The state"s prescription for the pharmaceutical industry

• It is still unknown what will happen to the shareholders of the future Romanian Pharmaceutical Company, built around Antibiotice Iaşi, and whether the new company will remain listed on the stock exchange

The thousands of small shareholders of Antibiotice Iaşi, listed on the Bucharest Stock Exchange, are waiting to see what the government decides on the issue of the Romanian Pharmaceutical Company, which would be a strategic national company.

The new national company will be built around "Antibiotice" SA and will also include "Unifarm" and the Central Storage Office for Special Situations (both controlled by the Ministry of Health).

Cristian Duţescu, attorney specializing in equity markets, warns that the integration of "Antibiotice" in the new national company could lead to numerous lawsuits with the current minor shareholders of the company: "It will all depend on whether the other shareholders of Antibiotice will have the right to withdraw from the company. If they are not going to receive a fair price for their shares, then most likely lawsuits will occur".

Duţescu claims that technically, the merger between the three companies, while one of them is listed on the Stock Exchange, could happen either by having "Antibiotice" acquire the two other companies, or through the creation of a new company. If the government opts for the latter solution (which seems to be the case) Cristian Duţescu says that it is hard to anticipate whether the new company will still be listed on the stock exchange.

Tudor Ciurezu, general deputy manager of SIF Oltenia, which holds 10% of "Antibiotice", said that his company has not yet decided on whether they will keep their stake in the new company: "It will depend on what companies the new national pharmaceutical company will include".

The project, which was launched last year, also included "Sanevit" Arad, as well as the Iaşi and Bucharest vaccine manufacturing departments of the Cantacuzino Institute.

The former manager of Sanevit Arad, Mircea Roman, claims that he worked to include the syringe manufacturer in this project to help reinvigorate this industry: "I have talked to Mr. Ioan Nani, the manager of < Antibiotice >, for < Sanevit > to be part of this project together with < Antibiotice >, following the Western Model, in which syringes are sold together with the antibiotics, allowing a shared price, and keeping the output of syringe factories constant".

In turn, Ioan Nani, the head of "Antibiotice", said that he is in favor of the company he is leading becoming part of the Romanian Pharmaceutical Company, but said that a decision on this matter will not be made at the General Shareholders" Assembly: "The shareholders will meet on April 29, but the merger is not on the agenda. I do not think it will be included. I, for one, am in favor this project, but it needs to be accepted by the majority shareholder - the Ministry of Healthcare, but especially by the small shareholders, which are extremely important to us."

Ioan Nani says that he doesn"t yet know if the future company will be listed on the stock exchange or not.

Shares of "Antibiotice" (ATB) were trading at 0.6950 lei/share yesterday, up 12% since the beginning of the year.

The price of the drug maker however lagged behind the BET index (which follows the most liquid shares listed), which gained 24% since the beginning of the year.

The highest price for "Antibiotice" this year was 0.71 lei/share, almost four times less than the historical high, of 2.71 lei/share, reached on July 10, 2007, when the Bucharest Stock Exchanged was at its peak.

The company has a share capital of 45,489,729 lei, divided into shares with a face value of 0.1 lei. The last price of the stock puts the company"s market cap at 318.4 million lei, or EUR 77.65 million.

The Ministry of Healthcare controls 53.01% of "Antibiotice", (a stake worth 41.1 million Euros at the last market price), while SIF Oltenia controls 10.09%. The remaining 36.8% (worth approximately 28 million Euros) is owned by small individual and corporate investors.