ADDRESS OF THE CEO/MB PRESIDENT OF ALKALOID AD SKOPJE

In 2016 we have marked by the 80th jubilee of Alkaloid AD Skopje. 8 decades of research, development, innovations and continual investments in our vision for healthier life of each individual. When I speak about the success of Alkaloid, I must mention the generations before us, whose selfless endeavors took us where we belong today - among the most modern pharmaceutical industries in South Eastern Europe, with nearly 1700 employees, 50.000m2 of production facilities and placements in more than 30 countries in the world.

RESULTS

Despite all objective and subjective challenges, the company managed, to generate positive financial results in its operations employing extraordinary efforts and precautions in everyday operations.

We achieved total consolidated sales of MKD 8.292.770.038, which represents a growth of 6%. Our consolidated net profit amounted to MKD 731.818.674 noting 10% growth compared to 2015.

83% of our total (consolidated) sales were in the segment of Pharmaceuticals, 10% in Cosmetics, 4% Botanicals and 3% Chemicals segment.

Out of the total consolidates sales, 40% were realized on the domestic market and 60% were placements in the foreign markets. Out of those, 35% were effectuated in the markets of Southeastern Europe, 17% in Western Europe, 6% were placed in Russia and CIS and 2% on the remaining markets. In 2016, we achieved 8% growth in our export sales.

In the course of 2016, we had 115 new employments in the company, and as at 31 December 2016, Alkaloid AD Skopje counted 1723 people. In 2016, the Chess Club Alkaloid became a European Champion. Formed in 1976, after the completion of the international chess tournament entitled “Solidarity Meeting” during the visit of Anatolij Karpov and the played simultaneous games with the employees of the company. One decade later, during the managing mandate of Trajche Mukaetov, the club subsisted its renaissance. The scale of goals was raised with implementation of the corporate “alkaloid gene” and the club represented a synonym for chess in Macedonia. The European gold from the Club Championship in Novi Sad would have been a pride for the creator of the chess club Alkaloid, Trajche Mukaetov who passed away exactly one decade ago.

STOCK EXCHANGE OPERATIONS

According to the records of the Macedonian Stock Exchange, the shares of Alkaloid in the course of 2016 were amongst the most traded and most liquid ones.

Alkaloid AD Skopje, as one of the leading companies on the Macedonian Stock Exchange, in the regular stock exchange operations participated with traded MKD 230.722.089, which is 13.57% of the total turnover recorded on the first official market of the Stock Exchange in 2016.

The share price of Alkaloid AD Skopje ranged from MKD 4.900 to MKD 5.499, with an average of MKD 5.261,47, which represents a growth of 3.82% of the average price of the share compared to 2015.

The dividend income from the shares of Alkaloid AD is 4.27%, which is significantly better investment than the bank savings. In 2016, Alkaloid AD Skopje was granted another Crystal Bell for being the most transparently quoted company at the Macedonian Stock Exchange.

NEW VENTURES

2016 was also marked with the trend of expansion of the marketing authorizations. We did around 50 projects with nearly 40 partners in more than 35 markets in the world. We obtained more than 280 marketing authorizations for pharmaceutical products and medical appliances.

Through our Department for Pharma Business Development, we have effectuated EUR 420.000 through sales of licenses of our products to renowned companies, which represent an intellectual property export. We signed a license agreement for our preparation ibuprofen suspension with “Dr. Max”, one of the biggest chain of pharmacies in Central and Eastern Europe. We initiated the first license agreements for our products in Ukraine, Spain and Azerbaijan. We also effectuated the first sales in the market of United Kingdom amounting to over EUR 1 million in the first quarter of 2017.

INVESTMENTS

In 2016, the overall investments of the Company amounted to MKD 712.283.000. I would mention a few:

  • In order to increase the production capacities in the pharmaceuticals segment, we installed another (fourth) machine for blister packaging and we ordered one more.
  • In October 2016, we ordered a capsuling machine so as to increase the capacity for the requirements of the British market.
  • An ongoing process is the execution of a second central weighing room in the segment of production of solid dosage forms.
  • The equipping of the new department for semi-solid dosage forms executed in accordance with the EU GMP standards is in process. We ordered 2 homogenizers for production of ointments and creams of 100 and 300 litters and one homogenizer for the requirements of the cosmetics segment.
  • In accordance with the new regulation for obligatory protection marks on each individual packaging, due to be implemented in February 2019, we have a forthcoming investment for complete equipping of all packaging machines with appropriate hardware and software for socalled serialization.

Based on previously implemented projects and invested efforts, in 2016 the Company was granted few internationally recognized certificates.

CORPORATE SOCIAL RESPONSIBILITY

Socially responsible activities, as one of the company’s main features and top priority in the operative agenda, continued with strong intensity in the course of 2016.

For the sixth time, the employees of the company, under the auspices of the Foundation “Trajche Mukaetov” joined together in another charity event to raise more than MKD 1.653.737 intended for the treatment of an 18-months old child of a colleague diagnosed with a rare brain disease.

Ninth year in a row, the Foundation “Trajche Mukaetov” grants scholarships to talented students of medicine and pharmacy at the state university “Sts. Cyril and Methodius”. Out of 379 recipients of scholarships (194 students of pharmacy and 185 students of medicine), 122 are active scholarship holders and 46 of these graduated students already started their careers at Alkaloid.

PROSPECTS

The emphasized geopolitical tensions in several regions in the world, the tragic influx of migrants in Europe, the terrorist acts all over the world – are some of the factors which would tailor the world economic trends. The Presidential elections in the United States and the exit of Britain from the European Union as well as the uncertain future of the eurozone, the oscillations of the value of the US dollar and the Russian ruble, the variations of the price of the crude oil are just some of the global flows which could have a direct impact on the operations of our Company. Locally, we are constantly facing pressure from the state health funds for reduction of the prices of the pharmaceutical products from the reimbursement lists.

The global uncertainties of 2017 represent a major challenge and responsibility that all management bodies and the overall personnel at the company should bear. All activities of the company will be directed to maximum diversification of the potential risks in our operations and reduction of their intensity and eventual impact. The credibility, integrity and professional approach in all ventures will remain principal guidelines in our further growth and development, all for the benefit of our stakeholders, shareholders, consumers and employees.

The new era brings new challenges. We must be more flexible, more qualified and more rapid to respond to these challenges. We must adapt and change according to the new business requirements, both as individuals and as a team. In this turbulent times, I would just like to wish you to keep the positive course and in the spirit of the company slogan “Health Above All” to confirm the perception of Alkaloid as company which stands tall, still and ready to respond to all flings and arrows of the new challenges. A company that would generate results to which all stakeholders would be proud!

Zhivko Mukaetov
CEO/MB President