TrePharm Hi-Tech Manufacturer Assisting in Kosovo’s Transition

 

TrePharm was an amazing discovery here in Kosovo. Starting only a handful of years ago the company represents itself as major source of pride within Kosovo, or at least it soon will. Technology in Kosovo’s IT sector isn’t the only image changer presenting itself to the broader world; TrePharm is making sure of that, one pill at a time.

Mr. Prishtina, very nice seeing you today. You have come highly recommended as a success story here in Kosovo. Please offer our readers a brief on the company.

The main business in the Tre group is Tregtia, the leading construction company in Kosovo of apartments, from design to final sale. In this sector we also operate in Germany. However, TrePharm was established in 2009 and began presenting products in the market in 2011. At this point we have seventy employees with three production lines. Along with our APIs (active pharmaceutical ingredients) we have our world class quality control lab testing our final products; which include dry syrups, pills and capsule tablets.

That’s great to see you are producing rather than simply importing as a distributor; especially in a transitional country.

Indeed. Although in order to do so it was a very difficult process as the first manufacturer of this type in Kosovo. This being the case everything was new to us. Therefore, it was new to the government which had no regulatory and policy structure for such an operation. What helped was being in Europe and our aspirations for EU accession which allowed for the government to follow their regulatory framework.

So did you have any outside assistance to guide your work in the early days?

We contracted with CIPEX Inc. from California and they helped us from day one; starting from technology, staff training as well as hiring the best people. Through them it really allowed us to expedite the process and afforded us the ability to offer 80 products in the market today.

TrePharm CEO: Mergim Prishtina

How did you connect with them and are they still consulting with you today?

After the war there were companies providing medicines in Kosovo and we managed to connect with some people here that were a part of that and guided us to CIPEX. They were primarily there in the first years. As our competencies grew we began operating on our own. However, we still do speak with them when trying to identify new API sources; raw materials in this industry are difficult to locate.

You mentioned earlier a quality control lab. I’d imagine that kind of facility is in short supply in Kosovo.

You are right our lab is very important to our work. In fact, it is the only quality control lab in Kosovo and Albania and is accredited for controlled pharmaceutical products with the certificate being accepted in the EU and US.

So your standard is of such a level that there would be no problem exporting to the western markets?

 

Yes. Do to our unique position as the sole lab, we have worked with USAID in Kosovo to determine the quality of certain foods that they are using in another program. They sent the samples to the National Institute in Kosovo and to us as a control to compare the results.

 

When talking about exporting to the US and EU; how much in at this point are you exporting and to where?

Currently we produce for Kosovo and Albania. But since the beginning we separated the entire investment into two phases. First was the quality control lab and R&D lab and the second phase is literally happening right now; developing seven more production lines. Once we finish these lines we are readying ourselves to apply in the EU and then the US. Moreover, we are looking at applying in the Czech market and have a company in the Emirates which will represent TrePharm and apply to take our products to market in the Middle East and Africa.

It’s interesting to note that although we have no problem making contacts and exporting to these regions we have a very difficult time overcoming image problems in our own region. Exporting to Macedonia, Bosnia and Serbia makes for a tough story. But since we are registering our products and applying with the European Union I am confident at that point we will have the needed credibility to overcome these misperceptions that such a technologically advanced operation can come out of Kosovo.

I know there is a pharmaceutical manufacturer in Macedonia. What does the competitive landscape look like for TrePharm?

Alkaloid in Macedonia is one of our direct competitors in the region, also some other well-known brands in former Yugoslavia. But when it comes to pharmaceuticals competition occurs from players worldwide; including the US, EU and even Australia Turkey. We’ve found some space in the market as well as some gaps in the antibiotic syrups where there are few good tasting medicines, especially for children.

Back in 2009 when your family started this operation, knowing that it’s an extremely competitive industry, what was your strategy, the justifying cause for entering?

First of we one must recognize when entering this industry you cannot begin with a narrow vision of only providing for a 2 million person market. Financially it’s just not feasible but you cannot find an API supplier at such a small level. So from the very beginning we built this facility with the intention of expanding [Phase II] to facilitate a growth in exports which will be about 60%. Having said that, the remaining 40% is for the domestic market, which is very important for us as well. At this point, and from the 2011 we’ve operated at about 30% capacity; now with the development of Phase II, to be completed in 6-months, we will become 100%. Basically, the first several years of production we were perfecting ourselves for the eventuality of Phase II exports.

You’ve had a keen vision from the start and are finalizing that vision as we speak. Based on this, where do you see the company in the next 5-10 years?

If we keep working at the standard we do I am certain we will become one of the most respected companies in the Balkans. We possess the latest technology, air filtration and water purifying, and we learned from the best with American company CIPEX. Moreover, I see this path leading to us becoming the quintessential ambassador of our country. We want the stamp “Made in Kosovo” to depict quality and innovation. Due to our location in the verge of east and west, we can offer affordable medicines at a western standard.

 

As a Kosovar you are naturally in great support of your nation. However, when it comes to business, are you seeing the business environment here as conducive to business or are you maintaining you operation here out of emotion?

It’s mixed. The environment is becoming better, especially when compared to when we began. Ultimately, we are doing business here and making a profit here and certainly we see that because of that we should be doing something for our people. As a country, as a geo-strategic area, I see Kosovo as one of the best places in the Balkans to invest today. The country sees what countries like Macedonia are doing to attract investors and we need to take notice and offer our own solution; I know that will happen.

Indeed, we have done some work in Macedonia and they are very aggressive in their approach to attract FDI, so it is stiff competition.

These small countries have to act like companies. What can a Prime Minister of a 2 million person country do in terms of big politics in the world? In a country this size a Premier should act as a CEO; which means acting fast on decision and creating the framework that allows others in the country to flourish and do the best work they can. I mean there are many single companies in the world that have 10 times the amount of revenue than we do GDP.

Initially TrePharm had to be a part of policy development with the government as there was no precedent at the time. How do you find their support these days? Do they let you operate without being too intrusionary?

I am seeing moves this year in a positive direction. For example, the VAT law and the opportunity for us, as well as others, to present ideas and share challenges impeding business. In this sense they were very open; in fact, based on my suggestions regarding VAT on pharmaceutical raw materials they presented a draft the law. This is important because at the moment there is 0% VAT on the final product but a VAT on raw material; it should be the opposite. Make the issue deeper is the fact that no CEFTA member produces APIs so we have to move outside the region which adds yet another 10% in fees.

Additionally, it would be nice if the government did like the US government and made a law that all publically owned facilities requiring our sort of product used a domestic company. Considering the government is the largest purchaser of pharmaceuticals in Kosovo this would be ideal. Many times it seems even the foreign governments and their ambassadors, buy locally more than Kosovo’s government. It keeps all the money in Kosovo.

If I was a group of investors sitting in front of you here today; what would you tell them about TrePharm, about Kosovo?

Our location is superb. We have the new highway to Albania and the Macedonian highway being constructed now. The port of Durres in Albania is only 2 hours, the port in Thessaloniki is 2.5 hours and it’s a maximum of 3 hours to Belgrade. We could be a very attractive logistical center point of the Balkans like Panama for the Caribbean or Dubai for the Middle East in terms of our centrality. Finally, it’s a very safe place. A little story; we had a German colleague visit a few years ago and he was insured through a British company. Because he was in Kosovo they required that contact e made with them numerous times a day. After several days in Kosovo and seeing young children walking around, going to school, people happy, he told them to stop contacting him. He was reminded of his time in Germany at that young age and realized it was safer even here!

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