TBY talks to Elshad Abdullayev, General Manager of Avromed, on the company’s evolution over the past decade and current trends in the pharmaceutical distribution and retail sector.
TBY Avromed started operations in 2001. How has the company evolved since then?
ELSHAD ABDULLAYEV Avromed has gained wide experience since it launched its operations more than a decade ago. Avromed was founded in October 2001 and within one year we became the distributor of more than 20 leading European pharmaceutical companies, such as GlaxoSmithKline (GSK), Les Laboratoires Servier, Solvay Pharmaceuticals, and Pfizer. By the end of 2003, the company enhanced its relationship with other European and American manufacturers, which allowed us to expand our product range. The company’s revenues have considerably increased year by year and, for example, we closed 2011 with a turnover of more than AZN200 million. In that sense, our total turnover in 2010 was almost AZN140 million. Avromed has been growing more than 50% every single year. That means that we are going in the right direction. Our main principle is to deliver our products in no more than two hours no matter where the location. In line with this, we have seven regional branches and our network covers all the cities in Azerbaijan and I would say 99.9% of the whole national territory, except for the Armenian-occupied Nagorno-Karabakh region. In 2012 we will be opening two more regional branches, for we stress the quality of our services. Also, the company has a fleet of around 100 vehicles and three different warehouses, with the one in Baku being around 3,000 sqm. Since 2007 Avromed has been supplying nearly 50% of the tenders from the Ministry of Health and, of course, we also work with private hospitals. Avromed has its own pharmaceutical retail chain as well, which includes 180 drugstores across Azerbaijan. We currently employ more than 700 people, and around 60 of them are sales people who only serve the retail businesses in Baku.
What evolution have you witnessed in terms of medical and pharmaceutical trends within the country?
Over the last 10 years we have seen a shift in the manufacturers that are present in the market. Before, Soviet manufacturers used to dominate the market and people did not know much about European and American manufacturers. Nowadays, the situation has changed. Azerbaijan is a very open country and we can see representative offices of the best-known manufacturers in the world, such as Pfizer, GSK, Sanofi Aventis, and Novartis. That means that consumers are also looking to buy their products. We have seen an increasing interest among consumers in quality products. Therefore, the number of CIS producers has considerably decreased year-by-year, and European and American producers, due to their quality and worldwide reputation, have seen an increase in demand for their products. This trend has been palpable over the last few years,
especially since Azerbaijan’s population has increased its purchasing power.
Who are Avromed’s main competitors?
Avromed is one of the leading distribution companies in Azerbaijan. Our estimated market share is around 20%. However, the lack of clarity makes it difficult to provide reliable data on this. As for our competitors, although there are more than 100 distributors in Azerbaijan, the main ones are Azerimed, Riyad Farm, Farm Qrup, and Pasha-K. They represent, along with Avromed, almost 70% of the market in this country.
What are the main lines Avromed represents that differentiate its product range from other distributors in the market?
Our suppliers are multinational companies such as GSK, Aventis, Balkanpharma, Novartis, Les Laboratoires Servier, Sanofi, and Janssen-Cilag. Moreover, Avromed is an exclusive distributor of Pfizer, Alcon Pharmaceuticals, Novartis, Cheminova Internacional, Catalysis, Alfa Wassermann, Abdi Ibrahim, Jugoremedija, Jadran Galenski, Promed, and Octapharma. We currently have a supplier list of more than 190 pharmaceutical companies from 42 different countries. As a result, our services and wide range of products set Avromed apart from its competitors. Our company has the largest stock-keeping units (SKUs) in Azerbaijan with more than 15,000 in our price list, whereas our competitors have around 4,000 SKUs.
What were the reasons that led to the launch of your joint venture with GSK to set up vaccination clinics?
About five years ago we started this important project with GSK. We opened several vaccination rooms in different hospitals in Azerbaijan in order to offer jabs that had not yet been provided in the country. It has been a very successful project, and now we are looking to expand vaccines in the field of newborn babies that suffer from lung diseases. We are developing a strategy with our suppliers GSK and Pfizer to import the jabs from European markets and distribute them in Azerbaijan.
Is the company looking to expand its activities on the manufacturing side?
At the moment, we are not planning to start up any manufacturing processes in Azerbaijan. To open up a manufacturing line, we would need a much bigger market than Azerbaijan. We would need to export to other markets such as Central Asia and Georgia. However, this is not in our plans for now, but perhaps in the future we could look at it with more interest.
What are the main strategic plans Avromed has for 2012?
We are planning to increase our drugstore chain and open two new regional branches in order to keep up our services both in Baku and regional Azerbaijan. Avromed will be expanding its marketing department, so we can increase our portfolio and bring more international companies to our country. Finally, one of our targets for 2012 is to further increase our cooperation and relationship with the Ministry of Health and other governmental institutions.
What is your general outlook for the pharmaceutical sector over the medium term?
The pharmaceutical market in Azerbaijan is very interesting, because at the moment we are tending to the formation of the whole market. We estimate that when medical insurance is implemented, the pharmaceutical sector can grow to twice its current size. There is big potential and I am sure we are headed in the right direction. Also, the number of CIS manufacturers is getting smaller, while their American and European counterparts are increasing their presence in Azerbaijan. That might have an impact on the market size as well. The economic status of Azerbaijan’s population is steadily growing, and therefore people are increasingly opting for better treatment according to world standards, which enables businesses in this sector to develop in the right direction.
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