Fraud schemes of the pharmacy empire 

Fraud schemes of the pharmacy empire
On the 19th of May, the head office of the "36.6" pharmacy chain was searched

On the 19th of May, the head office of the "36.6" pharmacy chain was searched, which, as it turned out later, was initiated by the FSB. They search was associated with the criminal case against one affiliate companies of the "36.6", which is being investigated by the police under the Article 159 of the Criminal Code (Fraud) in connection with allegations of non-payment of debts to banks. Media noted the rapid growth of the pharmacy chain, which currently owns about 6% of the total Russian pharmacy market.

The reported about searches in the office of the "36.6" in the morning of 19th of May. An eyewitness told the publication that several cars with the soldiers of a special rapid reaction unit arrived to the building of the shopping center "Tishinka", where the chain’s headquarters is located. The soldiers broke down the office door and began to take documents and hard drives out of the building. They questioned accountants of the "36.6" and its management, in particular, the CEO Vladimir Kintsurashvili. In the commentary for Vademecum magazine, the representatives of the Moscow FSB said that searches were initiated by the federal management of the security service, but they declined to comment on the interrogations.

Генеральный директор сети «36,6» Владимир Кинцурашвили

The  "36.6" chain  CEO Vladimir Kintsurashvili Photo:

Media connected the searches to the criminal case opened in 2014, the person of interest in which could be Kintsurashvili. The case was filed under the charge of "fraud on a large scale" after the application submitted by the production company "ForaFarm" against the distribution company "Oriola" (later renamed as "FarmOpt"), which was bought by the "36.6" chain in 2014. During the past year, "Oriola", which owed to its suppliers the amount of not less than 1 billion rubles, has failed to fulfill obligations under the supply contracts with "ForaFarm". The company offered the supplier a debt repayment scheme that was disadvantageous for it.

The conflict resolution began only after "ForaFarm" contacted the police. Then, the investigation brought the "Oriola" management to responsibility and questioned its directors. After that, all the debts of the enterprise have been fully repaid, about which the co-owner of "ForaFarm" Olga Shtauberg said in her comment to Vademecum. At the same time, she noted that he did not know about the dismissal of the case against the "36.6". Sources in the law enforcement said at the time that the repayment of debt does not mean the case will automatically be dismissed.

According to "Vedomosti", in 2015-2016 the lawsuits against companies owned by "36.6" group, were filed initiated by many other manufacturers and distributors of medicinal products, including IC "Protek", "Sia International", "Rosta", GlaxoSmithKline, Takeda and "Petrovax". The claims were related to the pharmacy chain’s debts: at the end of 2015, the group's net debt amounted to 12.9 billion rubles. However, none of the companies could solve the debt problems as effectively as "ForaFarm". Media explained this by reputational risks: such a small company as "ForaFarm" had nothing to lose, whereas for large companies such criminal proceedings are always a blow to the image, even if they are the plaintiffs.

According to RBC, because of its debts the "36.6" asked its distributors to provide it with 30-50% discount on payment of loans and debts. "They’re asking for a discount of up to 30% of the debt. And why should we give them a discount? Is it because they are so big? We better will work with small players who pay, "- said the CEO of IC "Protek" Dmitry Pogrebinsky.

The chain closed the year in the red losing 1.2 billion rubles, while in 2014 the loss amounted to 43 million rubles, with revenue growth of 67%, up to 31.9 billion rubles.

Nevertheless, in the ranking of "Top 100 pharmacy chains" the "36.6" group is ranked first with 34.1 million rubles of revenue in 2015 (second place is taken by "Rigla" with 34 million, the third is "Doctor Stoletov & Ponds" with 21 million.).

Story of the company

"For the last two years, receiving new legal claims on regular basis has become a routine for the legal service of the "36.6". In particular, workload has increased in 2015, when it became clear that a mutually acceptable debt settlement scheme with the new owners "Oriola" cannot be achieved by everyone <...> having starved the producers into submission and pushed them to the favorable resolution schemes, the chain has earned at least 3 bilion rubles", said the Vademecum’s comment on the rating of pharmacy chains.

According to the media, aggressive policy of the pharmacy chain is defined by its current owners, already mentioned Kintsurashvili and Roman Avdeev, the owner of the Credit Bank of Moscow, who owns a stake in "36.6" through the concern "Rossium" which is controlled by him. According to RBC, Kintsurashvili and Avdeev, "do not look like" the founders of the pharmacy chain, Artem Bektemirov and Sergey Krivosheyev.

Bektemirov and Krivosheyev, students at that time, founded the "36.6" pharmacy chain in 1991. Probably, they were good managers (and the market has not been overwhelmed by retailers), because until the fall of 2008 the net growth rate was incredible. Bektemirov then argued that "the revenue of the pharmacies year on year grew in double digits, and it seemed to us that this was the right strategy."

From 2003 to 2006, the net revenue grew each year, and in 2007, its growth rate increased by 1,5 times. If in 2003 the "36.6" had 173 pharmacies, in 2006 it had already 838, and in 2008 the number increased to 1127.

In 2006, according to media reports, the pharmacy chain began to prepare for the acquisition by the British concern Alliance Boots. Then, "Vedomosti" reported that foreign businessmen have put a condition to the founders of the network: to connect at least 1,500 pharmacy outlets, which were associated with numerous purchases of new pharmacies. Bektemirov and Krivosheyev denied the existence of such conditions and claimed that the offer from the Alliance Boots was received only in 2008, at the peak of chain’s growth, when the company's market capitalization amounted to 17 billion rubles. Anyway, the deal has not been closed (according to Bektemirov, the chain’s founders’ "desires did not coincide with the possibilities"), and the pharmacy chain has met the 2008 crisis with debt and without funding.

"Retail has been very heavily overloaded by loans. It’s a very bad scenario, when services eat a lot of money. There is always a shortage of cash flow. This all leads to the fact that the purchasing policy suffers. As a result, we didn’t earn as much as we expected and sought to get rid of all this ", a former employee of the "36.6" told RBC.

Глава Московского кредитного банка и совладелец «36,6» Роман Авдеев

The head of the Credit Bank of Moscow and the co-owner of the «36,6» Roman Avdeyev Photo:

Exactly at this time, Roman Avdeyev appeared on the scene. The Credit Bank of Moscow belonging to him began buying multiple debts of the "36.6" chain and ended up as its sole creditor. The founders of the chain had no choice but to sell the business. After that, the new owners of the network, as many employees of the chain claim, played foul with Bektemirov and Krivosheyev: they forced them to resign. Commenting on this subject, Kintsurashvili said that "it was no longer the legendary "36.6", it became a completely different company".

Currently, according to the information of the Cypriot offshores, the chain is owned by by Avdeyev, Kintsurashvili and their partners Ivan Saganelidze, Temur Shakaya and Igor Zhibarovsky.

Present posture of affairs

Крупнейшие аптечные сети в 2015 году по данным DSM Group.jpg

On the chart: The largest pharmacy chains in 2015 according to DSM Group © RBC 

The chain’s new management tried to deal with the difficulties related to its debts acquiring new companies and pharmacies. In particular, in March 2009 the pharmacy chain controlled 51.8% of the shares of the "Veropharm" pharmaceutical company, which was in the top 5 of the largest Russian manufacturers of pharmaceutical products.

In January 2016, the "36.6" announced the impending merger with the A5 group. By entering into this transaction, the company also became the owner of shares in the retailer X5 Retail Group, which the founders of the A5 Roman Buzdalin and Sergey Solodov bought a year earlier. A few weeks later "Rossium" owned by Avdeyev also bought part of it: 62.94% of A5 Pharmacy Retail.

During all this time - from 2008 to 2016 – the management of the "36.6" bought the pharmacies and closed unprofitable ones. At the same time, by 2015, the rate of purchase of new pharmacies significantly reduced, and the number of those that were closed was rising.

Nevertheless, in the summer of 2015 "Aptechnaya Set 36.6" (The “36.6” Pharmacy Chain) OJSC announced completion of unification of the group of companies "36.6" and the pharmacy chain called «A.v.e», and in April 2016 it has transpired that 15% of the chain will be sold to the largest US drugstore group Walgreens Boots Alliance (sources report that in the next three years, the share of the group in the "36.6" will increase to 85%). As a result of the merger with «A.v.e» and A5, the chain’s share on the pharmacy market has got up to 5.5% with the total annual revenues of 53-55 bilion rubles. According to a report from the DSM Group, the combined company "in the near future is unattainable to other naturally developing participants of the market".

The new players

Президент инвестиционной группы А1 Александр Винокуров

The President of the investment group A5 Alexander Vinokourov Photo:

It would seem that the situation is quite simple: a clunky and complicated pharmacy chain is looking for ways to increase profits and minimize losses. However, the publication of The Moscow Post citing its own sources claims that the co-owner of "36.6" Roman Avdeyev by buying pharmacy market players acts on behalf of Alexander Vinokurov, the head of the A1 investment group. Among the projects the group there are a private bank "Alfa-Bank", "VimpelCom" (brand "Beeline") and "MegaFon", the retailer X5 Retail Group (retail chains "Perekrestok", "Pyaterochka", "Kopeika"), SC "Rosvodokanal" and many others. It also owns a pharmaceutical distributor "SIA International", which Vinokourov bought in February 2016.

Also, Alexander Vinokourov, together with his father, Semyon Vinokourov and his partner Sergey Zhukovsky own a group of companies called "Genfa", which specializes in distributing drugs. In addition, "Genfa" works with subsidiary of SC "Rostekh" National immunobiological Company (NIC). Media associates Vinokourov’s numerous business achievements with his family: according to RBC, he was married to the daughter of the head of the Russian MFA Sergei Lavrov.

His name also appeared in the press in connection with the case against Ilgiz Valitov, the former director of "Vnesheconombank" department, who was accused of trying to get a share of the "Eurodon" company in exchange for loans. Then it was reported that one of the Vinokourov’s holding’s companies was involved in the legalization of "Eurodon’s" property that was taken away illegally.

According to press reports, from 2006 to 2013, "Vnesheconombank" under Valitov’s pressure gave to "Eurodon’s" structures not less than 18 billion rubles in loans. He was arrested in February 2016, and at the same time it became known that "Vnesheconombank" acquired 40% of "Eurodon’s" shares from "Alfa Group’s" structural unit. However, "Alfa Group’s" mediator, belonging to Vinokourov’s A1 group, immediately after the acquisition of shares filed lawsuits to exclude Valitov from the participants of company. Reporters connected the arrest of the former director of "Vnesheconombank" department with "Alfa Group’s" claim.

The media called the scheme used by Vinokourov a "raider seizure". Journalists of The Moscow Post suggest that the businessman can use it again to take control over the "36.6" pharmacy chain.

Violation of law on competition

A few days before the searches in "36.6" the Federal Antimonopoly Service (FAS) has warned the marketing communications director of the "36.6" Constantine Tiunov of a possible violation of the law on free competition.

Warning endured because of Tiunov’s public statement: “The "36.6 "will create a network of procurement uniting 6000 drugstores".

"In this article, Constantine Tiunov said about the planned behavior of the product market, namely of the merger of the "36.6" Pharmacy Chain with the competing business entities, other pharmacy chains in the association for additional discounts from suppliers", explained the deputy head of the control over social sphere and trade of FAS Nadezhda Sharavskaya. According to her, this statement can lead to a violation of antitrust laws.

«36,6» and the corruption case in the Ministry of Public Health

After the searches at the head office of Russia's largest drugstore chain, a source of connected them to the case of the deputy chief of the Ministry of Public Health licensing management of the Moscow Region Tatiana Salova. In August 2015, the official was arrested red-handed when receiving a bribe. Then it was reported that, according to the investigators, overall, Salova received more than 20 milion rubles from the representatives of the major pharmaceutical chains. Among other things, the was information about the chain called "A5 Apteka Moskovskaya Oblast", which at that time was preparing to merge with "36.6" and "Apteka A.V.E.-1", which joined the group later.

The Russian Investigative Committee reported that the official has received the money for the illegal issuing of licenses: the representatives of networks passed her a bribe, and then sent the documents to align and photo reports on licensed facilities by e-mail. Salova signed all the documents without verifying authenticity of the submitted photos and inspecting the facilities.

The representatives of pharmacy chains had not been brought to justice since they actively cooperated with the investigation.


The management and owners of the "36.6", Avdeyev, Kintsurashvili, Saganelidze, Shakaya and Zhibarovsky, were not involved in the corruption scandals and anti-trust (in any case not prosecuted). Nevertheless, the representatives of other pharmaceutical market players claim that it is the policy of their "36.6", its manipulation of debt and the purchase of pharmacies without registration of official transactions resulted in a total “neurotization” of the market.

"The large chains confirm that the atmosphere of total distrust tightly envelops the market and seriously adjusts the system of relations. Requirement of bank guarantees by the suppliers has become a standard rule. And insurers are clearly embedded in the system of relations in the entire supply chain and there is the risk of them becoming the main regulators of retail pharmacies and pharmaceutical distribution. They will be able to determine who should and who should not be in the market, will shape the industrial landscape, just relying on their own debarred presentation of the risks", Vademecum writes about this.

The publication predicts that because of the fact that market is controlled by the "36.6" group, the appearance of at least several stable and profitable pharmaceutical companies (with revenues in the region of 50-60 billion rubles a year) may take years.



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