Japan’s Mitsui buys 10% of the largest supplier of medicines on public procurement

Japanese Corporation Mitsui & Co. signed an agreement to acquire 10% stake in Russian pharmaceutical company “R-Pharm”. This is stated in the joint message of the companies. The signing of the agreement was timed to the visit to Moscow Prime Minister of Japan Shinzo Abe. The interest of the Japanese to Russian asset first became known in October last year.

The amount of the transaction amounted to $200 million, it will be closed in September 2017, said the representative of “R-Pharm”. In addition, the Japanese company may receive an option to increase its stake up to 20% according to first 10% stake, reports TASS the words of the sole owner “R-Pharm” Alexey Repik.

“R-Pharm” is both Russian and international assets. By September they will be separated, as the Japanese Corporation claims exclusively on business in Russia and business in the CIS countries. International assets — in Turkey, USA, UAE, India and Germany — in the transaction will not be considered and will remain the Repik.

Japanese people in Russia

Mitsui & Co. is a diversified Corporation which operates in the engineering, power, food, chemical and textile industry. In the medical market at Mitsui & Co. already have a share in the Indian pharmaceutical manufacturer Claris Otsuka, the Malaysian network of clinics IHH Healthcare Berhad pharmaceutical manufacturer and Japanese MicroBiopharm.

“R-Pharm” — not the first investment of Mitsui & Co. in Russian business. So, in June 2016, it became known that the company invested $1.3 million in a Russian startup grocery delivery with recipes “Shefmarket”. In September 2016 the holding company RusHydro, Mitsui signed a Memorandum of understanding that secures the interest of the Japanese side, the acquisition of Treasury shares of RusHydro and plans of the parties for participation in joint projects. In December 2016, the company also signed a Memorandum of understanding with the agricultural holding Rusagro. Thus “the parties outlined their common intention to consider opportunities for investment,” reported the company. Total Mitsui & Co. invested in the Russian economy more than $3 billion, the report said “R-Pharm”.

Pharmacydelivery resource

He Repik in an interview told that he prefers the Japanese market for expansion. “There we are conducting early research, primarily associated with cardiovascular diseases and Oncology. We have there a partnership project, a large grant has been awarded to us for the University city of Nagoya, said the businessman. The market is complex, but little by little we will be there to integrate the function of business development to enter the market, which is among the three largest in the world.”

Using the “resources and ties”, Mitsui & Co. help “R-Pharm” to license new drugs developed by Japanese, European and American manufacturers, the report said. In addition, the Japanese Corporation will provide “R-Pharm” support for the development of technologies for the production of medicines.

At Mitsui & Co. still no farmaktivy in Russia, but the conglomerate have been interested in this market, says General Director of “IMS Health Russia” Nikolay Demidov. According to him, Mitsui has chosen for investments, working on public procurement is the most profitable segment of the pharmaceutical market in Russia. Profitability in the public sector, on average, can be 20-30% higher than in the commercial, due to the lack of promotion costs and scope of supply. “R-Pharm” is not only the largest player, but has a strong administrative resource, says Demidov.

Alexey Repik has established the “R-Pharm” as a distributor in 2001, when he was 22 years old, the initial capital amounted to $40 thousand a year “R-farm” was a network of regional branches, and five years later the company became one of the largest players in the market of public procurement of medicines. Own production from “R-farm” appeared in 2009, now the company has three plants in Russia and one in Germany, two are under construction in Azerbaijan and Turkey. In 2011, “R-Pharm” created in USA R-Pharm Overseas, which is engaged in the development of the company abroad — in Japan, China, Europe and the United States. In 2015, the company’s revenue amounted to 62 billion rubles., net profit — 8,6 billion rubles.

Thanks to “R-Pharm” Alexey Repik takes 13-th place in the ranking of Forbes “Kings order”. The total amount of gospodryadov made, by estimates of the edition, about 45.6 billion RUB in 2016. In 2016, the “R-Pharm” took almost 9% of the market of public procurement of medicines, according to the Agency Alpha Research & Marketing. Just for public procurement and the commercial market, “R-Pharm” in 2016, put drugs in the amount of RUB 43 billion, and in 2017 — already at 12.3 billion rubles, follows from the data “SPARK-Interfax”.

He Repik in an interview with Forbes, answering a question about the availability of administrative resources to promote the company, said that “in the classical sense”. “We never had officials, informal leaders. The administrative resources of the business are always needed. If government and business will live on different planets and to listen to each other, the economy will not work, — explained the businessman. — The administrative resource should not be in companies and in business in General.”