Industry Trend Analysis - Antibiotice Reports Slow Sales In Q114, But Poised For Export Growth - JULY 2014

BMI View : Antibiotice reported slow growth in Q114, owing to a disappointing performance in the domestic market. However, the company plans to focus on growing its export output. Although publicly listed, the large overhang of a stake by the Romanian state will limit the company's attractiveness to microcap investors. We see the company's export growth as its most promising aspect, given Romania's competitive positioning as a manufacturing hub.

Romanian drugmaker Antibiotice Iasi reported its first quarter results, posting year-on-year sales growth of 2% to RON60.5mn (USD18.71mn), and an increase in profits by 1% to RON5.2mn (USD1.61mn). Over Q114, Antibiotice launched eight new products and 13 licence renewals for products in Romania and 22 marketing authroisations for export markets. As a result, Antibiotice management guided towards full year sales growth of 7% to RON340mn (USD105.22mn), of which exports would comprise RON95mn (USD29.40mn). The growth figures are disappointing considering the size of the company and management's focus on turning towards exports.

The company's increasing focus on exports is primarily due to the constrained environment for pharmaceuticals in Romania. We do not expect to see any meaningful increase in the national health insurer's pharmaceutical budget in 2014 given the areas of spending priority outlined by the Romanian government and the lethargic pace of the Ministry of Health in deciding to update the reimbursement list. We expect to see concrete growth in government and consumer spending to potentially resume by 2015/16, driven primarily by improving macro fundamentals within the Eurozone, led by Germany, which will filter down into the Romanian economy.

Export Growth Highlights Competitive Labour Market
Romanian pharmaceutical exports, USDmn

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