#Story
#Export Import
#Pharma­ceu­tical Indus­try

Um bom negócio – A good deal

Brazilian generic pharma­ceutical producer Vitamedic has been able to in­crease output drama­tically thanks to new machinery from Germany and export finance from Helaba. Setting up the trans­action required close colla­boration be­tween a number of parties on two dif­fe­rent conti­nents – an object lesson in success­ful globa­lisa­tion at the SME level.

The physical distance between Karlsruhe, home to German mechan­ical engi­neering company Romaco, and Brazilian pharma­ceutical company Vitamedic’s base in Anápolis, is con­siderable by any measure: 10,000 kilo­metres (most of it the open Atlantic) on the map or a flight of 15 hours or so by plane. Numbers like these soon cease to have any rele­vance in the 21st century though if – as in this case – there is a good deal in the offing.

Vitamedic produces generic pharma­ceuticals for the Brazilian market, the world’s sixth largest, which is already worth approxi­mately US$ 22 billion and con­tinues to grow at a sig­nifi­cant pace. Brazil’s economic en­gine may have been stutter­ing over recent years, but that has not pre­vented more than 40 million Brazilians moving up into the middle class – and demand for pharma­ceutical pro­ducts has in­creased as a result. Generic medi­cines, whose active ingre­dients, like ibu­profen and cetirizine, match those of pharma­­ceuti­cal pro­ducts that have already gained regu­latory ap­pro­val, are effective, thoroughly proven, relatively in­expensive and, there­fore, very popular. Vitamedic’s share of the Brazilian market rose by 11.1 percent in 2018, well ahead of the mar­ket as a whole, and with this trend ex­pected to continue, the com­pany has a com­pelling case for invest­ment and ex­pansion.

11,1 %

The share of generics in the Brazilian pharmaceutical market grew by 11.1 percent in 2018 – considerably stronger than the market as a whole.

Understanding the country and people

“It sounds trite, but proper plan­ning and rea­lisa­tion are abso­lutely essen­tial,” ob­serves Gabriel Steiner as he watches the rain fall­ing over São Paulo from the window of his office. “And there’s nothing simple about proper plan­ning and rea­lisa­tion.” Steiner, a joint national of Germany and Brazil who leads Helaba’s local re­presen­tative office, played a central role in the Romaco-Vitamedic deal. Vitamedic had de­cided that mechan­ical engi­­neering com­pany Romaco was the ideal choice to supply the auto­mated packag­ing lines for tablet blister packs (includ­ing cartoon­ing systems, scales and pal­letisers), the packag­ing line for liquid products and everything else it needed for its new pro­duction facility. The order ran to over € 10 million in total.

"The loan from Helaba was extremely impor­tant for us, mainly because of the long pay­ment terms and the interest rate, which was much more attractive than the options offered by our local banks."

Milton Penna, Grupo José Alves

“We were very im­pressed with the perfor­mance and ope­ratio­nal relia­bility of Romaco’s equip­­ment and by the technical support they were able to offer us in Brazil,” explains Milton Penna, CFO of Vitamedic’s parent company Grupo José Alves. “The loan from Helaba was extremely important for us,” he continues, “mainly because of the long payment terms and the interest rate, which was much more attractive than the options offered by our local banks.” Vitamedic’s financial resources would not have stretched to the advanced German techno­logy without the rela­tively long repay­ment period of nine years, meaning that it would have had to satisfy itself with less innovative and efficient machinery from local suppliers.

"The Vitamedic project is the Romaco group's biggest single trans­action to date. We would never have managed it without the Helaba team's per­severance in structuring the complex loan. We were greatly impressed with their commitment.

Guido Bourtscheidt, Head of Finance, Romaco Holding

Milton Penna, CFO of Vitamedic's parent company Grupo José Alves
Milton Penna, CFO of Vitamedic's parent company Grupo José Alves

Vitamedic was re­luctant to compromise – and once it had Helaba on its side there was no reason for it to do so. “We took on the role of advisor and bridge-builder to secure the export finance,” Gabriel Steiner recalls. “Our under­standing of the Brazilian market and our know­ledge of the local struc­tures and men­tality proved invalu­able.” The questions that had to be asked in connec­tion with the structur­ing of an export finance deal backed by the German government’s Hermes programme (an export credit guarantee system for exporters and banks) were many and detailed and required a huge amount of dis­cussion and analysis: How are Vitamedic and Grupo José Alves organised, financially and structurally? How good is the company’s credit standing and what are its future prospects? How might the credit risk be ade­quately assessed and how can trans­parency and legal certainty be estab­lished for all of the parties involved?

"Our under­standing of the Brazilian market and our know­ledge of the local structures and mentality proved invaluable in arranging the export finance."

Gabriel Steiner, Helaba São Paulo

Gabriel Steiner, Helaba São Paulo
Gabriel Steiner, Helaba São Paulo

Finding specific solutions

Every one of these questions needed an abso­lutely water­tight answer too, because the deal could not pro­ceed without the Hermes gua­ran­tee. The fact that Grupo José Alves had never arranged a Hermes-backed buyer’s credit before meant that it was all hands on deck back in Germany as well and while Gabriel Steiner was assisting his new customer on the ground in Brazil, Diana Häring and her team at the head office in Frankfurt continued to puzzle over the contract. “We spent the best part of a year working out how to structure the trans­action. And it certainly paid off,” declares the head of Helaba’s Structured Trade & Commodity Finance depart­ment. “We always welcome good, sustain­able business of course,” Gabriel Steiner adds, “and we are keen to pursue more of this type of deal in Brazil with our repre­sentative office in São Paulo in the future.”

"We are keen to pursue more of this type of deal with our repre­sentative office in São Paulo in the future."

Gabriel Steiner, Helaba São Paolo

Pro­viding the best possible support for SMEs like Romaco is a particular priority for Helaba in its capacity as the S-Group bank for the Spar­kassen. New busi­ness in this area often begins with an inquiry to the Spar­kassen thanks to the close contacts they main­tain with SMEs in their district – and so it was with the Vitamedic deal. Kreis­sparkasse Biberach is one of several Sparkassen that work with Romaco along­side Sparkasse Pforz­heim Calw. “There’s a strong foun­dation of trust in our relation­ship with Romaco,” reports Tobias Rommel, Head of Kreis­spar­kasse Biberach’s Inter­national Business depart­ment. He and his team consider it perfectly normal to support their SME customers in all aspects of their inter­national business – after all, inquiries about structured finance of any­thing from € 30 million to € 100 million are not un­common in the small- and mid-cap area and there are cor­porate finance specia­lists ready in-house to respond. Once Romaco had ex­plained to him what it wanted, Rommel wasted no time in bring­ing Helaba on board to help with the loan. “A stand­ard loan contract wouldn’t have been much use,” he says. “Every­one in­volved put enormous time and crea­tivi­ty into the project and Helaba was very prudent in its manage­ment, all of which was essential to achiev­ing the success­ful deal we delivered.”

“The deal was a success because every­one involved put enormous time and crea­tivi­ty into the project and Helaba was very prudent in its manage­ment.”

Tobias Rommel, International Business Sparkasse Biberach

Helaba in Brazil

Helaba helps German and European com­panies, especially those that bank with the Sparkassen, to break into the Latin American market and ex­pand their local busi­ness from its base in São Paulo. It offers attrac­tive borrow­ing options plus advice on the local busi­ness culture too and can assist with intro­ductions to other com­panies, public au­thori­ties, law firms and accoun­tants if neces­sary. Helaba is also develop­ing its busi­ness with Latin American financial insti­tu­tions wishing to ex­pand their product range or gain better access to Europe.

  • Opened: 2018
  • Location: São Paulo
  • Number of staff: 3

São Paulo is Latin America’s main finan­cial hub and one of the most import­ant foreign loca­tions for German industry. The German-Brazilian Chamber of Commerce and Industry, which links the Brazilian and German markets, has 1,200 members.

Helaba's location in São Paulo
Helaba's location in São Paulo

2018

Location opening in São Paulo

Address

Av. das Nações Unidas, 12399
Conj. 105 B
Brooklin Novo, São Paulo – SP
CEP: 04578-000

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