Archive for September 19th, 2013


To pharma or not pharma – That is the question (and the SCM answer)

September 19, 2013

At the end of August, some time around the 20th, my Facebook friend Natalya Yemchenko let it be known that Rinat Akhmetov and his 100% owned investment vehicle SCM were leaving the Ukrainian pharmaceutical market and selling Ukrainian Pharmacy Holding.

Now Natalia would know – she is the Communications and Public Relations Director for SCM.  Her Facebook page, aside from pleasantries about family and children, often contains interesting snippets pointing to the direction in which SCM, DTEK and many other assets of Mr Akhmetov are taking.

As an example, on 15th August:  “Мы начинаем менять подходы к закупкам не только в части корпоративных подарков. Теперь все значительно серьезнее. Первая ласточка – от ДТЭК. Официальное сообщение компании в разделе ТЕНДЕРЫ. Цель – через обдуманную политику закупок стимулировать создание новых рабочих мест в тех городах, где работают наши предприятия”

In English – “We are starting to change our approach to procurement, not only in terms of corporate gifts. Now everything is much more serious. First signs – from DTEK. Official announcement of the company in the tender process. The aim – through the deliberate policy of procurement to stimulate the creation of new jobs in the cities where we operate.”

Interesting if you are one that follow corporate governance issues in Ukraine.

This exit of Mr Akhmetov from Ukrainian pharmaceuticals seemingly confirmed at the end of August with confirmation of the sale.

Since that exit he has furthered his purchases in Ukrainian mining and metals I should note.

However, according to Oleksiy Solovyov, the head of the State Service for Medicinal Products, Ukrainian pharmaceutical exports grew by an impressive 25% in 2012 compared to 2011.

Now I admit to being something of a part time “Rinat watcher” – primarily because I bank with his bank in Ukraine (which kindly made me a VIP account holder – meaning I able to jump the queue and drink tea with branch managers at any branch in the nation amongst other things it seems) .  Therefore I have an indirect interest in how well his entities do lest there be domino-like repercussions for his bank.

Somewhat unsurprisingly, it seems that where ever his interests go, money is made rather than lost.  Profits may rise and fall, but profitable they remain.  Even more unsurprisingly, his investments seem to follow areas in which government subsidies oft follow – solar energy was an example.

It is therefore somewhat surprising that SCM has left Ukrainian pharmaceuticals when 25% growth in exports is being cited by the government.

It maybe that SCM see more grants/subsidies (both domestic and EU)/money making opportunities in energy, mining and metals than within pharmaceuticals across Europe if the DCFTA is signed.  It maybe SCM believes Ukrainian pharma will be crushed by the influx of EU pharma if the DCFTA is signed.

Whatever the case, as I use Mr Akhmetov and SCM as one of a number of a weather veins pointing to what is hot or not in big Ukrainian business, momentarily this SCM move seems out of sync.

Perhaps I am missing something?

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