1. Biopharmaceutical industry
in Bulgaria
Vision for the Future
Team: Disrupt your world
Country: Bulgaria
Team leader: Mario Todorov
Team members: Kristina Naidenova

2. Competitiveness of Bulgaria
Supporting industry
- big local pharmaceutical
producers
- presence of international
and local companies
- developing chemical
Firm strategy & rivalry cluster
- lowest corporate tax rate
in EU Factor conditions
- EU market integration - skilled labor force
- underdeveloped markets, Bulgaria’s - political and
macroeconomic stability
favorable to new entrants diamond - EU outsource destination
-presence of global firms in
the domestic market model - cultural and business
- people tend to seek the similarities
best when it comes to their - favorable FDI destination
health
Demand conditions
- proximity to large,
sophisticated markets
- population aging
- city pollution
- stressful lifestyle

3. Figure 1. Bulgaria's GDP (at 2005 prices) Figure 2. Bulgaria - final consumption
and exports (at 2005 exchange rates) expenditure (at 2005 prices)
30000 30000
Milions of EUR
Milions of EUR
25000 25000
20000 20000
15000 15000
10000 GDP 10000 Final
5000 consumption
Exports 5000
0 expenditure
0
2009
2000
2001
2002
2003
2004
2005
2006
2007
2008
2010
2011
2012
2000
2002
2004
2006
2008
2010
2012
Period
Period
Figure 3. Bulgaria - gross saving as Figure 4. Bulgaria - gross capital formation
percentage of GDP (current prices) (at 2005 exchange rates)
30 12000
Percentage of GDP
25 10000
Milions of EUR
20 8000
15 6000
10 4000 Gross capital
Gross saving
formation
5 2000
0 0
2009
2000
2001
2002
2003
2004
2005
2006
2007
2008
2010
2011
2012
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Period Period
The Bulgarian, as well as the Eastern European market, is developing. The country has upward GDP and investment
trends, high savings rate and stable population. The stable banking system and low budget deficit contribute to the
efficient allocation of resources. Still, Bulgaria has to tackle its Achilles’ heel – corruption, red tape and ineffective
legal system.
Source: Eurostat, team’s calculations

4. Interviews and Discussions
When asked the majority of the people pointed out a few
problems, pulling the Bulgarian economy back: “There is a bunch of
documents, references,
declarations to fill in,
which costs time and
energy. I think that it
ineffective
legal was calculated that over
corruption system a 100 working days are
needed in order to
process all the
documentation in the
red tape country.”
Bulgarian food stores
entrepreneur
Uncompetitive economy and
inefficient resource allocation

5. Interviews and Discussions
The generalized results show
pharmacy and IT as the
industries, on which focus
should be put on.
Popular opinion commands
the importance of foreign
investments in Bulgaria as a
growth driver. People
recognized the youth of the
Bulgarian free market as a
development opportunity.

6. Bulgarian biopharmaceuticals
company
• Why biopharmaceuticals and why in Bulgaria
Biopharmaceuticals seem to be the natural
extension of the pharmaceutical industry. The
global trends of urbanization (leading to more
polluted cities), combined with the aging
population, deficient consumption of health
treatment and the stressful lifestyles that we are
subjected to suggest the importance the products
of the industry have in our lives.

7. Bulgarian biopharmaceuticals
company
Figure 5. Bulgaria’s biopharmaceutical
industry
700000
600000
Thousands of USD
500000
400000
300000
Export Value (in USD
200000
thousands)
100000
0
Health and Beauty Biopharmaceutical
Products Products
Subcluster
The pharmaceutical industry marked a 9 percent growth rate in 2010, one of the hardest years for the
world and the Bulgarian economy. People ranked the price of the medicine as the third factor,
determining their purchasing decisions, when we presented our questionnaire to them.
Source: Prof. Michael E. Porter, International Cluster
Competitiveness Project, Institute for Strategy and
Competitiveness, Harvard Business School; Richard Bryden,
Project Director

8. Bulgarian biopharmaceuticals
company New entrants
- developing market
-higher return on
investment
- developed distributional
network
Buyers
Suppliers Competitive rivalry within - access to large near-by
industry markets
- a lot of small companies
- local and international
- access to international - increasing consumption in
producers
suppliers with world market local market
- industry growth
distribution channels - a lot of buyers with
- weak brand identity
different sizes
Substitutes
- high consumer
propensity to substitute

9. Bulgarian biopharmaceuticals
company
Our vision is of a biopharmaceuticals company in
Bulgaria. The national diamond model of the country
shows its potential to capture a share of the value chain
of the biopharmaceuticals world market. Although
Eastern countries dominate Bulgaria on cost basis, we
believe that the large Western European companies in
the industry will outsource their R&D activities in
Eastern Europe, due to its proximity to the mother
companies, the similarities in our cultures, the
favorable factor conditions and the bigger power the
market leaders would possess negotiating with Eastern
European governments, compared to the Chinese
government for example.

10. Bulgarian biopharmaceuticals
company
Initially the companies would be
. branches of world-known leaders,
outsourcing their activities.
Brought know-how combined with local
companies and supporting industry would
result in new market players. Well established
distribution channels and proximity to large
markets will ease the interaction with the rest
of the world.
The most important sector of the company
would be R&D. Combined with our skilled
work force and favorable business climate
this would ultimately result in innovative
value propositions and higher return on
investments compared to Western Europe.