‘In our first years of operation, I personally delivered medicine to the customers in fruit crates. I had no other choice, since we didn’t have a distribution background, but products had to be brought somehow to veterinarians,’ that’s how Péter Laczay, the General Manager of Lavet Gyógyszergyártó Kft. recalls the beginnings two and a half years ago.
The company, which has specialised in veterinary medicine right from the start, was founded by a couple of entrepreneurial-minded veterinarians in December 1991, during the first wave of company registrations following the regime change. ‘All of us were university people, but we were eager to make use of the theoretical and practical knowledge we had thus far obtained, also in the world of business. We did not have much money; all we could put together was scarcely enough to fund the company formation accounting for one million forints at that time,’ explains the executive.
At first, Lavet began with offering vitamin products for pets; and many would still associate the company’s name with these products. As the company had no capital resources for significant investments, their whole production was outsourced to a Kaposvár-based pharmaceutical centre.
‘We developed step by step, using our own resources. This might not be an advantage, but we never really thought of a major borrowing,’ explained Péter Laczay of their financing practice. This has not changed ever since: the company has never had any longterm debt.
Since the owners deployed exclusively own resources, they moved forward nice and slow. The first major milestone came as early as 2-3 years after their kick-off. It was then that the company embarked upon the development of its first own medicinal products and the marketing authorisation thereof. At the same time, they decided that the company should continue to exclusively focus on development, production and marketing authorisation activities, while distribution would be taken over by partner organisations. Their first partner was Ceva-Phylaxia which started to distribute Lavet’s products in other countries besides Hungary, thus shooting the company off to the global market.
In the meantime, they also concluded an agreement with Ceva aimed at a cooperation in production – from the mid-90s Lavet products were also manufactured in Nagytétény in addition to the currently existing Kaposvár-based production, which continued until 2002 when the company’s first production facility was launched closer to Budapest, in Kistarcsa. Ever since the unit has been upgraded multiple times; today’s operation is carried on in four different buildings accommodating also the company’s headquarters.
In parallel to developing their own production capacity, they also launched a range of new products to the market and started to open for western markets. They took the first step in this direction in 2004. It was then that Lavet agreed terms with one of the world’s leading veterinary medicine companies over the Danish distribution of Lavet’s antibiotic product designed for pigs. This was followed by a series of similar agreements on other major markets.
International expansion boosted Lavet’s growth as well. The company, which realised only 500 million forints in revenue in 2003, out of which 80-85 percent in Hungary, was busy fulfilling orders in the amount of 2.1 billion forints five years later, the largest part coming from international sales. By 2013, export exceeded 80 percent and the company reached a turnover of 3.6 billion forints. The operational model, however, did not change: Lavet was in charge of the development, production and marketing authorisation of medicines, while contracting with Western European partners for the sales of products, which they were allowed to market under their own brand names.
Due to the flattening demand for antibiotics in Western Europe in the last 2-3 years, the Hungarian company’s growth has come to a temporary halt, but they expect another leap forward this year. Lavet has lately developed a new technology which has earned a licence for the company to manufacture one of the flagship products of the world’s second largest producer in veterinary medicine.