Sinclair IS to consolidate distribution in Eastern Europe
This article was originally published in Scrip
The specialty firm Sinclair IS Pharma is consolidating its distribution agreements in Eastern Europe as part of a wider strategy to "reduce business complexity", it said. During the financial year ending 30 June, the number of individual distribution agreements in Eastern Europe was reduced from 45 to 16.
"We are not reducing our focus on Eastern Europe," CFO Alan Olby told Scrip. "Eastern Europe is quite an attractive market, where dermatology products sell well." Globally, Sinclair IS had in excess of 100 distribution deals, "many of which were single product, single territory deals, and were not very successful", he explained. "The partner was not incentivised to sell the product effectively."
Sinclair IS is now looking for more multi-product, multi-territory deals, such as the ones it signed with Invida over the past year (scripintelligence.com, 21 March 2011 and 7 December 2010). "The Invida relationship – 4 products in 12 countries – is a blueprint for what we want all our future partnerships to look like," said Mr Olby.
Sinclair IS is withdrawing from deals with "underperforming distributors" in Eastern Europe "when we can", said Mr Olby. The company is talking to several companies in the region to sign the broader arrangements it now favours. Discussions were close to completion with a regional player earlier this year but "it got bought at the wrong time", revealed Mr Olby. However, he fully expects to partner with a new Eastern European distributor within the current financial year.
finances
Revenues for the full year, which include a first time contribution from IS Pharma which merged with Sinclair in May this year (scripintelligence.com, 7 April 2011), are expected to be ahead of expectations at £32.7 million following a strong performance by the Sinclair business in the fourth quarter. The company is still expected to show a loss, as anticipated, reflecting "continued investment in the business to drive revenue growth".
Revenue growth for the full year is expected to be 18% on a reported basis and 10% on a like-for-like basis and compares to 9% like-for-like growth in the first half. "This like-for-like revenue performance has been achieved by focusing on products that have the potential to grow faster than their markets, by extending the sales reach through additional co-marketing arrangements and by taking products into new markets internationally," said the company in a statement.
It continued: "The second half improvement in revenues occurred despite the difficult political environment in North Africa which has seen product orders delayed across that region. Furthermore, as previously advised, revenues and like-for-like growth rates have been further impacted by the deliberate termination of non-strategic distributor contracts in order to reduce business complexity." In addition to the terminations in Eastern Europe: "in India the termination of the Wockhardt agreement also reduced sales prior to Invida's re-launch of the products in the coming months" (scripintelligence.com, 24 March 2011).