Argentinian generics manufacturer Grupo Roemmers – which celebrated its 100-year anniversary in 2021 – has expanded steadily across the Latin America and Caribbean region since the mid-1970s with a successful strategy predicated on customising its offering to each country and balancing local management autonomy with a strong company culture.
Roemmers has focused on entering markets by registering brands and then buying a small local company or connecting with a distributor to settle down and start growing
Eduardo Macchiavello, CEO
A Strategy that Has Paid Off
CEO Eduardo Macchiavello explains the company’s expansion strategy: “Roemmers has focused on entering markets by registering brands and then buying a small local company or connecting with a distributor to settle down and start growing. It is a long process – from making the decision to the first sale it can take four or five years and many more to become profitable – but once the barrier is broken it is worth it. We are not contract manufacturers making products inexpensively for someone else to sell, but we have our own company and brand with their own quality standards.”
This strategy has borne fruit, and Roemmers has managed to dramatically increase the value of its acquisitions. Ecuador’s Deutsch Pharma was selling USD four million worth of products per year in 2008 when Roemmers bought it, and now represents over USD 100 million in sales. Similarly, Brazilian firm Farmoquímica (FQM) was achieving USD five million of sales in 2001 and now brings in USD 400 million every year under the Roemmers umbrella. Finally, in Mexico – Roemmers’ most profitable market today – the company has grown its Siegfried acquisition from sales of USD 2.5 million per year in 1994 to a USD 400 million business with 1000 employees, two plants, and the number one market ranking in the country.
We have predominantly grown via our own capital. But about five or six years ago we had a major deal [for two Roche brands], so we needed a quick injection of capital and negotiated with the IFC in Mexico
Significant portions of this internationalisation have been financed by the World Bank Group’s International Finance Corporation (IFC), which has been a crucial partner in allowing Roemmers to leverage capital in the sometimes volatile macroeconomic environment of LatAm. Macchiavello outlines, “We have predominantly grown via our own capital, as we have acquired small assets. But about five or six years ago we had a major deal, which was the sale of two key Roche brands, so we needed a quick injection of capital and therefore negotiated with the IFC in Mexico, which gave us a large loan in Mexican pesos at a very good rate.
“The IFC has been an extraordinary capital partner and has allowed us to acquire two regional brands throughout LatAm. Later we did something similar in Colombia with Novartis and again IFC gave us a loan. In Brazil, we had the opportunity to buy an over the counter (OTC) pharmochemical company – which we did not have – and again it was the IFC who gave us the loan.”
Focusing on LatAm
We believe that establishing a local presence goes beyond being an importer, instead we invest in the countries where we are present and promote the local economy
Up to this point, Roemmers’ expansion has focused predominantly on branded generic medicines in the private market in other LatAm countries. There is a clear methodology behind this, says Macchiavello. “We are asked, why don’t we go to the United States or Europe? Or why don’t we expand into other types of products more? Our expertise is in prescription drugs in this region. We know what pharmaceuticals are needed here. That gives us momentum for growth.” He adds, “we believe that establishing a local presence goes beyond being an importer, instead we invest in the countries where we are present and promote the local economy.”
Moreover, Macchiavello is convinced that there are sufficient opportunities remaining within LatAm for Roemmers to continue its growth trajectory on the continent. He exclaims, “Roemmers is made up of many companies that together have almost 20 percent of the Argentinean pharmaceutical market, to which we must also add a distribution company and participation in drugstores. This same strategy of gradual growth and various brands in different therapeutic areas means that we still have many opportunities in LatAm. Although our presence is very strong in Mexico, Colombia, Brazil and other countries, there is still a long way to go to reach the level we have in Argentina.
“That is why we prefer to stay in LatAm and continue our strategy in the continent, as we know the market and our developments and portfolio can cope with these businesses. Going to other countries outside of the continent would be a more complicated competition and would ultimately raise our standards by increasing prices for LatAm, which would alienate our established market. In short, we are committed to Latin American leadership and growth.””
The empowerment of local management is a key element of the company’s success in a region as diverse as LatAm, and stands it apart from multinational competitors, posits Macchiavello. “We believe that you should see each country’s business as local and not just a representation of your control. Our local country leaders are independent. They can invest locally and thus we have facilities in every market that help generate and sell products. That allows us a great flexibility that most multinationals have lost. They typically have one central manufacturing plant. They have logistics and transport issues, while we have the ability to produce and distribute products through many different paths. This enabled us to respond more effectively when the COVID-19 pandemic came. In every country, we want a CEO who knows the market very well. All markets are different. The parent company offers guidance and provides opportunities. But in the end, the final decision is made locally.”
Finally, Roemmers’ leaders deliberately cultivate agility and flexibility in their operations and product mix, developing the ability to take on a new product line or even an acquisition in a couple of months, for example. Macchiavello summarises this spirit of agility thusly: “I learned this way of working from my predecessor, former CEO Alberto Roemmers. His father, the founder, used to say: “I don’t want an ocean liner. I want a tugboat.” They created a small company that could make decisions quickly. And I have continued that approach.”