The Serbian economy ministry launched a tender process for the sale of 25% of state-controlled pharmaceutical giant Galenika on April 4, setting the starting price at just €7mn.

Galenika was originally listed as one of 502 public companies supposed to be privatised by the end of 2015. However, it was among 17 companies of strategic state interest whose privatisation deadline has been extended by up to a year under amendments adopted by the Serbian parliament in May 2015 and approved by the International Monetary Fund (IMF). The IMF approved a precautionary €1.2bn three-year stand-by arrangement (SBA) in February 2015 which envisages privatisation or restructuring of state-owned companies, including Galenika.

The call for tender was published in Politka daily and says that prospective strategic partners need to submit their applications for participation in the tender and pay a deposit of €100,000 no later than May 4.

Potential strategic partners also need to be a legal entity whose controlling owner, or members of the consortium jointly, posted an operating income of at least €50mn or assets amounting to no less than €100mn in the previous financial year – 2015.

Any potential strategic partner of Galenika needs to have at least five experts with at least 10 years experience, of which at least five were in high level managerial positions within pharmaceutical companies, to manage Galaneka for the duration of the strategic partnership.

The government currently owns a 70% stake in the company, while 15% belongs to the Equity Fund and the remaining 15% to other shareholders.

Tanjug quoted economy minister Zeljko Sertic as saying earlier that simultaneously with the tender process, the company’s accumulated debts should be managed.

“Debts are a serious burden,” Sertic said.

Of Galenika’s total debt which amounted to $220mn, it owes $50mn to commercial banks with which it is difficult to negotiate, Sertic said.

Besides huge financial debts, Galenika struggled under allegedly corrupt management for years. Efforts to tackle this problem finally started in April 2014 when Serbian police arrested several of Galenika’s former managers, accusing them of abuse of office and siphoning off money from the company. Most were members of the Socialist Party of Serbia (SPS), which has been a minority coalition partner or supporter of all Serbian governments since 2004. Both the tax authorities and the police brought charges against the former managers, alleging they caused some €75mn damage to Galenika, which benefitted local drug trader Velefarm. The process is still ongoing.

Galenika once had a market share of 60% in the former Yugoslavian markets of 24mn people. Nowadays, it controls only some 10% of the Serbian market of 7.1mn people but still employs 1,400 people.