Jan 3, 2024
Interview of the CEO/MB President of Alkaloid AD Skopje, Zhivko Mukaetov, for The Economist
ALKALOID AD always aims to attract the best candidates on the job market, irrespective of the position.
ALKALOID AD always aims to attract the best candidates on the job market, irrespective of the position.
I am particularly pleased that we successfully maintained sales in all our operating markets amid such operational adversity, especially in the last three crisis-ridden years.
Alkaloid is approaching its 90th anniversary. How do you consistently maintain your company’s position at the forefront of the pharmaceutical industry, domestically and regionally?
I consider Alkaloid ingrained in my DNA. My father, Trajche Mukaetov, one of the founders of the modern Alkaloid and my teacher and mentor, dedicated 34 years of his career to the company during turbulent times. I've been a part of Alkaloid for nearly 25 years, serving as Chief Executive Officer for 18 of them.
Throughout its nine-decade history, the company has navigated numerous crises, always showing resilience and adaptability. Alkaloid attributes its success primarily to the quality of its staff, products, the Alkaloid brand, and the individual brands crafted by generations of Alkaloid employees in the past.
The company has experienced consistent growth over the past 18 years. What is the driving force behind this?
Historically, Alkaloid has sustained continuous growth for the past two decades. When I assumed leadership of the sales operations in 2005, our sales amounted to €53 million. By the end of 2023, we anticipate exceeding €265 million in sales. Achieving a five-fold growth wasn't without challenges, and this success is likely attributable to the fundamental tenets of quality, dedication, and hard work. Alkaloid aims to distinguish itself through the knowledge and development of products with added value. Currently, Alkaloid comprises over 2,800 families, with each member of the extensive Alkaloid family contributing to our success story's ongoing growth and development.
You are recognized as a prominent investor in the Western Balkans region and declared a lead investor at the Western Balkans Six Chamber Investment Forum. What does this acknowledgment signify for you?
In recognition of our investment endeavors from 2018 to 2022, totaling €104.1 million, the Western Balkans Six Chamber Investment Forum (WB6CIF) designated Alkaloid as "The biggest investor in the Western Balkans." This year, in 2023, we are poised to surpass our previous investment record with an infusion of approximately €30 million. Sustained investment and continual enhancement across all operational facets will remain top priorities in Alkaloid's business strategy.
We are currently grappling with a series of global challenges, with many companies shuttering due to significant losses. Despite these difficulties, your company has fortified its presence in numerous European markets. What are the primary problems, obstacles, limitations, and challenges facing your company?
Geopolitical developments have not been favourable to the economy, particularly this year, presenting significant challenges. The health crisis escalated into a military crisis last year and, subsequently, an energy crisis. We encountered substantial disruptions in the supply chain and shortages of essential supplies and raw materials. I am particularly pleased that we successfully maintained sales in all our operating markets amid such operational adversity, especially in the last three crisis-ridden years. We have remained steadfast partners to health systems and business associates, ensuring the uninterrupted provision of high-quality products at affordable prices, even in the face of disrupted distribution channels.
How does the surge in inflation impact your company's operations?
Inflation has cast its impact on operations across industries. On the one hand, the escalation in the cost of living compelled us to raise salaries—an adjustment we implemented multiple times in the past three years. We also grappled with a substantial upswing in the prices of pivotal raw materials, introducing unforeseen additional costs. Despite the de facto rise in expenditures, pharmaceutical products fall within a strictly price-regulated category, leading to the freezing of most prices. State institutions overseeing price regulations do not permit corrections. These unanticipated expenses have influenced the overall functioning of the company. However, in response, we adopted a more cautious approach, enhancing effectiveness and efficiency. We continually strive to optimize the company's processes as much as possible.
You consistently broaden your portfolio with new products, explore new markets, and acquire fresh clientele. How content are you with the ongoing developments?
By the close of 2023, our exports will constitute over 70% of our sales, totalling more than €180 million. Competitiveness in any foreign market necessitates investments in local personnel across all territories, a diversified product portfolio, and robust marketing efforts. With the inherent challenges of pharmaceuticals as a highly regulated category, penetrating foreign markets proves to be a demanding and gradual process. However, the global expansion of the Alkaloid brand commenced approximately two decades ago, positioning us well to conform to the legal, ethical, and professional norms that we have already embraced and that prevail in the highly developed markets of Europe, America, the Middle East, and elsewhere.
How much support does our state provide to companies in developing a successful export strategy? Are there opportunities to implement practices from other countries and make beneficial changes?
In our dynamic industry, sales are typically directly linked to investment, skills, and knowledge. Over the past two decades, our focus has centred on constructing a modern and competitive product portfolio, bolstering the global positioning of the Alkaloid brand.
Under Macedonian law on investment support, Macedonian export-oriented companies receive approximately 10% subsidies for investments, capped at a limited maximum amount per year. In contrast, pharmaceutical companies within the European Union benefit from investment subsidies equivalent to half of the total invested amount. To illustrate, in 2022, Alkaloid invested nearly €24 million, primarily in our new mega-project "Tabletno 2," with the maximum state support capped at €1 million. Despite the limitation, we appreciate this initiative, especially considering that until 2018, there was no support for Macedonian exporters. Our commitment to exporting is fueled by our knowledge, capacity, and high operational standards, allowing us to compete globally within our domain.
Supporting export-oriented companies, particularly those investing in innovation and research and development, yields manifold advantages. Companies gain by expanding and modernizing their capacities, while the state benefits from a strengthened overall economy, the creation of companies and products with added value, new employment opportunities, and more.
Which are your most exported products leading the growth?
The primary contributors to our export growth are antibiotics, followed by over-the-counter (OTC) products, cardiology preparations, preparations for the central nervous system, cosmetics, and teas.
Last year, you invested in photovoltaics to partially meet your electricity needs and a water treatment station at the Avtokomanda site, enhancing wastewater treatment. What are your plans in this area?
In 2018, we introduced the Alkaloid Energy Management System in collaboration with the United Nations Industrial Development Fund (UNIDO). Our first photovoltaic plant, with a €165,000 investment, commenced operations in 2021. In 2022, we further invested €668,000 in 12 new plants, anticipating an annual energy savings of 1,480 MWh. From 2018 to 2022, our consistent implementation of environmental projects resulted in Alkaloid saving 8,193 MWh of energy and 233,194 m3 of water and reducing greenhouse gas emissions by 41,401 tons of CO2. These commitments align with our strategy of responsible conduct towards the environment and the community. Our ESG (Environmental, Social, and Governance) strategy strongly emphasizes environmental concerns, particularly energy efficiency and the use of alternative energy sources. We also prioritize the health and safety of our employees and actively support the communities where we operate.
Responsible environmental and community engagement is a long-term commitment deeply ingrained in the daily lives of all Alkaloid Group employees across the countries where we operate. Looking ahead, the ESG segment will expand and intensify, involving all stakeholders within Alkaloid, with a singular goal of contributing to a better, healthier, and more sustainable world.
Alkaloid has solidified its reputation as a sought-after business partner, particularly in foreign markets. What criteria must a company meet to become your collaborator or partner?
Our domestic suppliers' roster includes approximately 1,200 small and medium enterprises, and we have established partnerships with over 1,500 collaborators in our country and the region. Across all our dealings, we consistently prioritize high quality, honesty, reliability, strong business ethics, professional integrity, and credibility. These values are fundamental in our collaborations with every company or individual.
Human resources play a pivotal role in the success of the company. What is your strategy for career advancement at Alkaloid?
At "Alkaloid AD", our commitment is to attract the best candidates on the job market, irrespective of the position. Quality education and relevant skills are crucial in this process, particularly for skilled staff. Maintaining a high level of organizational culture, a results-oriented focus and ethical values is a significant challenge, especially in an environment filled with numerous unpredictable aspects. Annually, Alkaloid allocates substantial resources to various employee benefits, including financial compensations, internal and external training, ongoing education, additional health insurance, and support for children. The company provides ample opportunities for professional career development, ensuring that every employee has equal access to this potential.
The "Trajche Mukaetov" foundation, named after your father, awards scholarships to numerous medical and pharmacy students. Could you elaborate on your collaboration with scholarship recipients and the number of those who have seized the opportunity to work at Alkaloid?
In 2007, Alkaloid established the "Trajche Mukaetov" Foundation to contribute to the quality of education and foster competent professionals in the health and pharmacy sectors. The foundation has granted scholarships to 659 pharmacy and medical students at the state university, representing an investment of approximately 130 million denars in scholarships and one-time cash awards for outstanding students. One-hundred-and-one scholarship recipients have embarked on their professional journeys at Alkaloid.
Can we anticipate entry into new markets and new investments?
In 2023, global challenges were pervasive, marked by fluctuating raw material prices, a regional decline in industrial production, rising unemployment, and growing inflation. These issues dominated headlines in the economic sections of the media. Over the past several years, our country has weathered considerable turbulences. Excessive politicization at every level of society hindered the creation of sufficient space for substantial economic development. Amidst prevailing uncertainties within the country and in other markets in the region, companies grappled with various risks, diverting valuable time and resources to overcome increasingly pronounced administrative barriers. Through adept market flow management and high-level operational prowess, Alkaloid successfully safeguarded its sales, preserving the well-being of each employee and shareholder. Our commitment remains unwavering: to distinguish ourselves through developing knowledge and value-added products. Looking ahead, we are resolute in staying this course, further globalizing the Alkaloid brand with dignity and dedication. We are steadfast in practicing high ethical standards, credibility, and a professional approach in all our operations, ensuring Alkaloid's continued success and integrity.