Merger will establish PGF as the drug market leader
The upcoming merger between pharmaceutical wholesale holding company Polska Grupa Farmaceutyczna (PGF) and state-owned Cefarm Poznan will establish PGF as the industry leader, with 23% of the pharmacy sales market, analysts said last week.
"Cefarm Poznan is one of the largest companies to be taken over by PGF," said Monika Cebula, an analyst at COK Banku Handlowego. "It will have an important influence on company sales." PGF generated revenue of zl. 1.7 billion ($377 million) in 1999, and COK Banku Handlowego forecasts revenue this year to increase to zl. 2.5 billion ($556 million) thanks to the merger, due to be completed by mid-year.
"PGF will increase its market share to about 25% and this is the most important thing," said Amerbrokers' Piotr Wisniewski. He added that there are no other Cefarm companies as large as Cefarm Poznan left to be taken over.
Currently, PGF enjoys the biggest market share of all pharmaceutical wholesalers operating in the country. Cormay is in second place with a 10% market share, followed by Prosper's 9%, Farmacol's 7% and ORFE's estimated 4%.
PGF emerged in 1998 as a result of the merger of three regional pharmaceutical warehouses: Medicines, Carbo and the Opole-based Cefarm B. At the time of the merger, the companies had a total 15% market share. Since then, PGF has expanded its holding by another seven firms Cefarm Bydgoszcz, Cefarm Olsztyn, Esculap, Biomedic, Cefarm Lublin, and Urtica which upped its share of the market to 21%. The last three acquisitions were made this year.
Before the merger with Cefarm Poznan can be finalized, the publicly listed PGF needs to obtain approval from the Securities and Exchange Commission (KPWiG). Wojciech Rosicki, PGF's PR director, said the approval is expected by the end of June.
The merger with Cefarm Poznan one of 19 previously state-owned Cefarms whose privatizations are almost complete will allow PGF to expand its operations across Poland. "We were interested in Cefarm Lublin and Cefarm Poznan in particular because we didn't have outlets there," Rosicki said. According to Wisniewski, "these two Cefarm companies greatly fill the gaps in the geographical structure of (PGF) sales."
Rosicki said the company's strategy thus far had consisted of two stages. "The first was to open new outlets," he said. "And the second, to merge with other companies." PGF has opened 19 outlets countrywide so far (not counting Cefarm Poznan) and supplies 7,000 pharmacies.
The acquisition and branch-opening stages are over. "And now we want to concentrate on the best management of all companies (in the group)" Rosicki said.
