CEO Review

 

CEO's Review

Year 2016 was the first whole year when we operated with a structure which was set according to our new strategy and were able to improve our services to all our customer groups. The realization of our new strategy was visible also in acquisitions and large logistics and IT projects.

New Innovations in Logistics Value Chain

In the beginning of the year we finalised our acquisition of Svensk Dos dose dispensing company and it was intergrated into our new Healthcare Business area during spring 2016. There is a significant growth potential in dose dispensing both in Finland and in Sweden and I’m pleased in our progress during the last year. In addition, we acquired Farenta service company which complements our Services business first in Finland but in the coming years hopefully also in Sweden. All acquired companies have been successfully integrated and we have been able to offer added value to our customers through new services.

The whole services IT-system renewal and Enköping and Mölnlycke enlargement projects have progressed according to the plans. The efficiency of the logistics processes in Finland was much improved when we concentrated all Finnish distribution to Espoo during second quarter. With these initiatives we are preparing to market change that is already clearly visible in Sweden where e-commerce is growing strongly. We are also able even better to answer our customers’ and authorities’ higher quality expectations. Digitalization and our customers new needs require us new innovations in logistics value chain. We must be faster, more efficient and available to our customers every day in easy and clever ways. This demands continuous improvement and development of procedures.

The Growing Role of Digital Services

We established in 2016 14 new pharmacies and developed several new digital services to consumers. Webstore and other digital services are a key development area to us. In Sweden the e-commerce is rapidly growing and was in 2016 already over four per cent of total pharmacy sales. We were able to further grow our traded goods and OTC share of the sales in Sweden and also our webstore grew strongly especially during the final quarter. I believe that the new year will be interesting due to both increasing competition and strong growth in e-commerce.

During 2016 there was a lively discussion in Finland about the development needs of the pharmacy market. In the light of the stated arguments on the matter it is clear that there is much potential for development. Patient safety is on a good level in Finland and it is important to regulate the pharmacy operations in the future at least as well as currently. It is also an undisputed fact that the regulation concerning pharmacy ownership makes it difficult to increase efficiency and unnecessarily increases retail costs of medicines compared to other Nordic countries. The example from Sweden proves that the regional availability of medicines can be safeguarded at the same time when general availability of medicines and competition in the markets are increased. In my opinion it is important that pharmaceutical distribution as a whole is part of the solution when healthcare reform is on the planning board in Finland.

An Interesting Year Ahead

The past year was busy and the new year seems to offer many new and interesting projects. I want to thank all our customers and employees for the year 2016 and hope that we may together do this year 2017 at least as successful.

Eero Hautaniemi
President & CEO