Expanding your business by becoming a local
A German pharmaceutical producer used to distribute its cold treatment medicines to the Russian market through a local partner – a pharmaceutical company which controlled the sales, marketing, and liaised with local regulatory authorities.
The German producer decided to end the distributor relationship and open its own company in Russia. For the German firm, it was necessary to ensure a smooth transition to the newly established company, so as not to lose market share and guarantee that the company’s medicines stay in pharmacies during the cold season. To do this, the remaining distributor stock had to be bought back and secured in a licensed warehouse. Once completed, the company then had to distribute an uninterrupted flow of its medicines to local customers, as well as organize and finance a marketing campaign before the cold season. However the German producer could not do these things themselves, as they did not have a legal entity in Russia.
SCHNEIDER GROUP established the company’s subsidiary in Russia and opened its bank accounts. Through our outstaffing service we hired four employees who actively supported the transition, even before the subsidiary was properly established. We provided a temporary, fully-equipped office and subleased premises to serve as the registered permanent seat of the new company and organised its renovation. Our interim management service appointed a trusted General Director from day one, ensuring the new subsidiary’s activities were conducted in compliance with HQ instructions.
In parallel with establishing the subsidiary, we provided legal support for the stock relocation and ensured the continuous sale and promotion of company’s medicines. A SCHNEIDER GROUP subsidiary stepped in to buy back the remaining distributor stock using an agent holding a pharmaceutical license. During the transition period, we then instructed the agent to sell the medicines to pharmacy chains.
The implementation of a contractual scheme developed by SCHNEIDER GROUP allowed the client to optimize payments related to the stock relocation by setting-off the obligations of the former distributor towards the company against its claims arising from the transfer of stock to the agent. We supported our client during all stages of the process, including preparation of the required agreements, their negotiation with all parties involved, and the conclusion of the process.
While the German company’s new subsidiary was being established, SCHNEIDER GROUP also prepared agreements for the marketing campaign which were concluded and paid for by one of our subsidiaries.
This project had a profound impact on the business. It helped fill the gap between terminating the distributor partnership and establishing the new subsidiary in Russia. The stock remaining with the distributor was salvaged, the medicines reached the pharmacies for the cold season and the marketing campaign supported sales without any obstacles. The German producer continues to do business in Russia via the subsidiary and did not lose any market share as a result of moving away from their distributor.