Farmak Pharmaceuticals II

Location:

Ukraine

Project number:

45083

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Target board date:

23 Jul 2013

Status:

Repaying

PSD disclosed:

14 Jun 2013

Translated version of this PSD: Ukrainian

Project Description

The Project will facilitate further growth and expansion of Farmak – an existing client of the Bank. The Loan proceeds will be used to partially finance Farmak’s CAPEX programme totalling EUR 27.7 million over 2013-2014. It will enable Farmak to obtain a USA Food and Drug Administration (FDA) certification, to enhance its Research & Development (R&D) capacity, to improve its operational efficiency (via energy efficiency investments) and to expand its production capacity for tablets.

Transition Impact

The transition impact potential of the Project will derive from:

  • Demonstration of new replicable activities and behaviour
  • Setting standards of corporate governance and business conduct

The Client

PJSC Farmak, is a leading producer of pharmaceuticals in Ukraine.

EBRD Finance

Loan of up to EUR 20 million.

Project Cost

EUR 27.7 million.

Environmental Impact

Categorised B. The potential environmental and social impacts associated with Farmak’s Kiev based CAPEX programme are expected to be site specific and readily addressed through appropriate mitigation and management measures. Key components of the CAPEX programme (the Project) include: obtaining a US FDA certification, which necessitates the improvement of existing systems and the construction of a new warehouse; modernising the R&D laboratories (new equipment); and the introduction of a tablets workshop. Other improvements include the reconstruction of the existing gas boilers and the waste water treatment system, which will improve the efficiency, reduce emissions and improve waste water quality. All improvements will take place at Farmak’s existing facility located on Frunze Street in an industrial area of Kiev.

Farmak also intends to relocate its Active Pharmaceutical Ingredient (API) production from Kiev to a new site in Shostka (Sumy region). This new API production facility is not part of the EBRD loan.

The Environmental and social due diligence (ESDD) has been carried out by the EBRD and draws on the existing information acquired through the ESDD for the previous EBRD loan to Farmak for the upgrade of facilities to meet Good Manufacturing Practice (GMP) requirements. The ESDD included a site visit, a review of Farmak’s existing environmental and social (E&S) and Occupational Health and Safety (OHS) management systems and its current E&S and OHS performance, and a review of the Project components.
Farmak has well developed and robust E&S, OHS and quality management systems, together with the necessary organisational structures and staffing capacities that are certified in terms of ISO 14001, OHSAS 18001 and ISO 9000 standards. All production lines are certified to comply with GMP standards as established by the WHO. Ukraine has recently adopted legalisation that requires all pharmaceutical companies to comply with GMP as of 2012. Through the previous EBRD loan, Farmak has demonstrated a commitment to improving its E&S, OHS and GMP performance and this was confirmed during the ESDD.

Farmak conducts waste water, emissions and indoor air quality monitoring at its facilities and currently meets national and the EU standards. Waste water is treated on site before it is discharged into the municipal waste water system and is well within quality limits specified in the “Rules for wastewater receipt from the customers of Kyiv City” agreed with JSC "Vodocanal". Production lines and laboratories have various extraction and filters systems in place to reduce emissions, including dust. Energy use and waste generation are also monitored. All waste, including hazardous waste, is removed by the licensed waste contractors. Various environmental targets are in place to reduce energy use, waste water and emissions and a significant reduction has been demonstrated over the last eight years. Staff are required to comply with strict Personal Protection Equipment (PPE) requirements and work procedures.

The Project is not expected to cause a significant environmental and social impact and in will improve E&S performance of the facility. Construction works will have limited, localised and short-term adverse impacts, which can be mitigated or prevented by adhering to good construction practices. New infrastructure, facilities and equipment will be designed and constructed in line with the best industry practise and to meet GMP and the EU standards. All facilities will be connected to the existing waste water collection systems and subject to the existing E&S and OHS management systems, procedures and monitoring requirements.

Farmak has recently adopted a Corporate Social Responsibility (CSR) strategy, which promotes transparency and information disclosure. Stakeholder engagement for the Project will be through the existing channels and complemented where required.
An Environmental and Social Action Plan (ESAP) is currently being developed to ensure that the EBRD Performance Requirements continue to be met by Farmak and the Project. Farmak will provide the EBRD with annual environmental and social reports, including updates on the implementation of the ESAP. The EBRD will monitor the Project’s E&S performance in line with the Bank’s E&S Policy.

Technical Cooperation

None.

Company Contact

Smarodina Viktoriia, CFO

 

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