Translated version of this PSD: Croatian
The EBRD is considering a long-term working capital loan of up to EUR 20 million to the Jadran Galenski Laboratorij d.d., a Croatian pharmaceutical company.
The Company is currently implementing an investment programme, aimed at significant increase of its production capacities. The EBRD financing is focused on the provision of the long term working capital which will enable the full capacity utilisation of a modern production facility.
Given the specifics of the Client’s key markets (CIS region accounting for more than 60 % of the revenues), EBRD is uniquely positioned to cater to the Company’s working capital needs and provide a multicurrency credit line.
The proceeds of the EBRD loan will help the Company in: (i) providing working capital with adequate tenor and currency during the Company’s expansion period, (ii) optimising the financing structure, (iii) decreasing financial risk and strengthening the risk management operations.
Transition impact of the Project derives from:
(i) Setting standards for business conduct and corporate governance, through the implementation of Corporate Governance Action Plan, aimed at improvements of different levels of corporate governance of the Company.
(ii) Skills transfer with introduction of the new products and technologies. JGL success is driven by the product innovation with R&D playing an important role of the corporate operations. The project will support the expansion of the R&D function and further enable investments in the product development innovation with the Company’s focus to significantly increase its R&D department in the coming 5 years.
Jadran Galenski Laboratorij d.d. is the second largest pharmaceutical company in Croatia. It specialises in production of sterile eye, ear and nose drops solutions, with Aqua Maris being their blockbuster drug in nasal saline segment. JGL exports 75% of its production.
The Company is in the investment expansion phase, currently building state of the art production facilities “Pharma Valley” that will increase the production capacity of sterile solutions from current 19 million products to 38 million per annum and employ 100 new employees, reaching a total headcount of 702.
The provision of multicurrency (EUR and RUB) long-term working capital loan to the Borrower in the amount of up to EUR 20 million.
EUR 65 million.
Categorised B. Environmental and Social (E&S) issues associated with pharmaceuticals formulation and pharmacies operations are site specific and can be mitigated through introduction of specific improvements and management practices. The Environmental and Social Due Diligence (ESDD) included a review of the Client’s corporate E&S policies and management systems via an E&S Questionnaire, existing audit reports and other support materials analysis, and a site visit to JGL operational formulation plan and construction site (Pharma Valley complex) located in Svilno, Croatia. To ensure compliance with the Bank’s Performance Requirements (PRs) an Environmental and Social Action Plan (ESAP) is to be agreed with the Client prior to the Board of Directors review of the Project.
The ESDD showed compliance with national environmental and social legislation and confirmed that JGL has an adequate institutional capacity and management culture to implement the Bank’s PRs. JGL management systems are certified to comply with ISO 9001 quality management systems, ISO 13485 medical devices quality standards and ISO 22000 food safety management system based on the HACCP principles. The production plant of JGL is also compliant with EU Good Manufacturing Practice (GMP) standards ensuring products safety and appropriate pharmacovigilance practices. All above certificates are valid till 2016, and the Company has passed the first audit to certify its sterile line for compliance with more stringent US FDA standard. JGL’s environmental and OHS management systems are complaint with ISO 14001 and OHSAS 18001 respectively, and the Company’s management is considering the certification over next couple of years. JGL is a founding member of Croatian Business Council for Sustainable Development from 2009, produces regular Sustainability Reports and has high Corporate Social Responsibility focus.
The JGL current operations and investment programme into Pharma Valley complex at Svilno II are not associated with any major environmental issues due to the nature of the processes involving mainly mixing, drying and molding of tablets and preparation of liquid solutions, including sterile forms. The plant is equipped with an HVAC (Heating, Ventilation and Air Conditioning) system to abate the dust emissions and to provide required air circulation for the premises. Key issues are related to VOC emissions from the use of solvents, road transport and boilers combustion emissions, and R22 ozone-depleting refrigerant. The on-site waste water treatment capacity is currently limited with total suspended solids (TSS) exceeding 10mg/m3 best practice limit by three times and is also associated with the lack of municipal sewage in the area. The Svilno II investment programme includes own waste water treatment plant construction, and this would be included into the ESAP.
The social issues stem from the location of the plant, which is in close proximity to the residential area, and thus generate community complaints about noise, light, emissions, traffic and other nuisances to the public. Main occupational health and safety risks stem from the lack of space, use of production areas for storage of the final products and raw materials, manual packaging, and lack of assembly points and emergency evacuation plans. These will be addressed via the specific measures in the ESAP. Human Resources policies and management system in place are in line with the best practice. The Change Management programme related to the transfer to Svilno II is in place.
The Company will provide the Bank with Annual Environmental and Social Reports (AESR) and notify on any material accidents or incidents. The Bank will evaluate the Project’s environmental and social performance in accordance with the Bank’s PR’s through reviewing the Client reporting and undertake periodic monitoring visits.
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