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The most successful Macedonian company Alkaloid is expected to end this year with exports totaling around €180 million, representing 70% of the company's total consolidated sales. Zhivko Mukaetov, the head of Alkaloid, anticipates a challenging yet successful year for the company. Despite numerous past challenges, the company has significantly strengthened its presence, prioritizing future export growth in many European markets.
We are diligently concentrating on numerous internal enhancements and optimizations to boost the efficiency of all processes. Through these efforts, we firmly believe we will be better equipped to tackle current challenges and navigate future ones successfully.
Over the past three years, exporters have faced significant changes and uncertainties in their operations. Could you elaborate on the major challenges and limitations that Alkaloid has encountered during this time?
Mukaetov: Indeed, the past few years have been marked by high dynamism and an extraordinary commitment to overcome a wide array of challenges. The persistent disruption of supply chains due to the pandemic has posed substantial difficulties. Predicting the procurement and securing of essential raw materials became increasingly unpredictable. Furthermore, the prices of numerous raw materials and supplies have consistently risen. Inflation has persisted in the economy for over a year, leading to delayed consumption and a notable reduction in consumers' purchasing power. Additionally, interest rates have continued to rise, further exacerbating the economic climate. These trends are not limited to domestic and regional markets but are increasingly apparent in many other markets where we promote our products.
Operating during a period of high inflation can be quite challenging. How do these price increases impact Alkaloid's operations and exports? Do you foresee a decline in demand for Alkaloid products due to high inflation and economic slowdown?
Mukaetov: Operating in such times is indeed challenging. We are actively working to transform these threats and risks into opportunities. Our industry is heavily regulated, and we cannot adjust quickly in certain segments. Therefore, we focus on internal improvements and optimizations to enhance process efficiency. We believe that this approach will better prepare us to overcome current and future challenges.
What are your expectations and estimates for production and exports for this year and the next? Can you share the signals you are receiving from your most important export markets?
Mukaetov: Despite everything, we anticipate achieving double-digit growth in key financial metrics this year. It is primarily due to a notable shortage of antibiotics and cold relief syrups from other manufacturers in most of our export markets. We have addressed these shortages by increasing the production and sales of these products within our portfolio. As for the upcoming year, we are currently planning, and the signals from our markets indicate that we can expect another challenging yet successful year.
In recent years, there have been significant geostrategic shifts affecting trade flows and supply chains. How do these shifts impact Alkaloid's operations, and to what extent is the company committed to diversification to reduce risks and dependence on specific markets or customers?
Mukaetov: Diversification has been a focal point in recent years. Consequently, we have continually expanded our product portfolio and ventured into new markets. We have also sought alternative suppliers and supply chains. The pharmaceutical industry operates on long timelines, and we are now reaping the rewards of efforts made over the past decade. Long-term success necessitates timely decisions and unwavering persistence.
Each year, we venture into several new markets. In 2023, we entered markets in Italy, Malta, Chile, Austria, Saudi Arabia, and more. We have also established a company in Bucharest this year, enhancing our presence in the Romanian market.
Which export markets hold growth potential for Alkaloid and the industry in which you operate? Have you entered any new markets in the past year, and are there plans to enter new markets next year?
Mukaetov: Our operations are rooted in traditional markets within the region. Nevertheless, we have significantly bolstered our presence in many EU markets in recent years, which we see as having the greatest growth potential and is our top priority. Each year, we venture into several new markets. In 2023, we entered markets in Italy, Malta, Chile, Austria, Saudi Arabia, and more. We have also established a company in Bucharest this year, enhancing our presence in the Romanian market. Our projections for this year include achieving a total export of around €180 million, constituting close to 70% of Alkaloid's consolidated sales.
To increase the competitiveness of Alkaloid exports and the pharmaceutical industry, what support and systemic changes do you believe the state should provide? Are there current policies or measures that you consider effective and beneficial for exporters?
Mukaetov: Export is a driving force for smaller national economies like ours. All stakeholders in our environment can significantly contribute to this essential economic goal. Rationalizing bureaucratic procedures at all government levels, making them more productive and streamlined, will create better operational conditions. It is undeniable that increasing financial support for those who invest continuously in manufacturing, research and development, and export activities yields superior results for exporters and offers long-term returns on investment.
It is undeniable that increasing financial support for those who invest continuously in manufacturing, research and development, and export activities yields superior results for exporters and offers long-term returns on investment.
In the fight with inflation, rising energy prices, and geopolitical uncertainty, where does sustainability and the green transition fit into Alkaloid's operations? How do these sustainability trends impact your company, and what changes are you implementing to align with them?
Mukaetov: Ensuring sustainable growth is fundamental for any successful company with long-term aspirations. It is an integral part of our decision-making process. Last year, we invested in photovoltaic systems to cover a certain level of our electricity needs. We plan to make further investments in this field, aiming to provide cost-effective electricity and enhance energy independence. This year, we also built a water treatment plant at the Avtokomanda site to improve wastewater treatment, aligning with our increased manufacturing capacities. We published our first ESG report this year, providing insights into this aspect of our operations, which will become a regular practice in the future.