You're reading: Ukraine’s Biofarma opens new $40 million drug-making center

BILA TSERKVA, Ukraine – Biofarma, a leading pharmaceuticals company, opened a $40 million plant on June 16 on five hectares of land located 70 kilometers south of Kyiv.


A maker of
immunological and other pharmaceuticals, Biofarma built the production center from the
ground up in 2.5 years, company chairman Oleksandr Makovsky said.

The project stems
from an infusion of cash that the Kyiv-based company received in exchange for
stakes in October 2012 from Holland’s development bank FMO and Ukraine-based
private equity fund manager Horizon Capital.

Ukraine’s
Finance Minister Natalie Jaresko is a co-founder of Horizon Capital.

The factory
opening brought together Ukrainian and foreign businessmen and diplomats,
including Health Minister Alexander Kvitashvili, Roman Waschuk, the Canadian ambassador
to Ukraine, and envoys from the U.S. and Italian embassies.

The new center includes a pharmaceutical factory equipped with automatic manufacturing lines,
a drug quality control laboratory and a warehouse. It will produce
plasma-derived drugs for those severely injured or burned, people fighting
cancer and pregnant women.

Championing
the factory’s opening, Horizon CEO Lenna Koszarny said that investors should
explore Ukraine, because it is “the most cost-competitive manufacturing
platform in Europe.”

“At least
93 percent of the country is open for business and you have all the
opportunities (in Ukraine),” Koszarny told the Kyiv Post. “There are no tanks
at Kyiv airport grinding you and nothing is in flames. Besides, with the free
trade agreement that has been signed (with the European Union), you now have a
real opportunity for manufacturing along the EU border…then why do
manufacturing in China?”

Koszarny
stated that Biofarma is not about “potential” foreign direct investment, but
about invested capital into Ukraine.” The investment into the plant has created
more than 250 jobs so far in Bila Tserkva, home to 203,300 citizens. The
average salary at Biofarma is about Hr 6,500 ($300).

Idsert Boersma of Holland’s FMO said that were
initially critical about investing in Ukraine.

“When my
wife found out we’re going to invest in the company that will produce drugs in
Ukraine she thought that I’m mad,”
Boersma said at the plant opening, adding
that the bank remains “optimistic” about Ukraine.

Investors
say an additional $30 million investment is slated for the construction of
Biofarma’s plasma fractionation plant. It will be one of the biggest in Eastern
Europe and will produce such medicines as immunoglobulin, albumin and Factor
VIII.

Not all
investors share the positive attitude, as the country’s economy is depressed
and the pace of reforms are not fast enough to ensure that Ukraine is going
through the changes and reining in graft.

Koszarny,
however, said that the nation – and investors – should give the Ukrainian
government a chance. “It’s truly one of the most reform-oriented governments
and (they) are not to blame for the kleptocracy of (former President Viktor)
Yanukovych regime,” Koszarny added.

Biofarma remains
focused on the domestic market, but it also plans to start exporting drugs to more
than 10 countries.

On May 25,
the government approved a Health Ministry proposal to allow Biofarma to export
donor blood components and products manufactured from blood in 2015.

Earlier the
company had announced plans to stop production of drugs due to its inability to
obtain government approval to export finished blood products under previously
signed contracts.

According
to Makovsky, the company plans to supply blood products worth a total of $7
million to Mongolia, Vietnam, Azerbaijan, Kazakhstan, and Belarus.

However,
some Ukrainian activists voice concern over the export of the country’s blood
products. Oleksandra Ustinova of the Anti-Corruption Action Center, said
Ukrainians critically need blood products especially in times of war. According
to the Ukrainian Red Cross Society, approximately 80 percent of deaths on the
battlefield occur from blood loss.

Ustinova,
who also worked for Patients of Ukraine, a non-government organization that
created a public platform for dialogue between patient organizations, the
pharmaceutical companies and the government to improve access to quality
medicines, said she hopes that the company will primarily pay attention to
domestic market and won’t use blood products for its own benefits.

Makovsky of
Biofarma said that the company has assured government that it would immediately
stop the export of blood in case there is a shortage of these products at home.

“Moreover,
the company is ready to double production to ensure the country’s needs,”
Makovsky said.

Kyiv Post staff writer Olena Goncharova can be
reached at
[email protected].