Galenika: Timeline of destruction of pharmaceutical giant

If someone launched a competition three decades ago to find the best person to destroy Galenika, the regional pharmaceutical giant, we bet nobody would apply. Back then, the company had a 65% market share, and it exported 200-million-dollars worth of goods annually, mostly to the USSR.

Today, only pieces remain of this iconic company. These days Galenika barely manages to have a 10% share of the pharmaceutical market in Serbia, with the debts accumulating to over 200 million EUR.

Still, there is a slimmer of hope that Galenika could restore its old glory because two global pharmaceutical groups – EMS SA from Brazil and Amicus from Switzerland – have expressed interest in acquiring it.

While we are waiting to see how the latest developments are going to unfold, let’s go back to the company’s history.

A Serbian millionaire, Milan Panic privatized Galenika in 1991 and added ICN to its name, which was the name of his pharmaceutical empire based in the United States. Panic was a dissident who left for the US with 20 dollars in his pocket, realized the American dream, and then came back to his homeland. He acquired ¾ of Galenika at the price of 270 million dollars. He gave 50 million dollars in cash, and installed 220-million-dollar worth technology in the company. The remainder of the company was still state-owned.

Despite economic sanctions imposed on the former Yugoslavia in the 1990s, Galenika continued operating and profiting. The salaries in the company were regular and above average. Apart from being the CEO of Galenika, Panic was also the Yugoslav Prime Minister in 1992. Even his political conflicts with the then Yugoslav President, Slobodan Milosevic did not affect Galenika’s standing.

However, in 1999, the Commercial Court in Belgrade ruled that the state would now own almost 2/3 of the company, claiming that Milan Pantic failed to adhere to his part of the agreement. Soon after, the police raided the company’s premises and appointed its executives. The state then transferred its ownership to the National Health Insurance Fund (RZZO).

Then came the political upheaval on 5th October, and Dusan Mitevic was appointed the new CEO. The company started doing well again. The state regained its full ownership of the company thanks to a court decision, and the court ordered the company to pay back MIlan Panic the 50 million dollars that he had invested in it.

Although, from today’s perspective, the period after the assassination of the Prime Minister, Zoran Djindjic was extremely difficult for the Serbian economy, with tycoons ‘privatizing’ everything in their sight, that was not the case with Galenika.

Aleksandar Pravdic (an official from the Democratic Party of Serbia – DSS) came to the company’s helm, and, despite the media not being too kind to him and questioning his quality as CEO, the employees say that the Galenika entered the golden era under his management. The company started winning various awards, the balance of its bank account kept growing, and Galenika was even granted a 46.3-million-EUR loan from the Italian company, IMA in order to build a factory that would produce solid pharmaceutical products. Back then, in 2008, Galenika had close to 32 million EUR in its bank account.

Things started going downhill when, in November 2008, Nenad Ognjanovic (from the Socialist Party of Serbia  – SPS), became the CEO. Soon after, Galenika became a guarantor of a 5-million-EUR bank loan granted to another pharmaceutical company, Velefarm by AIK Bank. The drug wholesalers kept getting higher and higher discounts. All in all, Galenika became a guarantor to a total of 38-million-EUR worth of loans granted to other companies. In 2010 alone, the company costs doubled compared to the previous year, with the company’s debt reaching an astounding 130 million EUR.

Ognjanovic was fired in mid-2011, and, in May 2013, he was arrested on the account of embezzling money from Galenika. He and 12 of his associates were accused of embezzling a total of 34 million EUR.

The next CEO was Zivorad Novakovic, a Galenika’s executive, who managed to turn things around for the company. After the four-year-decline, Galenika started making money again and it boosted its production by 30%.

Thanks to his decades-long experience and good connections in the pharmaceutical industry, Novakovic succeed in securing enough raw materials for production which  production was reinstated to its full volume, and for the first time in many years, Galenika’s profit stood at 350 million dinars.

Nedeljko Pantic was the next person to become Galenika’s CEO. He was beneficial for the company, and, according to the latest data, in the first 9 months of 2016, the company managed to increase its production by 8%, with the profit of 40 million dinars.

Galenika consolidated its operations last year, following the Serbian government launching a public call for selection of a strategic partner. The company is now being sold for a symbolic one euro, with the new owner having to agree to pay Galenika’s debt towards various banks with a one-off payment of 25 million euro.

(Vecernje Novosti, 15.10.2017)–Galenika



This post is also available in: Italiano

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