Polpharma looking too expensive for many foreign drugs investors
The government wants to privatize Polpharma, a large pharmaceutical enterprise in Starogard Gdanski, even though its first attempt with a consortium of Chemia Polska, Ciech and BIG Bank Gdanski fell through after the last group pulled out. Polsat and Multico had indicated that they may be interested in joining the consortium this time around. Officials with both companies were unavailable for comment. But other companies, who had taken a close look at Polpharma, decided to pass.
Enterprise Investors, which had previously negotiated with the Treasury Ministry on purchasing Polpharma, would not bid for the company, said Dariusz Kronczuk who was responsible for the negotiations for the investment fund. He did not want to reveal why Enterprise Investors did not move on the deal. "We signed a letter with the ministry not to reveal any details about our talks," he said.
Analysts, who did not want to be named, said, though, that the American fund's offer of $100 million was not enough for the Treasury Ministry.
German pharmaceutical company Bayer, which had also been interested in Polpharma and had cooperated with the company since the early 1980s, also is passing this time around. "The offer was not interesting enough," said Adam Grabowski, a public relations adviser with Bayer. "Bayer would like to participate in the privatization of Poland's other pharmaceutical enterprises and is constantly researching the possibilities of capital investment."
Analysts said a number of problems are likely to keep many major, international players away from the privatization.
"International interest in Polish pharmaceutical enterprises was quite large at the beginning, but the privatization process was delayed and investors went somewhere else," said Monika Cebula, an analyst with COK Banku Handlowego brokerage house. "Another problem is that despite promises made by the government, the prices for pharmaceutical products have not been freed, and this is not good for producers."
She added that the lack of price liberalization has led to growing imports and increased competition from foreign companies entering the market.
In addition, the pharmaceutical sector may see a downturn due to the Russian crisis which could limit sales to what was a lucrative export market. About 16% of Polpharma's sales are exports to the CIS countries, but according to its CEO Miroslaw Mironowicz, as quoted by Rzeczpospolita daily, the company has no problems with payments from its Russian buyers.
But not all analysts are bearish.
"The Polish pharmaceutical market seems to be more difficult, but still there is a large demand and potential for growth," said Jerzy Suchnicki, an analyst at Raiffeisen Investment Polska. "(Polpharma) is big and not bad if compared to other companies."
In 1997, Polpharma had revenue of zl. 462.2 million ($128.4 million), and net profit of zl. 46.8 million ($13 million). It has a domestic market share of 4.53%.
Enterprise Investors, which had previously negotiated with the Treasury Ministry on purchasing Polpharma, would not bid for the company, said Dariusz Kronczuk who was responsible for the negotiations for the investment fund. He did not want to reveal why Enterprise Investors did not move on the deal. "We signed a letter with the ministry not to reveal any details about our talks," he said.
Analysts, who did not want to be named, said, though, that the American fund's offer of $100 million was not enough for the Treasury Ministry.
German pharmaceutical company Bayer, which had also been interested in Polpharma and had cooperated with the company since the early 1980s, also is passing this time around. "The offer was not interesting enough," said Adam Grabowski, a public relations adviser with Bayer. "Bayer would like to participate in the privatization of Poland's other pharmaceutical enterprises and is constantly researching the possibilities of capital investment."
Analysts said a number of problems are likely to keep many major, international players away from the privatization.
"International interest in Polish pharmaceutical enterprises was quite large at the beginning, but the privatization process was delayed and investors went somewhere else," said Monika Cebula, an analyst with COK Banku Handlowego brokerage house. "Another problem is that despite promises made by the government, the prices for pharmaceutical products have not been freed, and this is not good for producers."
She added that the lack of price liberalization has led to growing imports and increased competition from foreign companies entering the market.
In addition, the pharmaceutical sector may see a downturn due to the Russian crisis which could limit sales to what was a lucrative export market. About 16% of Polpharma's sales are exports to the CIS countries, but according to its CEO Miroslaw Mironowicz, as quoted by Rzeczpospolita daily, the company has no problems with payments from its Russian buyers.
But not all analysts are bearish.
"The Polish pharmaceutical market seems to be more difficult, but still there is a large demand and potential for growth," said Jerzy Suchnicki, an analyst at Raiffeisen Investment Polska. "(Polpharma) is big and not bad if compared to other companies."
In 1997, Polpharma had revenue of zl. 462.2 million ($128.4 million), and net profit of zl. 46.8 million ($13 million). It has a domestic market share of 4.53%.
