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SEB important partner on continued growth journey

With seven new pharmacies, sales growing nearly three times faster than the market and almost doubled earnings before interest, taxes, depreciation and amortization, Katre Kõvask, CEO of Estonian pharmacy chain Südameapteek, can look back on a good year. An open, flexible and close relationship with financial partner SEB is an important part of the continued expansion.

In November, 2015 Katre Kõvask took office as CEO of the fast-growing pharmacy chain which since it launched in 2011, has become the second largest in the country in terms of revenue.

Prior to her current job, Kõvask worked 15 years in the food industry, most recently as CEO of listed company Premia Foods. The world of pharmacies is totally new to her, but at the same time a kind of return to the roots, since her childhood dream was to become a doctor, like her mother.

“I had intended to study medicine, but at the time, a few years after independence from the Soviet Union, it was too tempting to study business and economics and be part of building up the market economy in Estonia,” she says.

Südameapteek has 76 pharmacies around the country, including five that are operated by franchisees. The company has 365 employees and recorded revenue of 51 million euros in 2016. Last year, sales grew 14 per cent, while the overall market grew by 5-6 per cent.

Kõvask expects continued growth and see that the market is characterised by two distinct trends.

“There is a definite health trend among younger people and that means sales of non-prescription products such as vitamins, minerals and dietary supplements will continue to increase. Another trend is the emerging of digital solutions that help pharmacies provide better advice.”

One worry in the longer term is a government proposal suggesting pharmacies must be at least 51 per cent owned by a local pharmacist (a pharmacist may own up to four pharmacies). It would mean a lot of adjustments both for Südameapteek and other chains on the market as well as for the pharmacists.

“It is good to have a regulated market, but I doubt that this is the way to go. Pharmacists specialise in their profession and it is not certain that they want to or are financially able to be business owners,” says Kõvask.

She and other industry representatives have a dialogue with the government and hope that the proposal will be modified in order to serve the best interests of the patients, pharmacists and chains.

As for the coming year, Südameapteek plans to open seven new pharmacies, including four in the first months. She is especially looking forward to the establishment of a flagship pharmacy in a new Estonian healthcare center, which will offer a combination of Western and Chinese healthcare provided by Estonian top specialists as well as the laboratory services from Synlab’s most modern laboratory in the Nordic countries.
Kõvask has a long-standing and well-established relationship with SEB, both from her previous role and at the new company.

“The most important thing in a relationship with a bank is that it is characterised by honesty, flexibility, and that the bank has a deep understanding of the business. It is about building a partnership, working together and pulling in the same direction. It is based on both parties being open and transparent,” she says.

Her experience of SEB is very good and she especially appreciates the openness to promote entrepreneurship and innovation that the bank stands for.

“I also like that SEB signals an openness to cooperate with fledgling fintech companies to revolutionise the finance industry. It is absolutely the right approach. We who are working in mature industries can learn a lot by being open to and collaborate with innovators.”