CIN CG: Regimes change, but the Glossary is untouchable

Branimir Martinović's company, which grew during Đukanović's time into the main pharmaceutical distributor, in the decades after us achieved a turnover of hundreds of millions, still holds a complete monopoly and renders tenders in this area pointless

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Glossary's headquarters in Zabjelo, Podgorica, Photo: Boris Pejović
Glossary's headquarters in Zabjelo, Podgorica, Photo: Boris Pejović
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

There are 906 branded medicines on the basic, supplementary and special regime medicine list, which are paid for by the Republic Health Fund (FZO). For 92 percent of these drugs, the representative or authorized distributor is Glossary, Branimir Martinović, with subsidiary companies Glosarij CD and Medica! The company Farmerga, which is owned by the German group Fenix, represents 7,5 percent of the drugs, while the rest of 0,5 percent belongs to a couple of smaller Montenegrin pharmaceutical companies.

"This actually means that for 92 percent of these medicines that appear on tenders in the public procurement system, the supplier is known in advance because he is an authorized agent and distributor, i.e. in this case the Glossary company with subsidiary companies. The same applies to the company Farmerga and others participating in the traffic. This state of affairs shows all the senselessness of organizing public tenders because the winner is known in advance in each one," he wrote in October last year Goran Marinović, until recently the director of Montefarma, institutions and proposes to change such practice as part of the new Law on Health Care, by which this state company or FZO would take over at least part of the work related to the procurement of medicines.

Instead of the Government's reaction and the plan to end the decades-long monopoly of a private company on the drug market, which is constantly growing and exceeds 100 million euros, Marinović's dismissal followed. Minister of Health dr Vojislav Šimun, from the Europe Sad Movement (PES), threatened to file a criminal complaint against Marinović, due to alleged abuses.

Marinović claims for the Center for Investigative Journalism of Montenegro (CIN-CG) that his dismissal is politically motivated. During the rule of the Democratic Party of Socialists (DPS), the opposition accused the company Glossary of having a privileged position, and claimed that this company was one of the most important patrons of the party. Milo Đukanović.

After the change of government in 2020, the president of the Movement for Change (PZP) Nebojsa Medojevic he claimed that Milojko Spajic while he was the Minister of Finance in the 42nd Government, he made an illegal deal with this company, and later that it was one of the financiers of the PES election campaign.

CIN of the CG
photo: CIN CG

Before retiring, at the beginning of the presidential election race, in February 2023, Spajić started his election campaign from the City Tavern in Cetinje, which is owned by Martinović.

Domination

After the change of government, Glossary not only retained the monopoly it had during DPS, but profits also jumped, so this company was recognized as the largest growing company for two years in a row in 2021 and 2022.

In the last three years, the glossary had business revenues of more than a third of a billion euros, more precisely 340 million (2021 - 99.895.446, 2022 - 112.776.871, 2021 - 128.268.040), with a net profit that amounted to over five million euros each year. - over 16 million euros in the last three years.

CIN-CG obtained documentation that speaks of a systemically legalized monopoly.

Montefarma does not have millions of transactions
Montefarma does not have millions of transactionsphoto: Arhiva Vijesti

Montefarma's budget for the procurement of medicines last year was 99,1 million euros. The Glossary's share in that budget was 83,15 percent. After the rebalancing, the budget was increased to 115,4 million euros, and 71,38 percent of the money went to the Glossary. A total of 82,4 million euros. This company had the majority share in the previous two years as well.

"It is assumed that a market participant has a dominant position on the product market (goods or services) if its share in the relevant market is greater than 50 percent," states Article 14 of the Law on the Protection of Competition.

It is further stated that "two or more market participants are assumed to have a dominant position on the goods and services market if there is no significant competition between them and if their total share in the relevant market is greater than 60 percent (collective dominance)".

cin cg
photo: CIN CG

According to the practice and regulations of the European Union, such monopolies, especially in the sensitive area of ​​procurement of medicines, are very dangerous and unimaginable, because they are a threat to public finances and the health system. However, the Montenegrin authorities, including the Agency for the Protection of Competition, did not have an adequate reaction to this problem. According to CIN-CG information, foreign experts, representatives of the World Bank and other relevant institutions warned about this monopoly and the dangers it carries both due to possible corruption and the lack of real competition.

But, even though Glossarij was granted absolute dominance and monopoly on the drug market, it was not enough, so with two related companies, Glossarij CD and Medica, it achieves, as the Law says, collective dominance. During the last year, Glossary CD received 13,6 million euros from the budget for the procurement of medicines, and Medica 6,4 million, together with Glossary a total of 102,5 million. In total, 88,8 percent of the budget went to these three companies last year. The year before last, 76,68 percent, and in 2021, 76,30 percent of the total budget for medicines.

Last year, Farmerga participated with 17,29 percent of money from the budget, with 19,9 million euros, in 2022 17,17 percent - 13,1 million euros, in 2021 with 14,6 million, the percentage of participation in the total budget is was 18,67 percent.

Overall, private companies withdrew 106 percent of the money from the general budget for the procurement of medicines last year. Statistics transferred 100 percent, due to budget rebalancing.

Montefarm does not import, except when it is urgent

The state company Montefarm is not involved in these millions of transactions.

"Montefarm has not imported any medicine for the last seven, eight years. Except very rarely through emergency purchases, when medicines are missing, and for that approval the Ministry of Health", says Goran Marinović for CIN-CG.

"This is a key moment to deal with this kind of practice with legal solutions that are very simple, to prevent the unnecessary wastage of funds and, in the end, to fill the private pockets of individuals. Until this is resolved, it is completely irrelevant who will organize the public procurement process, because the winner of all tenders is known in advance", states Marinović in a letter to the institutions that he sent in October last year.

Marinović proposes to change the law to enable Montefarm as a state-owned company to directly purchase medicines from manufacturers. In that case, the state could take for itself all rebates or hidden rebates that manufacturers give to distributors, which represents an average of 30 percent of turnover. He clarifies that in this way, savings in the procurement of medicines that are on the lists would be between 28 and 30 million euros per year.

This document states that the current Montenegrin pharmaceutical market is characterized by features that are not known in the region or in Europe, and that they are the product of decades of state privatization.

It all started three decades ago when in 1991 the Assembly established the state institution Montefarm, with the aim of supplying the population and health institutions with medicines and other means for treatment.

A year later, the first private wholesale drug store in Montenegro - Glossary - was founded in Cetinje. Dozens of drug trading companies failed during the 1990s, but not Glossary, it did better in the new millennium.

The beginnings of creating a monopoly position date back to the end of the nineties.

"All ministers of health and directors of the Health Fund receive monthly corruption compensation in cash from the pharmaceutical mafia. He introduced that practice Ramo Bralic from SDP with Aco Đukanović", Medojević announced several times: "That's why all the assets of the ministers of health and the Fund since 1998, which they cannot justify with their regular income, should be confiscated!".

The MANS research center announced that Glosarij and Farmegra were among the privileged companies that the Investment Development Fund (IRF) helped in 2013 through the allocation of favorable loans, but also through the purchase of their million-dollar claims, 1,8 million euros each.

The business expanded, so in 2012, Martinović founded the company Glossary CD.

In an earlier study by CIN-CG, it was presented that the Glossary received over 2012 million euros from the state for drugs and medical devices from 2017 to 90. This is almost half of the funds available to Monterfam for the procurement of medicines from the state budget.

Glossary received a significant part of this figure, while Montefarma was at the head Budimir Stanišić. After he finished his directorship, at the beginning of 2017. the former director of Montefarma Stanišić buys half of the shares in the Medica company, with which he previously entered into contracts for the procurement of medicines on behalf of the state. The other half is bought by the son of the owner of the Glossary Goran Martinović, who is leaving this company at the beginning of 2018, still works at Glossary today.

The need for medicines is constantly growing, as evidenced by Montefarma's budget which in 2012 was 36,99 million, to increase to 2016 million in 49,43. In 2014, Glossary received 31,6 million from Montefarma for medicines budget, which amounted to 42,5 million. Official data shows that from 2018 to 2022, pharmaceutical consumption in Montenegro almost doubled - from 61,4 million to 119,4 million euros. This is a growth of an average of 18 percent per year, while the number of prescribed prescriptions grew by an average of five percent per year - from five to 6,2 million.

What did Radunović, Čirgić, Hrapović say

Problems in tenders for the procurement of medicines were highlighted during the DPS rule. That's right, in 2012, the then Minister of Health Miodrag Radunović told the then Minister of Finance Milorad Katnić that, if the Law on Public Procurement is not urgently amended, due to complicated and long procedures, the Montenegrin market will be affected by a large-scale shortage of medicines.

"A tender was announced for the procurement of insulin, but due to a complaint, the procurement of this drug, which 'preserves' the health of diabetics, was delayed for 57 days. I wonder who has the right to endanger the lives of 35.000 diabetics in Montenegro, and that's only because procedures that have nothing to do with life say so," said Radunović at the time.

He then emphasized that "someone who sits in some offices that are far from life, equated the procurement of building materials, cement or bricks with the procurement of medicines".

Claims about a monopoly in this highly profitable business could also be heard in 2017. The Health Fund asked the Ministry of Finance to change the method of procurement of medicines and medical devices. That institution, at the head of which he was Sead Čirgić, warned the Ministry that the complex and lengthy procedures of public procurement in healthcare have led to the existence of monopolies, significant price increases of certain medicines, as well as frequent shortages. They also pointed out that a large number of medicines are offered by one provider, which directly affects the price. They also cited examples of certain medicines whose price has increased by up to 97 percent in two years.

When the scandal broke out at the end of 2018 about the high prices of medicines that are three to five times more expensive than in Serbia, the Ministry of Health, headed by Kenan Hrapovic. The Ministry of Health has warned drug wholesalers and holders of licenses for the sale of medicines in Montenegro that in the event of the continuation of double prices, as well as inappropriately high prices of medicines, they will be forced to inform the competent authorities for the protection of competition - the Ministry of Economy and the Agency for the Protection of Competition. Nothing came of the report, and at the time Atlas Group claimed that he was Hrapovic's predecessor Budimir Apprentice, who was imposed by Milo Đukanović as the director of the hospital in Meljini, through the wholesale drugstore Glosarij and Montefarma, indebted that hospital and extracted money.

A few years ago, Medojević stated in the Assembly that the authorities do not arrest the owner of the Glossary for illegal actions because he is the godfather of the chief special prosecutor Milivoj Katnić.

The Network for the Affirmation of the Non-Governmental Sector (MANS) revealed at the end of 2021 that in July 2009, Katnić bought a 67.800-square-meter apartment in Podgorica's Vasa Raičković Street for 54 euros. Only four months after that, Katnić sold that apartment to the company Glosarij for 96.000 euros. Katnić justified the increase in the value of the apartment by nearly 30 euros, which happened in just a few months, with investments in reconstruction. MANS claimed that it was corruption through a gift.

When the pandemic started, over eight million euros in donations were paid to the National Coordinating Body for Infectious Diseases (NKT) in four months for the fight against the corona virus. NKT spent 1,7 million of the donated money. The most money from this fund was paid to the company Glosarij - 537.837 euros. The opposition and the public wondered how he was a humanist Hajriz Brčvak donated respirators that, according to the invoices he published to the public, cost 4.700 and 5.000 dollars, while Glosarij bought respirators and sold them to the state for 19.000 euros.

Fund on the verge of collapse: Calls to Novović and Abazović's idea

After the pandemic and the change of government, the Health Insurance Fund announced that the health system is about to collapse. It turned out that the FZO owes about 45 million to wholesalers and suppliers who supply medicines to Montefarm, of which as much as 75 percent or almost 30 million to just one business entity - Glossary, announced the director of the Fund at the time Dragoslav Šcekić. At the end of 2021, Šćekić called on the prosecution to investigate who and how brought the health system into a subordinate and controlled position. He pointed out that Montefarm cannot import, but must buy all medicines from the drugstore Glosarij, which invoiced 114 million euros on that basis in the previous two years.

Šćekić will become the Minister of Health in 2022, and the Movement Europe now accuses him of numerous failures in health care. In September 2022, Montefarma responded to the calls of PES addressed to them and the minister, along with the accusations of former ministers Spajić and Jakov Milatović.

"Debts not due in 2021, which were due at the end of that year according to the supplier Glossary in the amount of 15 million euros, at your insistence, they were simply transferred to 2022 through factoring with a firm promise that these funds will be planned in the budget for 2022. Of course, nothing from your promise", they stated from Montefarm.

At the same time, Medojevic called the chief special prosecutor Vladimir Novović to examine the deal from 2021 between the then Minister of Finance Spajić and the company Glosarij, in which the state gave guarantees and paid 17 million via cession.

In March of last year, at the Government session, then Minister of Health Dragoslav Šćekić said that it was necessary to stand in the way of the pharmaceutical mafia. Then he is the prime minister Dritan Abazovic stated that Montefarm should initiate the idea of ​​starting a factory that would produce medicines in Montenegro.

"Montefarm has become a Glovo for medicines in a targeted manner in Montenegro. It is just one distribution center. Instead of producing medicines, Montefarm reduced everything to being a place where various medicines arrive and are then driven to pharmacies by transport vehicles. Maybe that was the vision of the previous government. I responsibly claim that Montefarm can start producing drugs, at least those for mass consumption," said Abazović.

Stopped plans for a drug factory

Marinović says for CIN-CG that they made a preliminary study for the factory. According to the report, they should not have taken on debt because they could finance the construction with the 6.300 square meters that Montefarm has next to the Atlas capital center. According to the plan, it is estimated that the drugs produced in the new factory would occupy about 40 percent of the market share, with the possibility of increasing depending on the demands of the domestic and export markets. Marinović states that 400 employees are planned, and that in the first year the profit would be five million, and in the fifth, 25 million. In addition to the market effect, missing laboratories would also be opened within the factory, and the factory would be of great importance for the creation of drug reserves that Montenegro does not currently have.

In the Development Plan from last year, it is stated that the priority is for Montenegro to build at least one factory of essential medicines. As one of the important points, it is stated that Montenegro is the only one in the region that does not have its own galenic laboratory (production of simple drugs in small batches) and it is very necessary to establish it as soon as possible.

"According to the plan, the new galenic laboratory within Montefarm would produce from 180 to 200 galenic drugs - preparations on an area of ​​about 700-900 square meters, and the funds needed for its establishment would amount to between 880 thousand and one million euros". Implementation stopped last fall in the Ministry of Finance.

One year after the public initiation of this project, everything is as before. Glossary received 226 tenders in the last three years and three months of this year. In the structure of customers, Montefarm dominates with 94 percent, followed by KCCG with three percent, the Institute for Public Health and others with one percent each.

Connection between acting director of Montefarm and Glossary

The business is expanding, so the Martinovićs also have one of the largest private pharmacies, Tea Medica, and the owner of Glosarija Martinović has a 33 percent share in the health institution Moj Lab, which has three polyclinics in Podgorica, Ulcinj and Budva, and laboratories in 10 Montenegrin cities. Co-owners with the same share in Moj laba are Dragan Bokan, owner of Voli, and former director of KCCG, surgeon Milan Mijović.

Minister of Health Vojislav Šimun from PES recently accused Marinović in the Assembly that some lobbies grew during his mandate, claiming that he himself is neither part of, nor plans to be part of, the pharmaceutical lobby.

"One wholesale drug store had a budget share of 2021 percent in 83,8, 106,4 percent the following year, and 2023 percent in 90, and another company had 18 percent for the simple reason that it sold a much more expensive medicine," he pointed out. Simun.

He also announced that he would hand over everything to the prosecution.

After Marinović's dismissal, he was appointed acting director of Montefarma Aleksandar Bogavac. In his biography, it is written that he worked as a sales representative and medical representative in the company Farmegra, and that he held the position of supervisor of marketing and sales in the company Alkaloid in Podgorica.

Sacked after asking for a change of practice: Marinović
Sacked after asking for a change of practice: Marinovićphoto: Luka Zeković

By the way, the authorized distributor of the Alkaloid factory in Skopje for Montenegro is Glossary.

Medicines, business and basketball

Vladimir Martinović is the owner of four companies - Glosarij, Glosarij CD, Keywork Estate and Monte resort. He achieves the largest business income through Glossary - during the last year 128 million euros, and the profit was 5,6 million.

The income through Glossary CD in 2023 was 14,7 million, and the net result was 3,1 million.

Keywork Estate, in which Martinović is also a 411% owner, last year had an income of 191.964 and a profit of XNUMX euros.

In the last three years, Monte resort had an income of 200, with the profit from 6.000 in 2021, the year before last and last year being 94.000.

Through the company Glosarij, Martinović is the owner of 10 percent of The Badger MNE, and the company has had no business income for the last three years, last year it was in a loss of 22 thousand euros.

Until September 2022, Martinović was also the owner of Gradska Cetinje, now the owners are Jovan Martinović and Marko Martinović. She achieved a business income of 1,3 million during 2023, with a profit of 77 thousand euros.

Martinović was the co-owner and executive director of Evergreen, which has been under blockade since the end of 2005. The amount of the block is 629 euros. Until mid-2016, Martinović was the owner of 50 percent of the company Terra Properties doo Belgrade, which has been blocked since October 2018, with a debt of 152 thousand euros. Until 2014, he was a co-owner in the family company Monte vila Kotor, which is in liquidation.

In Glossary M and Glossary PH, which are also in liquidation, Martinović was an indirect owner. He was also a co-owner in the deleted company Sensilab.

Until May 2008, he was a co-owner of Baypharm, whose representative until 2013 was Oleg Obradović, the former chairman of the Board of the First Bank of the Đukanović brothers and one of the main actors in the Telekom affair. In this company, the bankruptcy procedure was introduced at the end of 2022. The tax debt amounts to 352 thousand euros.

Martinović's sons are the owners of one of the largest pharmacies in Montenegro, Tea Medica, which last year had an operating income of 21 million euros, and a profit of 972 thousand.

Martinović, Dragan Bokan and Milan Mijović are the owners of the health institution Moj lab, with a third share each. The profit in this company fell from 2,8 million in 2021 to 2022 thousand in 50, and last year it was in the minus of 462 thousand.

In addition to healthcare, basketball also connects the mentioned three. Mijović is a former doctor of the Budućnost basketball club and the basketball national team of Montenegro. Bokan is the head of the board, and Martinović is a member of the Board of Buducnost Volija.

Let us recall that the long-term president of the Basketball Association was Milo Đukanović.

CIN of the CG
photo: CIN CG

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