The Competition Council (KP) of Latvia has permitted the acquisition of decisive influence over medicines manufacturer JSC Olainfarm by JSC Repharm Group parent company JSC AB City, as confirmed by KP.
At the same time, to prevent potential risks to competition and comprehensive negative consequences for the retail pharmaceutical products market, permission was provided under binding conditions that provide for the recovery of capital shares of LLC Latvijas Aptieka with AB City and a third party not associated with them.
AB City is the parent company of Repharm. Its company group’s operations are related to the production and sale of pharmaceutical products and medicines, cosmetics and dietary supplements, as well as pharmacy business, provision of healthcare services, laboratory services, sale of medical goods and equipment and other fields.
Olainfarm works in the same field. There are several companies related to Olainfarm active in Latvia. The biggest ones are Latvijas Aptieka, LLC Klīnika DiaMed, LLC Silvanols, LLC OlainMed.
KP evaluated the effect from the merge on the pharmaceutical products wholesale market, laboratory test services market, healthcare services market, dieting supplement production and wholesale, retail market, as well as cosmetics production, wholesale and retail trade market.
KP found that on the aforementioned markets AB City market share will increased between 1% and 5%, which is not enough to secure a dominant position on the market.
Therefore KP concluded that the merge will not significantly reduce competition or provide one market player or the other any dominant status on any of the aforementioned markets.
As for the medicines production market in Latvia, KP found that there is high concentration between Latvia manufacturers – merge participants, as well as JSC Grindeks and its subsidiary JSC Kalceks.
At the same time, considering that Grindeks and its subsidiary Kalceks are Latvia’s biggest manufacturers of medicines turnover-wise and foreign medicines distribution-wise in Latvia, since their turnover in Latvia reaches 95% of all available medicines in the country, KP concluded that the merge will not create any major risks for competition on the market.
KP also found that participants of the merge are not direct competitors because they do not produce medicines that are part of the same anatomical Therapeutic Chemical (ATC) Drug System Group Level 3.
KP did find a possible problem with retail trade of pharmaceutical products.
According to the institution, potential competition is already limited or non-existent in certain administrative territories, such as Riga, Daugavpils, Ogre, Tukums, Liepaja, Daugavpils and others. Already Latvia is in a situation when a single company’s pharmacies tend to be concentrated in specific populated areas. In some areas the majority or even 100% of pharmacies belong to the same market player. This applies to AB City Group companies’ network of pharmacies – JSC Sentor Farm, which are known as Mēness aptieka.
KP and participants of the merge have discussed this situation as part of consultations. On 14 February KP received information that Olainfarm plans to dispose of all of its owned capital shares in Latvijas Aptieka to a person or group of persons that represent or have ties to AB City.
After evaluating information provided by participants of the merge, KP found that the participants of the merge are committed to putting concerns about the negative effect of the merge on competition to rest.
Binding conditions state that until all capital shares and assets of Latvijas Aptieka have been disposed of, market participants will have to ensure AB City and persons associated with the company do not influence operations of Latvijas Aptieka and ensure information about prices, development plans and other sensitive commercial information is not shared between the two sides unless it is required to fulfil requirements of regulations.
In 2020 Olainfarm turnover was EUR 122.167 million, which is 11% less when compared to 2019. Profits went down 2.3 times and were EUR 9.478 million. The company’s financial account for 2021 is not available at this time.
Repharm Group includes Mēness aptieka network owner JSC Sentor farm, JSC Recipe plus medicines distributor, JSC Rīgas Farmaceitiskā fabrika, JSC Veselības centru apvienība (VCA) and LLC Centrālā laboratorija.
Repharm beneficial owners, according to Firmas.lv, are Roberts Tavjevs and Sergejs Korņijenko. In 2020 Repharm operated with turnover of EUR 314 million, which is 10.9% more when compared to 2019. Profits reached EUR 11.39 million.