Interview of Mr. Ognyan Donev, CEO of Sopharma AD at The Week Radio Show on Darik Radio, October 20th, 2018
Sopharma turns 85. You are claiming that this is the oldest functioning Bulgarian company today and you say it dates back to 1933.
No, that’s not exactly what I’m saying and maybe there are some older companies but amongst those in our line of business we are definitely the oldest, yes.
This is an organization which started as a Bulgarian pharmacy corporation, i.e., a type of cooperative of pharmacies.
A cooperative of Bulgarian pharmacists who decided that in addition to imports, which had dominated the sector, they want to start their own production on the territory of the country.
And it was established to compete with the Germans, the Swiss.
“Competition” is a bit far fetched but it gave Bulgarians access, as we are doing now, to cheaper medicines.
Then came nationalization in 1953.
Nationalization and …
“Galenus” becomes a chemical and pharmaceutical plant.
Ognian Donev: That’s right. Then CFC Sofia and after that – “Sopharma”.
2000 was the privatization year and today it is still “Sopharma” as a non-offshore enterprise. It remains on the Bulgarian stock exchange.
Even now we are the biggest company according to the market capitalization of the Bulgarian stock exchange.
When did Analgin® appear? This still is the most popular medicine and I read some statistics on sold packs and turnover volumes.
Considering sold packs it is the OTC number one i.e., these are products sold without a prescription and people just go to the pharmacy and buy them freely. The jargon is “OTC products”. Otherwise, the Bulgarian “original” industry – and I put this in quotation marks – dates from the 60’s – 80’s with the patriarchs of Bulgarian pharmacy, the discoverers or those who created some original Bulgarian medicines mainly plant based. Bulgarian science in the field of pharmacy was directed mainly at the development of herbal medicines: a tradition that we are now continuing and hope to preserve in our production facility in Kazanlak.
Is this the most exported part of Bulgarian medicines?
Yes, the bulk of the Bulgarian medicines, or “Sopharma” medicines, which are exported to 44 markets are mainly plant-based.
You are talking about what you mentioned in your speech in connection with the 85th anniversary of this site and the 20% growth in export markets. Are these new markets or do you mean that on this basis you are going to be looking for more?
You’re getting a bit out of the context, but maybe you mean that there is a 25-fold growth in sales which was, indeed, mentioned in our advertisement too. And that’s because during 2017 we were able to cross the threshold of 1 billion sales.
Which is the biggest market for Bulgarian medicines, Sopharma’s in particular?
The biggest market for Bulgarian medicines is Russia, the Russian Federation. The second place is held by the Ukraine. It all depends on the size of the population of the countries concerned and the potential of their markets.
And in the EU, given the opened market?
Poland, the three Baltic states, the Czech Republic and here on the Balkans we also sell quite well. In far-off Vietnam we keep the old traditions and we still have colleagues there who understand our language as they have graduated here, in Bulgaria.
How many employees do you have? The Wikipedia says 1860, without the subsidiaries, but if we are to include them too?
Ognian Donev: Well, now after the two successive mergers (with “Medica”, and “Unipharma”), the people from the mother company it will be about 2300 people but considering the subsidiaries. It should be about 8000 I guess.
Got any plans for other facilities abroad along with those in Ukraine?
Everything is a matter of capacity and an economic analysis of whether the whole thing makes sense or not.
And what about America. Do you think you can set up a plant there for producing Tabex® or whatever name they might give it?
No, even if we register Tabex®, of which I am very hopeful, I doubt whether we’ll be producing it in the States. The idea is to manufacture it here in Bulgaria because this requires the availability of plantations, facilities and equipment which we have or which we’ll have to set up in the future.
Yes, however, the big ones in the economy are those who manage to manufacture products which are their own but are made abroad. Bulgarians make the yogurt, which is always among the top three advertisements in Japan but it’s the Japanese themselves who actually produce it. We only tell them how to do it. Why is it that we, Bulgarians, can’t do that?
I cannot analyze all the Bulgarian trademarks but as far as Tabex® is concerned it’s going to be produced in Bulgaria …
No, the idea is to make factories around the world for your own products. For example, to produce Analgin® in many countries,
Well that doesn’t make much sense as, for example, paracetamol is more preferred in the USA than metamizole but this can become a much longer discussion. In some countries Analgin® is a protected trademark. According to the Russian pharmacopoeia, Analgin® is /…./
Okay, probably Analgin® wasn’t the best example. But the question is about the products. Why is it that Bulgaria is unable to distribute a product in the whole world?
One such product – and I hope this will happen – will be our Tabex®.
So, what I am asking you, in effect, is are you going to set up a plant for manufacturing Tabex®? This is the product used for quitting smoking.
Setting up a new plant makes no sense as here, in Bulgaria we have a facility which can supply the whole world with the product. And, of course, this is an economic issue: a production process in the States can’t be as effective as in Bulgaria and while we are talking about all this in the studio 1 million saplings are being planted. This is a big job and it has to be big because the necessary raw material is extracted from the acacia tree – the yellow blossoms of the acacia. The plantations are here in Bulgaria and I also believe that we are doing something ecologically beneficial by planting 1 million saplings; I don’t know whether we can even imagine what it takes to plant 1 million trees.
And in which part of Bulgaria is this?
Just to the north of Chirpan.
How do you see the future for companies like Sopharma? Is it going to be generic or innovative drugs?
Unfortunately, when talking about Sopharma I have to immediately say that generic medicines are what ….
I have to be cautious about my information sources again but of a portfolio of 210 products, of which 15 are original and 12 of these plants based…
This is true, yes. They were original when created and you know only too well that even in socialist times those that had patent protection had to abide by world practices so that 20 years later the patent is annulled, and the drugs become accessible to all manufacturers. The point here is that medicines are produced for the good of humanity and so there are no “eternal” patents.
Does, making an original medicine really require heavy investments or…
It depends. If we had 150 years of experience, rather than 85, we’d have sufficient financial resources to be able to deal with this. But as we only started in the year 2000 …
Is it a question of money or of science, for example…Do you have the respective universities preparing the people who can then develop these drugs and so on?
Well, if you look at where they get born – though fewer new molecules get born – it looks like a global trend although they don’t get born in the big multinational companies but rather in smaller establishments that specialize in this sphere. The moment you hear that some multinational company has bought a small firm for 10 million, for example, you must know that in effect it has purchased a new molecule.
An what about the personnel in general? Do you have the same problem as elsewhere, the lack of cadres I mean?
Both yes and no. Required cadres can be found readily and at this point in time we do not feel the pressure so much. The mid-aged layer of our personnel, however, is already approaching the retirement age. Actually, the Bulgarian industry is being supported by the reluctance of the average Bulgarian to retire and as I have always said, the Bulgarian pensioner is nothing like his or her American counterparts who head off to Florida to spend their time under sunnier skies and have fun. On the contrary! The Bulgarian retiree will grab any available opportunity to get some additional income an work long after retirement age only to improve his or her financial status. Put in simpler terms: pensions are insufficient even for people’s basic survival.
What is to be done then …
Pension levels are not rising and I understand the policy of the state: it is trying to collect more for the National insurance agency in order to decrease the deficit which is also related to the demographic crisis.
From what you are saying, and putting it jokingly, it seems you’re not interested in pension rises as that would mean that the last qualified employees who know exactly what happens in this industry are going to try to retire en masse.
Well, if you want to describe me as a person who has no feelings for the fate of people this would be exactly so.
No. What I am saying is that the accent should be placed on the younger generations. What do you think should be done there? Are the universities the problem and the fact that they can no longer offer high educational standards?
That’s where the prosperous Bulgarian companies place the emphasis: ultimately, people should get the finishing touch to their training and education at our enterprises. It is true that the educational system cannot prepare ready cares although the situation was the same in my day too. I remember graduating college and when I started my so-called “long apprenticeship” it turned out that it was as if I hadn’t learned anything: practice had nothing to do with theory. Some time for adaptation is needed. The problem, however, is the lack of any basic education whatsoever. Someone said that very often the current educational system seems to produce functional illiterates and they can’t be helped – what’s done is done. But people with good fundamental knowledge start mastering their skills in a matter of only a few months.
And what about those who study abroad? Do they come back and are they good for the job?
We have a number of such cases and we are in a permanent dialogue with people who have graduated abroad.
What would their motivation be then? Most probably you’re not in the position to offer them greater pay?
The quality of the workplace, the relatively secure life they can have plus the fact that all of their relatives, friends, acquaintances, etc., live here… It’s a combination of all of this. And instead of wandering around the world and in spite of getting better pay they prefer to remain among us.
Come to think of it, what keeps you in Bulgaria? You went through quite some turbulence. Тried yourself at various business – the media for one – which caused you considerable troubles?
This media thing has nothing to do with pharmacy and, of course, it is a matter of the civil engagement I have undertaken to have free media in this country. Had there been a free media, whether I am here or not, I wouldn’t have had to put so much effort in this direction. But considering the media market – and you should know that better than me – we are all aware of its current condition. Let’s not go into the details of where, when, how…
Source: Darik Radio and Sopharma AD