of autumn when a second wave of Covid-19 is expected. The public health restrictions have led to a significant shift in consumer habits towards online shopping which is only expected to increase. While the demand for medical products from private customers was strong in the first quarter of the year, the beauty retail segment is expected to underperform in 2020 due to restrictions leading to significantly lower customer traffic.

[EBRD representative quote] “As Poland copes with the coronavirus crisis and its longer-term impact it is vitally important to act now to prevent future harm. Phelion is setting an example in forward thinking and the EBRD is very proud to support our partner in these efforts. As the biggest distributor of pharmaceuticals the company’s health is of strategic importance for Poland.”

The EBRD started investing in Poland in 1991 and to date has provided €10.3 billion through 436 projects to all sectors of the economy.