According to a news item of the Business Courier [1] program that was aired on December 17 last year, JSC Partnership Fund is no longer going to finance the construction of a pharmaceutical factory planned by JSC Humanity-Georgia [2]. It is noteworthy that TI Georgia has written [3] on a number of occasions about the doubtful origin [4] of Humanity-Georgia and about the question marks in its relations with the Partnership Fund.
After Business Courier aired the news item, TI Georgia contacted the Partnership Fund, and they sent us an official written reply to our questions.
The letter says that in 2015 the Partnership Fund and Humanity-Georgia initiated a joint project which was to be implemented in the pharmaceutical sector of Georgia and included two components: 1) at the starting stage, import of medications to Georgia at prices affordable for the population; 2) at the second stage, joint construction and operation of a pharmaceutical factory, a pharmaceutical laboratory meeting the GMP standards, and the storehouse infrastructure.
According to the information provided by the Fund, for the purpose of implementing the first component of the project (import of medications), on September 24, 2015, the Partnership Fund and Humanity-Georgia concluded a loan agreement which provided for the issuance of a loan of USD 9,359,438 with the aim of importing medications to Georgia at prices affordable for the population and supplying them to the sales network during 2016. In the framework of this project, Humanity-Georgia registered up to 600 medications on the local market and supplied a large part of them to the pharmacy network.
As for the second component of the project – the construction of the pharmaceutical factory, the letter says that on December 22, 2015, the Partnership Fund, Humanity-Georgia, and the Austrian company Humanity Holding GmbH concluded a partnership agreement on the implementation of the project of construction of a pharmaceutical enterprise, according to which the Fund was to invest in the construction of the factory, as well as to convert the issued loan to capital. It should be noted that the partnership agreement hasn’t entered into force in the component of investments, and, accordingly, the Fund hasn’t invested in the capital of Humanity-Georgia. The Fund’s official reply makes it clear that one of the main reasons for this was the fact that at the end of 2016 the Fund’s budget for 2017 was revised and the project of construction of the pharmaceutical factory was postponed for the future with the aim of optimization of expenses. Accordingly, as things stand today, the Partnership Fund and Humanity-Georgia only interact with each other in the framework of the loan agreement – as a creditor and borrower. The loan is secured on all the assets of Humanity-Georgia and the 100% stake of the company, as well as on additional collateral.
As for Humanity-Georgia, it constitutes a legal entity of private law and continues to supply medications to the Georgian market independently of the Partnership Fund.
The aforementioned information fails to make it clear why the optimization of expenses by the Partnership Fund has affected JSC Humanity-Georgia in particular. Question marks also remain with regard to the quality and prices of the medications imported by this company and about their influence on the pharmaceutical market in general. The recent developments surrounding the project of Humanity-Georgia and the incoherent information disseminated about them make the questions we asked and doubts we expressed months ago even more relevant.