Tamro Norway (Apokjeden)

• In January–December 2005, total pharmaceutical sales in Norwegian pharmacies were EUR 1,985 million in pharmacy retail prices . The market growth in 2005 was 2.5%.
  
  
• Apokjeden’s net sales for the accounting year in 2005/2006 amounted to EUR 700 million, up 3% from the previous 13-month financial year.

Markets and operating environment

The sales of medicines in pharmacies grew by 2.5%, which is low compared to the average growth in recent years. Factors contributing to the slow growth during 2005 were the introduction of the stepped pricing model, patent expiry for several patented brands and introduction of a scheme called “preferred treatment” for cholesterol-lowering agents. Furthermore, the sales of cox-2-inhibitors have contracted substantially.

The consumption of medicines as measured by DDD increased by 4.5% from 2004 to 2005. On average each Norwegian spent EUR 427 on pharmaceuticals in 2005.

As of 1 January 2005 a new generic reimbursement scheme, the stepped pricing model, was introduced to replace the Index Price Model. The purpose of the stepped pricing model was to further reduce the prices of generics. The model has been a success for the government, though the government signals that it wants to further reduce the prices of generics within the boundaries of the model.

Apokjeden’s retail concept Apotek 1 has the highest brand recognition in the industry. People’s trust in pharmacies is at the same level as their trust in doctors. According to Apotekbarometeret by TNS Gallup in December 2005, Apotek 1 brand awareness (not assisted) is 64%, while the corresponding figures for Vitus and Alliance Unichem are 34% and 15%, respectively.

Financial performance and operations

Apokjeden’s net sales for the accounting year in 2005/2006 amounted to EUR 700 million, up 3% from the previous 13-month financial year. Apokjeden’s operational performance improved significantly in 2005 due to improvements in all entities. During the year, Tamro expanded its leading position in retail through several pharmacy acquisitions.

Apotek 1 is the largest pharmaceutical retailer in Norway, with 219 pharmacies. In 2005 Apotek 1 further strengthened its position, with a market share of approx. 43% excluding state-owned hospital pharmacies.

Personnel

During the financial year, Apokejden’s payroll averaged 1,650 (1,527) employees, of which 88% worked in our fully owned pharmacies.

In 2005 we established a new structure for the Apotek 1 Academy. Pharmacy professionals now convene for two days of meetings and participate in both parallel and joint sessions. During the year more than 900 employees participated in this programme, which was well received.

The recruitment of pharmacists to pharmacies is still a major challenge, although the recruitment situation in Northern Norway has improved. There was strong focus on the recruitment of Swedish pharmacists in 2005.

Outlook for 2006

Through significant investments Apokjeden has gained the platform and structure required for building a sustainable long-term position as the leading actor in the Norwegian pharmaceutical market.

Apokjeden’s share of the pharmaceutical market in Norway is estimated to remain slightly above 43%. The ambition is to grow the business somewhat above the general market growth.