State pharma sale fears
property asset strippers
Generic medicine producer Antibiotice Iasi is one of the few
profi table state fi rms for sale, but the privatisation has failed in
fears over murky real estate dealings, reports Ana-Maria Nitoi
State pharma company Antibiotice
Iasi failed to privatise last March
because the factory’s union felt
the contract did not offer sufficient security
for the workers’ jobs.
But this was further complicated by
the fact that none of the bidders were wellknown
international pharma companies.
The Moldavia-based company also
fears that a purchaser may be more interested
in the pharma group’s 40 square
kilometres of land for hot real estate
deals, rather than a state factory churning
Antibiotice Iasi is one of the few profitable
state-owned companies in Romania.
The company is also the only pharma
producer of generic medicine in central
and eastern Europe which continues to
be state-owned, with the Privatisation
Authority (AVAS) owning the majority
share package of 53 per cent. In 2007, Antobiotice
Iasi posted a 62.8 million Euro
turnover and a ten million Euro profit.
The factory was supposed to be sold
in a public auction last March. But the
employees of Antibiotice Iasi were unsatisfied
because AVAS did not assure the
workers that after the buy-out, they would
remain with jobs. Antibiotice union head
Vasile Stanga explains to The Diplomat
that AVAS agreed to the workers’ demand,
but did not put this on paper.
Stanga says AVAS could have agreed
to a social contract between the employees
and the new owner with AVAS as mediator,
a process used in other EU member
states. But this was not an option.
The privatisation method chosen by
AVAS also did not ensure that the factory’s
business of generic medicine production
would continue after the buy-out.
But AVAS president Teodor Atanasiu
fights back. “Our intention is to transparently
privatise the company and to ensure
equal treatment between the potential
bidders, respecting EU legislation in this
matter,” he told The Diplomat.
Nevertheless the Antibiotice union
took AVAS to court. It won and the privatisation
Before the tender, suspicions were
raised in Iasi because the authorities decided
not to issue a task book, which contains
a number of conditions any company
interested in a public acquisition has
to fulfill to take part in the auction.
Such a move made it possible for
companies with no apparent background
in pharma and registered in tax havens
such as the Cayman Islands or Cyprus to
show interest in the privatisation.
AVAS says that the method chosen for
Antibiotice Iasi was meant to prompt a fast,
transparent, competitive and efficient sale.
“The auction minimises potential
investigations by the European Commission
and maximises the price of the
shares owned by AVAS,” Atanasiu says.
Another worrying aspect of this privatisation
is that there are some real estate
interests in the purchase of the pharma
factory. Iasi is the largest city in Moldavia
with a huge cultural history and an
EU gateway to the Republic of Moldova
and the ex-Soviet space. The company is
located on 40 square kilometres, ten km
from the centre of Iasi.
A company could be created especially
to buy Antibiotice for the land, run the
pharma business into the ground slowly,
while selling off the land or developing
it for profitable shopping malls, car part
factories or logistic centres.
“It smells like a real estate business to
me,” says the CEO of A&D Pharma Dragos
Dinu. “Because a pharma producer
who has an agreement with a real estate
developer could acquire Antibiotice and
sell the land afterwards to a developer.”
The minority stake of 47 per cent in
Antibiotice Iasi is already listed on the
stock market and Dinu says the easiest
way to privatise the pharma producer
would be to list the remaining shares.
But Atanasiu says choosing to list the
company’s shares to privatise Antibiotice
Iasi would bring a smaller price because
a bidder negotiating for a majority stake
would be willing to pay more.
AVAS could not say when it would restart
the privatisation and which method
it would choose to sell the pharma producer.
“We will relaunch the privatisation
when we will have proper conditions on
the market,” Atanasiu says.
Union boss Vasile Stanga says that
AVAS is considering restarting the privatisation
this summer. But he believes
that the best choice would be to postpone
the process until next year when
the elections are over.