JGL’s profit of HRK 77.3 million in 2017

In 2017, JGL Group stabilized and improved its operational business and set good foundations for further growth.

Thanks to a significant debt reduction and sales growth in all key markets, JGL Group realized a total revenue of HRK 931.4 million, which is a nine percent increase compared to 2016.

The decrease in profitability from operational business was influenced directly by investments in strengthening market positions of the key Aqua Maris brand in Russia, in the optimization of stocks and in the change of the business model due to a one-off restructuring cost.

"The business transaction of selling brands in Russia was key for financial restructuring and debt reduction and provided the parent company with a buffer for a strategic focus in the area of the respiratory and ophthalmologic segment, for further investments into new markets and for the development of new products. The structure of JGL Group’s sales realisation, dominated by export, confirms year after year that the chosen strategic direction of business internalization – and in certain segments its globalization –was key for long term sustainability of business activities. Despite constant challenges and changes in the global pharmaceutical market, which we are overcoming successfully, our acquired market positions are stable,” said Ivo Usmiani, President of JGL's Board of Directors.

The realised operating revenue of JGL Group is HRK 908.4 million, which represents growth of almost 16 percent compared to the same period last year. The revenue from the sale of products reached HRK 728.3 million, which is an increase of 39 percent compared to 2016. JGL Group’s profit before tax is HRK 77.3 million, which is a five percent growth compared to the previous business year.

Seeing as the newly established company Jadran LLC Moskva took over sales in the Russian market, the implementation of transfer prices changed the structure of sales revenue.

JGL d.d. continues to contribute to the result with a significant share of 49 percent, followed by Jadran LLC Moskva with a 26 percent share and by the Pablo chain of pharmacies with an 18 percent share in JGL Group’s sale. JGL d.d. recorded a three percent growth in business revenue, with an increase in domestic sales of a little over four percent, while revenues abroad rose by about 42 percent. The share of exports in the sales revenue amounts to 78 percent.

During 2017, JGL d.d. successfully launched as many as 73 products in different international markets, with 87 percent of products from its own development. In addition, 117 first applications were prepared and submitted for registration, of which 94 obtained approvals. There was a total of 36 launches in the South East Europe region, 27 of them in the CIS region and 10 launches in the B2B business segment (Italy, Poland, the Philippines, Spain, Romania, Thailand).

The parent company realised net sales in the amount of HRK 429 million, which is an increase of 24 percent compared to the previous year. The region of South East Europe shows a stable situation with a slight growth of 4 percent, sales in the CIS region increased by HRK 34 million, and the region of global markets also experienced growth, primarily because of new cooperation in the B2B segment.

A total of 15 new B2B contracts was signed during twelve months, for the markets of strategic EU, MENA and ASEAN regions. Contracts mainly cover the portfolio from three product groups – Meralys nasal sprays, Aqua Maris sea water based products, medicines for the treatment of glaucoma and OTC eye drops from the Vizol S brand. During the reporting period, sales in Italy, Spain, Romania and Poland started, based on out-licensing and contract manufacturing with our B2B partners, and new launches were realized in Poland, Portugal, Hungary, Austria, the Philippines and Thailand.

In addition to the change of the business model in Russia, with the aim of further strengthening operational business and increasing profitability, JGL d.d. entered the new business cycle, starting on 31 December 2017, with a simpler model of monistic governance. On the last day of 2017, Mislav Vučić, a manager with rich international experience in the pharmaceutical business, was appointed the Executive Director of JGL.

Seeing as financial and natural growth was recorded in the reporting period in all markets in which the Group is present with its own operations, the growth trend is expected to continue in the business year 2018.

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