Essence of pharmaceuticals FARMAK

ESSENCE OF

PHARMACEUTICALS

FARMAK, a.s. is an exclusively Czech chemical and pharmaceutical company whose core business is the development, production and marketing of generic active pharmaceutical ingredients. During the past three years the company has gone through some turbulent changes to emerge as a lean, fully customer-oriented enterprise. Romana Moares reports.

FARMAK, a.s., Czech Republic, a private, independent joint-stock company with a tradition going back to 1934, focuses on two main production lines: generic pharmaceutical ingredients and chemical specialities (including so-called intermediates). However its core business is the production of pharmaceutical ingredients, which currently account for over 95 per cent of turnover.

Production capacity is concentrated within the company’s only site in Olomouc, Czech Republic and consists of two production halls, both containing several production lines for universal and specific product ranges. In a new shape

In 2013, the company began the process of reorganising in order to increase effectiveness and improve overall performance. This difficult and complex process has now been completed – FARMAK is now even more flexible and better equipped to accommodate customers’ varied requirements, which should further strengthen its position in international markets.

The development of an in-house pipeline product portfolio, gradually introduced in commercial production, has been another important factor boosting the company’s position. “The introduc-

tion of these new products has been an important step in terms of FARMAK’s long-term development and financial performance. Generally speaking, achieving profitability of such products is a long-term process. While the full financial benefits of the products we introduced to our portfolio in the last three years are expected to become apparent in 2017, 2018 and later, they are already starting to generate profit now. In the pharmaceuticals sector, this is an outstanding result and we are very proud of this achievement,” says Roman Grunt, FARMAK’s managing director.

The recent re-organisation and re-direction has brought clear benefits for FARMAK: in 2015, its turnover increased by 13 per cent to over CZK 500 million (a 50 per cent increase compared to 2013) and the financial performance is expected to further improve.

The Essential is Inside

FARMAK does not produce drugs as such: The company makes generic pharmaceutical substances, essential ingredients of medicinal products – hence its slogan ‘The Essential is Inside’. “The slogan reflects not just the quality of FARMAK’s products but also the skills and competence of our employees who are our most valuable asset,” says the managing director. Currently, the product portfolio contains about 25 commercially available products. They are contained in medicinal products to treat disorders such as glaucoma, high blood pressure, sleep disorders or prostate problems. Traditionally, FARMAK is also a renowned producer of antipsychotics.

FARMAK’s research and development is focused primarily on chemical research, the priority being the development of chemical procedures which are subsequently used in the making of products sold not only on Czech markets, but more importantly abroad.

“A company of our type must always have several new products in the pipeline,” says Mr Grunt. He explains that the success rate of new

generic products can only be estimated with a 10–20 per cent accuracy, meaning that out of 10, eight products are usually discontinued in due course. “Time is another extremely important aspect in our type of production. Product development, production, registration and marketing usually take a relatively long time. That means the substances we prepare now will enter the market sometime in 2020 or even later,” he points out.

Investing in the future

The generic pharmaceutical ingredients sector is extremely competitive, with many companies competing with low price, low quality products. Mr Grunt stresses that this is not the company strategy. “FARMAK’s competitive advantage is high quality and this will never be compromised. Fortunately, the number of end product makers who prefer top quality, subsequent customer support and reasonable prices, is increasing,” he says.

FARMAK’s customer portfolio includes over 120 customers from more than 40 countries. Over 90 per cent of its revenue is now generated in the export markets, primarily in Europe but also the United States and in several Asian countries. “In 2016 we managed to penetrate the extremely difficult Brazilian market and also reinforced our sales efforts in Japan, Korea and Taiwan,” says Mr Grunt.

He further explains that the company is currently considering an investment in increased capacity to reflect growing sales. It is assessing various scenarios to enable it to achieve this, taking into account the simultaneous need for investment into research and development.

“Each year we would like to extend our product portfolio with at least two new, interesting pharmaceutical substances, in line with our company strategy. The second most important objective for the near future is to introduce final dosage forms (FDF) – i.e. medicinal products based on our own pharmaceutical ingredients,” Mr Grunts stresses. “These new products would not be manufactured within our current premises, but in collaboration with trusted business partners who seek such joint projects and are equipped with the required technologies, know-how and capacities to ensure successful market introduction,” he adds.

According to the managing director, this objective should be realistically achieved within the next five years. “We have already made the first steps towards this objective and received a positive response from our customers. This is a sound indicator that we are going in the right direction,” he concludes. n