Tamro Denmark (Nomeco)

• In January–December 2005, the pharmaceuticals sales through wholesalers amounted to EUR 1,112 million in PPP, surpassing the previous year’s sales by 6% at CER.
  
  
• Nomeco’s net sales for the accounting year in 2005/2006 amounted to EUR 1,231 million, up 1% from the previous 13-month financial year.

Markets and operating environment

In 2005 the aggregate market for pharmaceuticals in Denmark grew considerably more than expected at the beginning of the year. The growth rate at hospital pharmacies was substantially higher that at private pharmacies.

New rules on reimbursement for medicinal products became effective on 1 April 2005. Previously the value of the reimbursement was calculated on the basis of European average prices for pharmaceuticals.

Competition in Denmark was intense during the financial year, especially in discounts. Nomeco continued to develop initiatives that ensure long-term reduction of pharmacies’ logistics costs.

During the year Nomeco’s VMI concept (Vendor Managed Inventory) has been refined and strengthened, and resources have been allocated to continuously improve the system. The concept involves automatic replenishment of the pharmacies’ inventories, and the wholesaler manages the forecasting of the expected sales from the pharmacy.

Financial performance and operations

Nomeco’s net sales for the accounting year in 2005/2006 amounted to EUR 1,231 million, up 1% from the previous 13-month financial year. Nomeco preserved its strong position on the Danish pharmaceutical wholesale market.

Partnerships with voluntary pharmacy chains are increasingly important. This places pressure on the wholesaler to develop service concepts and solutions that support the individual chain and deliver the required sales data information, etc., concerning the branded goods market.

The Supplier Division has developed satisfactorily. The division focuses on the development of logistic and information solutions that can reduce suppliers’ distribution costs.

Personnel

During the financial year, Nomeco’s payroll averaged 614 (621) employees.

Outlook for 2006

The company’s earnings are to a great extent dependent on legislative initiatives that affect the pharmacy sector. Any measures to limit medicine consumption through increased co-payment and by influencing doctors’ prescription practices can affect earnings.

We do not foresee any substantial structural changes at the retail level in Denmark in the coming year. We assume that the growth rate of the aggregate market will be slightly lower than in 2005/2006.

At wholesale level the competition in Denmark is likely to intensify, which implies a further increase in cost-related discounts to pharmacies.