The co-owners of the Marathon Group, Alexander Vinokurov and Sergey Zakharov, do not doubt that the collection of pharmaceutical assets that they gather after the upgrade will turn into a powerful player capable of competing with the current industry giants. About how and when this plan should work, Vademecum in the first program interview was explained by the chairman of the board of "Marathon Group" Sergey Zakharov.
"WE LOVE COMPLEX TRANSACTIONS"
- You and your partner Alexander Vinokurov became shareholders of SIA for two years. The company was in a semi-flooded state, the market conjuncture also did not have any dealings. Why did you go to the obvious risk and start pulling out the fallen company?
- We [with Alexander Vinokurov. - Vademecum] - people from the investment world, we like to make complex, unusual transactions that add value. In this case, under the transaction in this case is understood not just a contract of sale, but the whole situation. "SIA" is a complicated transaction. Before we took it, we assessed our possibilities, checked that it would be possible to do at the first stage what it was necessary to do: establish relationships with banks and suppliers, before which the huge debt of "SIA" accumulated, and most importantly - to form a team that will be able to accept this challenge and rectify the situation. We must understand that these are the three elements that we work on all our lives: relationships with financial institutions, the formation of teams, the setting of tasks. When we realized that we would cope, we decided to "get involved in the fight".
- And what turned out to be the most difficult in this complicated transaction?
- The whole situation was not easy. And negotiations with the family [Igor Rudinsky. - Vademecum], which found itself in a difficult situation and turned to us for help - nobody could agree with us with them, although the negotiations were conducted by different people and large institutions. And a very large amount of overdue accounts receivable. But the main difficulty was that we had to make us believe in ourselves as a new team of contractors of banks and suppliers. We, people not from the profile market, needed to convince them that we are the team that will correct everything.
- Let's return to motivation. It is known that you have responded to the call of the Rudinsky family. But this could not be the only incentive. Why do you want to sink? After all, in 2015, many realized that even a healthy distribution business - the story is not super. Times of high margins are in the past.
"We have always liked the pharmaceutical market - it is steadily growing, it will always exist and at the same time less than other industries, is subject to fluctuations due to the general economic situation. Plus, it is not as consolidated as other markets: despite the presence of large players, there is an opportunity for a new player to enter. "SIA" has become one of the investment opportunities: yes, this is a low-margin business, but we saw in the first place some kind of infrastructure platform in the "SIA". It's one thing when there are two guys who are trying to do something from scratch. It's another matter when together with the company you acquire a team of specialists who understand the market, understand what sales are, what is a price war, how to deal with drugstores, what is the motivation of the supplier, why one supplier can be negotiated, it does not agree how insurance works, well, and so on. "SIA" for us has opened access to infrastructure and human capital. In addition, we received rebuilt logistics and IT, contracts with suppliers and networks. From scratch, we would have built this for a very long time.
- Two years have passed, but not all believe that "SIA" successfully passed the crisis phase, returned the position of the market grandee. How do you assess the market position of the "SIA"?
- There are things stubborn - these are figures. Today we are the fourth player on the market with a turnover of almost 60 billion rubles. How can you not take into account this? We perceive ourselves as a player on the market, and I can not say that we are deeply concerned about other people's assessments. Time will tell.
- You are surely aware of the popular theory in the industry about the imminent total redistribution of distribution: the maturing price war will sweep away not only the fourth in terms of turnover, but also the third in the table of ranks. Do you agree with this prediction?
- Yes. In all countries, similar to us, distributors as a business exist, but pharmacy chains dominate. Therefore, our market - it is difficult to definitely say in what time horizon, in five years or fifteen - will inevitably come to the same state: several very powerful drugstores and several distributors whose business will differ from the business that they are currently conducting. I think this business will be much more diversified, and one must be prepared for these changes. But who will remain, who will be able to win in this race - time will tell.
- Do you see yourself among the winners?
- We hope that it will be us.
"WE WORK GOOD WITH THE TOPIC WHO DOES NOT PAY"
- We are moving to the present day, to your relations with customers who have not yet reached Zen. When you took "SIA", the company had a huge debtor. The main "kiddies" - the business of the network "Healthy People" - occurred before you. But even with you, the bankruptcy of Chelyabinsk "Classics" happened. And you, according to our estimates, they should almost be more than all - 170 million rubles.
- The biggest risk in the distribution, or trader, or banking business is a crisis of confidence. It's like a bicycle: you have to constantly pedal, do not stop, otherwise you'll fall. As soon as there is a crisis of confidence, you stop paying - you stop turning around the goods - you start to fall. In this sense, we picked up the "CIA" on time. We work well with those who do not pay us, just there are things that can not always be and should be made public. I can say that we collected most of the overdue accounts receivable received by us together with "SIA". The story of "Classics" really happened already with our "watch". "Classic" - the brightest example of unfair behavior of the player, from which not only we suffered. People still perceive business as an opportunity to engage in, say, "schemes" that are simply non-market, unfair and illegal. Unfortunately, the situation can not be solved by simple civil-law methods.
- But "Classics" is no more. Her legal entity is a dummy. And the acquirer of the network - the so-called Samara "Implosia" - does not officially exist in the legal field. How will you get money?
"We will use all the mechanisms that the existing legislation allows." In fact, money was stolen from us - this is an excuse to appeal to law enforcement agencies, which we did.
- "Kidki" on the part of "Healthy People" and "Classics" - not only annoying episodes, but also precedents, dangerous for "SIA", which itself only comes out of the crisis. What are you doing to ensure that the former owners of these pharmacy chains and their like are not tempted to avoid financial responsibility?
- We have completely changed the scoring system in "SIA", we have done a lot of internal work.
- Which one?
- We have done a separate work on the analysis of the risk identification and acceptance system in force at SIA. Modified it: introduced a very complex system of mutually exclusive, mutually complementary criteria for different clients. For example, this is the lifetime of the client, its scale, region of presence and many more. We have revised the approach to determining overdue accounts receivable. Does the client pay a day or three, does he continue to work on other supplies? It's an electronic system, like in banks. We demonstrated this system to banks, when they showed us how we would work, it was tested by specialists. "Classic" is the only failure in this system. But you can not completely defend yourself against such situations. Banks also have bad debts.
- Let's talk about your retail. Then you started from scratch. There was Andrey Gusev with his idea, there were your friendly relations with X5 Retail. There are first results for the full - 2017 - year of work. You, obviously, will become one of the leaders in our rating of pharmacy chains. However, critics from among your competitors say that your strategy is risky, constraining, and sales figures are modest. Are you satisfied with the development of your pharmacy network?
- So there are no indicators yet. To look at the quality of retail development, it is necessary for a certain number of points to reach the target figure, to evaluate like-for-like [sales without taking into account the growth of retail outlets. - Vademecum]. It's impossible to compare the point that was opened three months ago with some ideal point. At us the first big bush of drugstores has opened in the end of 2016, and the point leaves on the plan-maximum of 12-14 months. Now the first pharmacies, we are only approaching that mark, when we can evaluate their results. Of course, now it is growing, every week it is huge, because the pharmacies, which we opened six months ago, are starting to add value. In this business, the most important thing is traffic. And it is formed by competent location. But traffic is also different. There is a traffic that is not converted into the stream of customers that you need. For example, about a decade ago pharmacies began to appear in the subway, and now they are not on any station. Because retail is an empirical thing, it is very poorly modeled in the offices. Will a person buy? Will it enter the retail space? Will it buy this or that? Often this can be verified only by experiment. So it turned out that the traffic of the subway is not converted into pharmacy sales: newspapers people buy, and medicines - no.
- Well, the Prokoptek ProApteka at the MCC is launching a pharmacy project.
- This is a very ambiguous project. No one at first wanted to take it. Tenders for the placement of pharmacies in the subway were conducted several times, someone won them, started and threw them. We also thought about participation, but we decided not to go: there traffic conversion is completely different. Retail network allows you to convert traffic to pharmacy, although the conversion may be different - 8%, 12%. Sometimes this indicator is affected by the poor work of the staff in the pharmacy, poor navigation within the store, competition or cannibalism from the side of the big store where the pharmacy is already sitting. The most powerful traffic, which in principle is, is the traffic of the food network, and there is exactly the place for the pharmacy.
- Based on the available indicators, the pace of development is in line with your expectations?
- Yes and no. I will not embellish: there are things that we can do better, but there are things that we managed to do, although we do not believe that it happened. Our pace of discovery could not be maintained by anyone and never. At the end of 2017, we opened more than two pharmacies a day, and when they started, one pharmacy a day. It's complicated. For some operational financial indicators, we are ahead of plans, by some - just approaching the target.
- Why is that?
- For example, we opened less pharmacies in a certain region than we should have, because we shifted our efforts to the North-West region. And there we overfulfilled the plan: this region is more important for us, for example, the purchasing power is higher.
"WHEN THE MARKET WILL BE OPENED"
- There is no critical dependence on the strategy of the retailers themselves, with whom you cooperate?
- No, there is dependence on an agreement with them, but not on their strategy.
- Whose experience did you analyze when considering this model?
- We analyzed first of all the relationship with the network. Pharmacy retailers to build a federal network, you need to have points throughout the country. There is a conflict of commercial interests with the grocery retailer. Each retailer understands that an additional service - shoe repair, metal repair, dry cleaning, mobile salon - complements his traffic, but the network itself will not organize such services. In most networks, there is internal prioritization and competition between sub-tenants, which is expressed most often in the difference between rental rates. For example, the network believes that it is more profitable in this place to have dry cleaning. If you want to open a pharmacy there - it's possible, but your rent will be one and a half times higher. In our case it was important to convince our partner that it was the pharmacy in comparison with other subtenants, other services here are more necessary, more complementary. We succeeded. But there is another side: the pharmacy really gives excess traffic to the store, and a large network is interested in having these pharmacies everywhere, even if it's a small shop in an incomprehensible place. And it is not always profitable for us. If there is not enough traffic, then there simply will not be any revenue, even at very high conversion rates. Therefore it is very important that the networkers with whom you negotiate are ready to seek a compromise. If you are forced to open everywhere, you just will not take off.
- And you are forced to open where you would not?
- Us - no. We decide. We have a partnership with X5. These were long, complicated negotiations, where we used the experience we acquired as a result of analyzing previous projects of our competitors on the market.
- Your partnership with X5 at first obviously did not bother the "Magneto". All the 2017th they independently opened pharmacies in the cash zones of their own stores. But now - in the transition period for the company - the pharmacy project is frozen. What would you advise the new owners of Magnit? Should I open the pharmacy further?
- Tell them that no, do not.
- You have a plan to open about 4 thousand points by a certain date. When you reach the desired indicator, are you considering selling your network?
- I do not know. In order to talk about whether we sell the network or not sell, it is necessary that there is a buyer and seller's market. This market is not yet available. In the 2000s, at the time of the economic boom, people got used to huge numbers, everyone sold and bought businesses based on prices that are hard to believe now. Now the investment appetite in our country is lower. But in general, everything is cyclical, someday the market will open. However, I see no reason to wait. We live once. Today the market is such that it is not time to play a financial investor. At least at that level of figures, which we are talking about, when we mean a business of federal scale. Therefore, we are forced - and we are happy - to develop our retail division in terms of strategic investment.
- The director of your "Mega Pharma" Andrei Gusev, as they say, is looking more closely at other formats for the development of the pharmacy project, mainly to the more traditional street pharmacy retail points. This is clearly at variance with your general development line.
- Everything can be. We look at different formats, we experiment. The market allows experiments.
- So you and the network will buy.
- Tomorrow - no. And then we'll see.
- You had another specific investment - buying a stake in Bentus Laboratories (manufacturer of antiseptic gel Sanitel). Do you want to buy more products?
- We are an investment company, investment proposals are coming to us constantly and in large numbers. We analyze them, take something into the study, do not take something. "Bentus" is not a very big asset, but the product itself is very interesting. There is technology, there are people who know how to do it, there is a brand, the company shows high growth rates year after year. For a product like Bentus, the most important thing is the shelf, the channel of advancement, and that we are able to give. Maybe there will be more assets of such a plan. We have certain deals in our work, but so far it is premature to talk about them.
"OUR DEAL IS THE SHOOTING OF CIRCUMSTANCES"
- Natsimbio, the blocking package recently received by the Marathon Group, had its five-year strategy, there were plans to obtain the status of the sole supplier for certain groups of drugs, but little of this strategy was realized. How do you review this strategy?
- We are not "Nazimbio", we will not be there during the closing of the transaction and the controlling shareholder. Therefore, most of the questions should be addressed to them, not us. As far as I heard, conversations that "SIA" will become part of "Natsimbio", were conducted during the lifetime of Igor Rudinsky. At "Natsimbio" long before our arrival one of the elements of the strategy was the creation of a strong logistics link. We have already said that it is impossible to create it from scratch. Players who can cover the whole country, just a few. Imagine that the "Natsimbio" needed a distributor, but there are not many potential participants: the competitors of "SIA" are big, well-behaved, these are expensive companies to buy them, we should not even talk about hundreds of millions of dollars, while others do not adequately understand the status and infrastructure . That's the whole logic of choosing a partner. Our deal is a combination of circumstances.
- But the "Marathon Group" at the time of the announcement of the deal existed for less than a year, how did you convince Rostek?
- With him we met at the site of "Synthesis", the "Rosteha" there historically had a large share - about 34%. With our arrival at the company, the situation changed, "Rostekh" saw it: revenue increased almost twofold, and EBITDA - several times. The basis for our relationship with Rostech was the results of Synthesis for 2016, then in May 2017 we acquired a stake in FORT and jointly restructured it.
- What then is the value of participation in the "Natsimbio" for you, if the preservation of the status of a single supplier under a big question?
- What is the status of the sole supplier and why does everyone want to receive it? Everybody thinks that the status of the only supplier is when they give you a pie and say: "Eat it alone, and everyone else - aside." It's not like that at all. The status of a single supplier involves many obligations, the fulfillment of which must be ensured, and it is a priori temporary. This is a project that is done for a specific purpose. Nobody in their right mind will undertake to invest hundreds of millions of dollars in the construction of the enterprise, when there is a very powerful competition with Western producers. Therefore, the state uses different mechanisms to ensure the creation of its own high-tech industries. This is the same as the subsidies that the state issues. This is just a form of investment incentive. We are building an absolutely transparent, normal business, for the long term, we are not going out of nowhere. Hundreds of millions of dollars are needed to localize one vaccine. This is a very long and very expensive process. Therefore, we consider the status of a single supplier not as a goal, but as one of the tools that we now use. We have a strategy to achieve specific goals at certain times in relation to each of the blocks of our pharmaceutical holding.
- How are the powers in "Natsimbio" distributed among you and Rostekh?
- When we close the deal, our roles will correspond to the shares in the capital. Each of us contributed to the creation of a joint venture, because we have common goals - expanding the product portfolio and bringing it to the market, as well as localization, import substitution, efficient logistics. Plus we have joint production assets. And the distribution of powers as such can not be. We will close the deal, form a team of managers, to whom certain tasks will be set.
- Before your appearance on the market, the main actors on the field of medicinal state order were two persons - Alexey Repik and Viktor Kharitonin. They changed and formed the culture of relations and competition, formulated the agenda of import substitution and so on. Obviously, your task is not to rotate, like the rest, orbit around one or another of them, but to become the third, but not superfluous in this get-together. Do you have any complaints about the current rules of the game on the market? Do you need any reforms?
- I would not describe the market environment. Now it's another time: the market has become so transparent that its participants are really measured by efficiency. We were not here when, as they say, the prevailing mechanisms were of a different kind. For example, now at the time of the auction there is absolutely real bargaining. The question is, will you be able to agree with the one who sells the drug in order to enter the auction, have you managed to create a generic drug by the time the patent for the original drug leaves the market, are there any production and financial resources to localize the drug to use privilege. It's just business. And we treat our colleagues in the market with great respect, many of us are connected not only with business relations.