At the time of our investment, Romanian pharmaceuticals sales at around $1.2bn per year were low by European standards, but growing rapidly at some 20% per annum. This was the result of increasing purchasing power, improved health education, better living standards and higher life expectancy. Highly fragmented, the market also presented many acquisition opportunities. Competition from both domestic drug producers and multi-nationals keen to break into such an attractive emerging market was intense. Romania’s then impending candidature for future EU membership was also a catalyst for growth, triggering the government to decree that domestic pharmaceutical producers had to meet European standards.

"We understood that the key to Terapia’s strategic attractiveness would ultimately lie in its ability to position itself as a dominant local producer and supplier. International ambitions were not discarded, but reprioritised. Instead, our energies went into building a commanding strategic position in the Romanian market."

- Emma Popa-Radu, Advent Managing Director

The strategy implemented by the new management team built on the existing manufacturing business focusing on Terapia’s core competency: the development and sale of pharmaceuticals.

One of the tasks was the revitalisation of Terapia’s product portfolio, triggering an expansion of the pipeline focused on its core cardiovascular expertise alongside three other core areas: respiratory and central nervous system, alimentary tract and muscular and skeletal. This resulted in 23 new product launches. The acquisition of two smaller generics manufacturers further added to the pipeline. The rate of new product development was accelerated and significant expenditure was directed at both R&D and sales activity in order to feed and support the new pipeline.

It was also essential to establish an effective commercial division, resulting in a five-fold increase in the sales team.

The new management team also implemented a programme to ensure that all of Terapia's operations matched EU best-practice criteria. One notable example was the company’s landfill site. Built to accommodate the hazardous waste generated by the clean-up of Terapia’s manufacturing facility, this international standard site was the first of its kind in the country.

Despite this elevation of operational standards, Terapia was able to maintain the production and distribution cost advantages resulting from its comparatively low labour costs and shorter supply lines to local consumers. This reinforced Terapia’s competitive advantage, but also supported a small and strategically significant regional presence in Russia and the Ukraine.

When Advent acquired Terapia in 2002, the company had gross annual sales of $33.2m and EBITDA of $11.0m. By the time of exit, sales had grown to $75m and EBITDA had surged to $26m.

One of the advisers who worked on the company’s sale to Terapia summarised: "The members of Advent’s transaction team were committed and hands-on investors: exceptionally knowledgeable about the company and its markets, closely integrated with the company’s senior management and willing to spend time and resources to build growth."

"By adopting a globally competitive standard, creating intellectual property and packaging products with local knowledge and links to the relevant authorities, Terapia has transformed itself from a company perceived mainly as a manufacturer to an organisation respected for its ability to create new products and bring the effectively to market."

- Stephen Stead, former Terapia CEO and Advent Operating Partner.