By: Dylan Sikes - AllPennyStocks.com News

Friday, July 5, 2013

In recent years, Russia has been looking to build its pharmaceutical markets after years of being viewed as lagging other developed nations. President Vladimir Putin has been supportive of developing the market and stated in 2011 that the country should be manufacturing at least 50 percent of its medical equipment requirements domestically by the end of the decade. The market has been growing consistently, expanding more than 17 percent to $15.3 billion in 2009 with Frost & Sullivan forecasting double-digit growth to $37.2 billion in 2016. Russia-based Rafarma Pharmaceuticals (Pink Sheets:RAFA) is a junior finding itself in the thick of Russian pharmaceutical initiatives. Rafarma is a manufacturer of generic antibiotics and specialty drugs. It also has its own portfolio of products that have been approved by the Ministry of Health of the Russian Federation.

The company has completed and is now operating from a massive 270,000-square-foot, state-of-the-art production facility in Terbuny, Russia, located about 300 kilometers (186 miles) south of Moscow. The Lipetsk region of Russia, the Ministry of Health and the Ministry of Industry and Trade supported the development of the complex, dubbing Rafarma as one of the leading and most prospective projects in the Russian pharmaceutical and medical industry.

In January, the company was named one of the four national strategic Pharmaceutical Suppliers to the Russian Federation. The designation means that Rafarma will receive guaranteed government contracts that will push its new manufacturing facility to full capacity.

Last month, Rafarma began production of the antibiotic Ceftriaxone for the treatment of inflammatory infections of abdominal cavity organs. The company said that the Russian market for Ceftriaxone is in excess of $51 million per year. Rafarma believes it will capture up to 50 percent of the market and has signed long-term national and region contracts to immediately facilitate market penetration.

On Friday, Rafarma announced that it entered into a production agreement to manufacture Para-Aminosalicylic Acid, or PAS, to be marketed and distributed by OOO "Advance Trading," one of the leading distributors of PAS in Russia. According to Russian pharmaceutical analyst firm DSM Group, the PAS market in Russian Federation was more than $8.2 Billion in 2011. Advance Trading is currently responsible for about 20 percent of sales of PAS in Russia, giving Rafarma an opportunity to establish itself as a bone fide production leader in the Russian market.

"This new contract is yet another expansion of Rafarma's production capability, opening the door for more revenue," said Dave Anderson, chief executive at Rafarma.

Rafarma has said in a corporate presentation that it has a goal of reaching sales of $317 million by 2015 with profits of $73.4 million and EBITDA of $216.7 million. Sure, ambitious targets are a commonality in small and micro-cap companies, but Rafarma’s goals are underscored by a series of growing developments that lend to the idea of the target not just being a dream. At least from today’s view, the market capitalization of only $30.1 million seems to be on the light side and should keep the company on radar for the agreements to start translating to sales and profits. Proper due diligence is, as always, encouraged.

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