Israeli drug store chain Super-Pharm Ltd. also operates in Poland and China. While business in Poland is flourishing, the company is struggling, because of regulatory barriers, to break out of its province in China. Super-Pharm now wants to sell its current operations and form a partnership with a company operating in China's main provinces.
"The international operations, which suffered from losses in the past, have become profitable and have become a very dramatic factor in the company's bottom line. In Poland, we lost $20 million in the past five years. In the past three and a half years, we succeeded in covering all the losses, and we're now very profitable. The operating profit margin of our Polish business is now 50% higher than our operating margin in Israel. Sales at our Polish branch reach $6.5 million a year, even though prices are 30% lower than in Israel," says Super-Pharm CEO Lior Reitblatt.
"In China, in contrast to Poland, the profit was from the first day, and we make a 50% return on investment every year. The problem is that we're located in a remote province, and we can't spread from it to profitable provinces. It seems that we'll have to enter into new partnerships, in which we will own 49%, and we'll sell our current holding. At the moment, we have offers that are four times what we invested."
Published by Globes [online], Israel business news - www.globes-online.com - on March 3, 2011
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