In 1996 Jiří Žák, chairman & current CEO of FARMAK, borrowed half a billion Czech crowns to take over a state-owned producer of vitamins for which he had started working almost 30 years previously.
My goal is to continue reinvesting our profits to keep growing and leave behind a thriving, debt-free and sound company for the next generation
“FARMAK is rooted in the history of the Czech Republic,” introduces Žák. “Our manufacturing site was originally built in 1934, and in the 1950s, the site was then repurposed as a state-owned manufacturer of vitamins and generic drugs called FARMAKON. However, it was clear that we could not remain competitive in the global market solely in the production of vitamins C and B2 as our volumes were too small compared to our competitors,” he adds.
Žák made the strategic decision to transform the site he had bought into a flourishing private Czech company focused on the research, development, and production of active pharmaceutical ingredients (APIs), intermediates, and specialized chemicals.
Recently celebrating 30 years since the Velvet Revolution and the end of communist rule, the Czech Republic has become a regional manufacturing hub, but is not without problems. “Locally, personnel costs increase by ten percent every year while the productivity of labour stays the same. Moreover, the cost of raw materials and energy are increasing as well. As a result, we are under pressure to develop new products to generate better income which means investing more in research,” comments Žák.
With decades of innovating to stay alive behind it, Žák swiftly added “contract manufacturer” to FARMAK’s capabilities. “If a company comes to us with a process to produce a certain product on a contract manufacturing basis, the situation is easier, although the volume must be reasonable. Every week, we receive at least one request for contract manufacturing, and every year we introduce at least one new product, mainly final APIs, to our contract manufacturing portfolio.”
However, remaining true to FARMAK’s roots, Žák declares that, “most of our activity is in developing our own product portfolio before we know who the clients will be, which of course means higher risk. The advantage is having our own labs and we invest as much as we can in R&D, which equals about CZK 30 million (EUR 1.2 million) per year.”
Business etiquette has changed dramatically during Žák’s time running his own company. “Being a reliable partner also means doing business honestly and transparently. When I was younger, a simple handshake was enough to seal a deal, and promises were kept. Nowadays, you need to sign ten pages of supply agreements, but it does not guarantee the promises will be honoured. I try to instil this culture of honesty and trust in my teams. Our word is our bond, and the customer is king,” he quips.
As for Žák’s strategy, he explains that this is very simple. “I want to position FARMAK as a reliable partner supplying products that meet or exceed customers’ requirements. Beyond simply fulfilling requirements, the key is also predicting their evolution, an area where we are very strong. My goal is to continue reinvesting our profits to keep growing and leave behind a thriving, debt-free and sound company for the next generation.”