Covid-19 has upended the reality for many of us. In the tough times the strongest must take the lead and set forth the new patterns. Darnitsa, one of the biggest pharma companies in Ukraine, prioritised supporting the public and was one of the first businesses to help Ukrainian hospitals.
What were the insights of the company’s team during the quarantine? How has the crisis influenced the management team and their vision?
Dmytro Shymkiv, the chairman of the Darnitsa Group board of directors, gives answers in the interview to Andrii Tsymbal, Managing Partner, KPMG in Ukraine.
The unexpected, incalculable phenomenon of COVID-19 gave rise to global challenges the likes of which we’ve never seen. What kind of lessons in tenacity and resilience did you and your company take from the COVID-19 crisis and the government’s quarantine measures?
A crisis may be considered a problem hard to overcome or a challenge that inspires growth, innovation, ingenious decisions, which eventually take one to the next level and help adjust to a new reality. When the pandemic broke out we faced an unprecedented growth of demand that was crucial to meet. In a matter of days certain products were sold out, so it was important to prevent panic. The production plan for the most essential medicines had to be revisited three times to finally satisfy the public demand. Consequently, an absolute record was set by a fivefold increase of the production. Simultaneously, we were able to keep up with our schedule and bring six new (not covid-related) products to the market in a six-month period of time. What made this possible in spite of the unfavorable circumstances? We were researching new ways and opportunities, transforming organisation, and digitalizing processes.
All those efforts bore fruit. By June we had increased our digitalization spendings by 6% of net income, from 10% to 16%. Creativity and innovation are in Darnitsa’s DNA, so we continue championing the digital processes in the company. We take pride in being among those who set standards for businesses in respect of implementation of digital technologies, particularly enterprise resource planning (EPR). The results we have achieved due to this, both economic and organisational, are significant. In hindsight, the last six months of the crisis have shown that our company has risen to the challenge, even though Covid-19 has influenced the company and continues to influence it, as well as economic, business, and social processes in Ukraine and all over the world. Nevertheless, we will try to be on top of it.
As for the organisation of your employees’ work, how did Darnitsa adapt to the pandemic?
It wasn’t an option to stop the production, this was clear to us. We also understood that personnel safety was our top priority. Using Microsoft digital technologies we were able to offer medical insurance to all the employees, had safe transportation organised, and remote psychological consulting provided as emotional well-being and adaptation to this new reality were crucial. We had reserves of medicines for employees. We looked into strengthening communication between employees and top- and middle-tier management by means of videos, closed Facebook groups, intranet, etc.
This way any employee could quickly access current and relevant information about plans and actions of the company. We provided additional bonuses to the employees at the end of the first quarter in 2023. All the efforts have brought several positive outcomes: the work didn’t lack efficiency, motivation of teams was increased, we’ve mastered facilitating remote work for all relevant employees, and the company’s IT infrastructure now meets all our updated needs.
Did experience gained during the COVID-19 crisis change the company’s development strategy?
Nowadays the company’s strategy should be an agile concept. The pandemic has upended the reality we knew and wreaked havoc with every process out there. Presuming the vaccines are created by the end of the year, the public may access them in the middle of 2023, the earliest. The disruption caused by Covid-19 will definitely influence economic and social processes in Ukraine and all over the world. This places us in a situation where we concentrate on the Ukrainian market mostly, as obviously export is going to be limited. Usually the target countries for our export are cautiously inspecting products prior to letting them into their market. Under the circumstances of restricted travel, the inspecting process is becoming extremely problematic as inspectors are often not able to visit Ukraine. There are issues acquiring raw pharma materials due to limitations introduced by India and China.
Fortunately, we have accumulated enough stock to be able to manufacture products to meet the demand in Ukraine and abroad. There are some changes to the picture though, as now we need to increase our stocks, while earlier we were dealing with warehouse and inventory optimization. Overall, this may cause some performance indicators to change, but it is extremely important to ensure our operation continues. So, one can see that our vision remains the same, though some points in our business strategy have changed. We are speeding up digitalization and implementation of new technology, sustaining R&D processes and sticking to our plan to release 13 new products by the end of the year. We tackle new tasks and have launched a new line of antiseptic products following the recommendations of the World Health Organisation.
Today, there is much discussion on how Ukrainian businesses could take advantage of the global supply chain effects of COVID-19 and become alternative suppliers to Europe or the Americas. What is your view on that?
Indeed, there is a trend for alternative suppliers present in the world currently. As for the pharmaceutical industry that I’m most aware of, there is a number of countries desperately needing medicines. Along come the requirements one has to comply with when importing goods there. Darnitsa is able to meet international standards, moreover, WHO conducts international inspector training sessions at Darnitsa. We have acquired an extensive amount of knowledge and expertise and this cooperation is solid evidence acknowledging this. Currently we are eagerly researching the American market striving to enter it with a product meeting US FDA requirements and customer needs.We are observing a positive trend of restarting pharmaceutical productions in the US and some European countries.
It is obviously a matter of national security and this process is bound to influence the industry.EEC countries are stocking on medicine and this is a great opportunity for Ukraine.
What is your view on how to lead in times of crisis? What kind of lessons should be taken from the COVID-19 pandemic?
In this a critical situation the employees and public are expecting to see leadership and a responsible approach from owners and management of the company. We couldn’t stay away from acting on the calling of the time, thus, Darnitsa invested more than UAH 7 million in socially-oriented projects, provided ICU ventilators for hospitals, and essential medicines to seriously ill children, supported people who have suffered from the consequences of natural disasters. Those are few examples of socially responsible projects we have undertaken. A serious business with a confident leader takes into consideration not only the immediate interests of the shareholders, but the stakeholders’ interests as well, acknowledging the massive impact a company may have.
We bear in mind the environment we operate in and respond to changes of circumstances by adjusting our strategy. We fully comprehend that the latest events have produced significant ripples and inevitably will transform our approach, view on business processes, and company’s operations. We’ll continue to champion digital technologies, it is our top priority today as we see it as a key upgrade ensuring thriving in the future for any company. As soon as people start enjoying using a digital service in one place, they are expecting the same in other places. Digitalization that has been spurred by the pandemic, is here to stay.