Dec 23, 2021

Interview of the CEO / President of the Management Board of Alkaloid AD Skopje for the Serbian magazine “Magazin Biznis”

We will continue to invest in people, new technologies, research, and development.

The countries in this region are our traditional export markets because they have known our products for 85 years. We also export to the European Union, Russia and CIS, North America, and some countries in the Middle East. We have also added Canada, Italy, Austria, Spain, Portugal, and Saudi Arabia to our list of new markets in the past several years.

The path from 15 to 2.500 employees

Back in 1936, when it started its operations as a morphine base extraction plant, Alkaloid was the founder of a new branch of industry with only fifteen employees. Continuous investment, commitment to growth, and sustainable development have made Alkaloid the sixth-largest pharmaceutical company in Southeast Europe today, with over 2,000 employees at its Skopje headquarters and more than 500 abroad. We currently sell in over 40 countries worldwide, with a marketing network of 20 offices in 14 countries outside of North Macedonia. Alkaloid has been involved in producing medicines, cosmetics, chemicals, and the processing of herbs for 85 years. The successful operation is primarily a result of the quality of our human resources and products and the Alkaloid corporate brand itself. It also follows the quality of our individual brands built by generations before us.

When asked about the keystones of Alkaloid's development, its CEO and President of the Management Board, Zhivko Mukaetov says: "In the past 15 years, we have invested more than €200m in new technology, complete digitalization of processes, doubling the number of offices outside Macedonia, and a production plant in Serbia. We also opened a Research and Development Institute and a Quality Control Center. It helped us increase our sales in the last 15 years from €53m to the over €205m we expect at the end of this year."

As Mukaetov recalls, 11 years ago, the Skopje-based Alkaloid opened its production plant in Serbia: “In 2010, Serbia was the first country outside Macedonia where we set production and wholesale operations. We employ 145 people in Serbia, which speaks volumes about how strategically important this market is to us. Alkaloid’s production program in Serbia includes over 160 pharmaceutical products. Our Becutan brand, which has helped raise generations throughout the region, is also there. The investment climate in Serbia is favorable, and we cover the entire Serbian market out of our Belgrade plant. In the long term, we also plan to use Serbia’s duty-free agreement with the Euro-Asian Union consisting of Russia, Kazakhstan, Belarus, etc."

What are your most important export markets, where do you plan to expand, and how much?

- More than 65% of our sales are for export, while two decades ago it was the other way around - 65% went in the domestic market.  The countries of the region are our traditional export markets because our products are well known there. For our 85th anniversary, we had an exhibition of the company’s history in the City of Skopje Museum. While preparing for it, we received Becutan soaps with a message from consumers in Bosnia: ‘They have the same quality after so much time. We’ll continue to be your loyal customers.’ The pleasure is enormous when a brand becomes an integral part of people's lives. Apart from the region, we also export to the European Union, Russia and CIS, North America, and some countries in the Middle East. We have also added Canada, Italy, Austria, Spain, Portugal, and Saudi Arabia to our list of new markets in the past couple of years. We intend to stay focused on globalizing the Alkaloid brand.

How do you see the competition in the pharmaceutical industry in the region, and what is Alkaloid’s position on the regional market?

- Alkaloid made its plan to enter the global market in the mid-90s, with the start of the biggest investment cycle in the company's history, and built a new plant for solid dosage forms and semi-synthetic cephalosporins. After lengthy negotiations with the international financial institutions, Alkaloid’s management secured a convertible EBRD and IFC loan of about €17.4m, without any state guarantee, only by applying strict corporate governance practices. But in today's age of rapid change, pharmaceutical industries must invest in new technologies, R&D, innovation, facilities, and people. Lagging behind would affect competitiveness, and the battle for markets is not easy. We are facing strong local and regional players and large generic companies. It is, therefore, necessary to follow the technological trends and regulations, at the same time investing in people and facilities.

What were the most difficult challenges while working in times of pandemic?

- We learned many important lessons from the current health crisis and accelerated the development of new skills. We encouraged creativity and innovation and built strategies demanded by the new age and markets. When the pandemic started, the disrupted supply chain appeared to be the biggest challenge. Unfortunately, a year and a half later, it is even worse. Raw material prices have surged, while delivery times have extended. For example, the delivery time for aluminum foil is now eight months, up from three months before the pandemic. The demand for certain raw materials is very high, so suppliers demand new and stricter conditions daily. Cargo containers cost almost six times more. Instead of $3,000, we now pay about $18,000 per container shipped to the US, while delivery time has doubled. But this is not happening only to the pharmaceutical industry. Facing the harsh reality is inevitable. It requires redefining processes, finding alternatives for communication with consumers, and sustainable adaptation to change.

What direction will Alkaloid take in its development? What will your development priorities be?

- While investing in business development, we will also keep investing in the community in which we live and work, making it our top priority. Alkaloid and the Trajche Mukaetov Foundation donated over €1.2m last year for various causes. About €300,000 of it went to the region, including Serbia. In the spirit of our motto – Health above all, Alkaloid will remain committed to the positive values ​​of credibility, professional integrity, humanity, and human solidarity. The year of our 85th birthday was full of challenges and uncertainty. Our imperative is to build a company of satisfied people who invest their full potential to achieve our joint success.

                                                                                                          

Changing trends as a result of the pandemic

There is a misconception that pharmaceutical companies earn more, especially during a health crisis. The growth of Alkaloid’s sales in 2020/2021 was at its five-year average, while this year’s global economic trends indicate that drug sales have decreased by four percent worldwide.

- There was a growing demand for antibiotics during the pandemic, with a complete halt in some drug categories unrelated to COVID. We had to adapt our plans to the market demands, and with all the logistics challenges we had to face, it was extremely difficult to take the proper position. The previous two years were very stressful for the whole system. But we dealt with the big challenges successfully. This crisis can serve as an exceptional lesson for all of us, said Zhivko Mukaetov.