November 19, 2019, 00:46 / Business

A newcomer has appeared on the list of the largest drug suppliers in Russia for the first time

The subsidiary of Pharmacy Chain 36.6 was helped by government procurement Ksenia Virchenko

Evgeny Razumny / Vedomosti

GP LLC, which belongs to Pharmacy Chain 36.6, took 11th place in the ranking of pharmaceutical distributors compiled by the analytical agency DSM Group since 2004. This is the first newcomer in the entire history of the rating - until now, companies have only left it, DSM notes in a statement.

According to him, in the nine months of 2019, GP supplies reached 29.7 billion rubles. Its market share in the direct supply of drugs, dietary supplements and cosmetics was 2.7%. The rating takes into account both commercial and government segments.

The distributor managed to achieve this result due to its recent entry into government procurement, DSM analysts believe. Within three years, GP plans to enter the top 5 largest pharmaceutical distributors in Russia, Vladimir Nesterenko, general director of the Pharmacy Chain 36.6 group of companies, told Vedomosti.

GP is the wholesale division of 36.6, one of the largest drug retailers in Russia. According to DSM, as of June 30, 2019, Pharmacy Chain 36.6 had 1,386 retail outlets. At the end of the first half of 2019, “36.6” took 4th place in the ranking of pharmacy chains with a market share of 4% (DSM estimate). In recent years, the pharmacy chain has faced declining profits and an increasing debt load; the group was forced to restructure its debts.

36.6 created GP in 2015. At first, the new company worked mainly to supply pharmacies of the 36.6 group. At the beginning of 2019, the distributor announced that it was starting to work with other pharmacies, and in July 2019 it began supplying medicines to the public sector. Due to GP supplies, 36.6 plans to increase revenue by no less than 30% compared to 2019, says Nesterenko. According to him, the company has already concluded government contracts worth more than 1.5 billion rubles.

The distributor supplies government agencies not only with medicines, but also with medical equipment, as follows from SPARK Marketing data based on data from the Unified Procurement Information System. Among the goods supplied by GP are antitumor drugs, drugs for the treatment of respiratory infections, antidepressants, ophthalmological equipment, instruments for examining internal organs, etc.

GP concluded the largest deal with the Saratov Regional Clinical Oncology Dispensary, as follows from SPARK data. Under the contract for 42 million rubles. the distributor supplied the antitumor nivolumab. The dispensary, when asked by Vedomosti about cooperation with GP, said that all information about its contracts is in the Unified Information System in the field of procurement. The representative of “36.6” did not comment on individual contracts.

According to SPARK, among GP's customers are not only dispensaries and hospitals, but also the ministries of health of the Moscow and Orenburg regions, the health department of the administration of the Vladimir region, etc. These institutions did not respond to Vedomosti's requests. Before GP, the distributors Irvin LLC (one of the top 5 suppliers for the public sector, according to its own data), Medservice LLC, Lextor LLC, Lancet JSC, Medipal-onco LLC collaborated with them. (included in the top 10 suppliers for the public sector, according to the company’s own data). All of them did not respond to Vedomosti’s requests.

The government segment is an opportunity for GP to quickly increase sales and take the first line in the ratings of the largest pharmaceutical distributors, says Sergei Shulyak, CEO of DSM Group. According to him, in monetary terms, government procurement accounts for a third of all sales on the Russian pharmaceutical market. The expert argues that it is not profitable for the company to focus on supplying pharmacy retail: it is now practically not growing due to low consumer activity and low incomes. There are no seasonal epidemics, Shulyak adds.

The retail market is historically dominated by three players with whom GP will find it almost impossible to compete with in the next five years: Protek, Katren and Grand Capital, Shulyak lists. To achieve the current turnover of Protek (165.7 billion rubles), the wholesale division of 36.6 must increase sales by several tens of percent annually. According to Shulyak, this will require a significant reduction in the price of supplied drugs, which is unlikely in conditions where the largest distributors have the best price offer from manufacturers, and smaller players cannot count on this.

General Director of FC Grand Capital Denis Remenyako hopes that 36.6’s desire to become a national pharmaceutical distributor will not harm its core pharmacy business. The net profit margin of pharmaceutical distributors is a maximum of 0.5–1%, he reminds, this is an extremely costly and low-profit business.

Protek and R-Pharm declined to comment. “Pulse”, “Pharmkomplekt”, “ Katren ” did not respond to requests from Vedomosti.