Important note: Information in this article was accurate in 1995. The state of the art may have changed since the publication date.

Reuters NewMedia, Inc. - 20 Jul 95
Roxana Dascalu / Reuters

Syringe-maker Sanevit SA, based in Arad, a city on the western border with Hungary and Yugoslavia, has launched the Balkan country's first public share offer by a private company.

It plans to add up to $2.2 million to its existing capital base of 1.7 billion lei ($865,600) by the end of August.

Sanevit managers say they built up from scratch the syringe and needle factory in Arad, which employs 180 people and operates advanced technology imported from Italy.

"Besides the Romanian market, we can supply East European and Middle East markets, and we already have good signals from Africa," said Sanevit general manager Mircea Roman after a tour of the whistle-clean factory.

Offsetting what Roman said was scant encouragement for the country's fledgling private sector, the public share issue will give Sanevit a vital shot in the arm for the completion of work on its production facilities.

The company was founded in 1992 by seven private corporate owners -- a local trade company, Arcasrom SA, which holds a 62 percent stake, a packager and five local building companies.

The syringe factory is the pet project of a handful of Romanian entrepreneurs, led by Arcasrom boss Mircea Costescu.

"We're not after a quick profit. In the beginning people said we're lunatics, to tie ourselves to raising money for a syringe factory, instead of cashing in a good commission from syringe or other imports," Costescu told Reuters.

Sanevit started production in April, with plans to produce up to 180 million syringes a year, as well as 400 million needles and to use its strategic location to tap nearby markets in Hungary and war-torn ex-Yugoslavia.

To solve cash problems common to many Romanian firms, Sanevit asked a local broker, GELSOR SA, to arrange its public share offer, also open to foreign investors, on June 26.

The move coincided with the opening of Romania's first stock exchange in half a century and was planned as a step towards listing Sanevit on the Bucharest bourse.

"We have had a good reaction to the public share offer, and we expect Sanevit to be among the first Romanian companies listed on the exchange," said GELSOR general manager Ioana Vlas.

Capital markets have been slow to develop in Romania since the 1989 collapse of communist rule.

This is among reasons why foreign investors have been slow to come to Romania, which is now at pains to eradicate an unwieldy legacy of communist-era corruption and bureaucracy.

"In 1990, Romania had a lack of disposable syringes and a serious AIDS problem. We wanted to do something with a social value," said Costescu, a dapper businessman in his mid-fifties who describes himself as "a pragmatic man with a vision."

Unlike most countries AIDS is a disease of children in Romania. Almost 3,000 Romanian children under 12 suffer from full-blown AIDS (Acquired Immune Deficiency Syndrome) -- about 98 percent of the cases recorded nationwide -- a situation largely blamed on precarious hospital conditions and lack of disposable syringes in the communist era.

Experts fear that core of AIDS sufferers combined with lingering problems of education and hygeine could lead to an explosion of AIDS among adults in the future.

Romania. with a population of 23 million, is East Europe's second-largest market after Poland. It needs around 300 million disposable syringes per year, latest official data show.

So far, Romania has resorted to imports of medical equipment, including disposable syringes, with trade liberalisation following the 1989 collapse of communist rule.

But Sanevit managers complain about official bureaucracy, saying it stiffles free enterprise. They are calling for the imposition of taxes on syringe imports, arguing that their syringes are 20 percent cheaper than current market prices.

GELSOR, one of the 30-odd securities companies operating on Romania's fledgling capital market, sees venture capital funds as a cure to Sanevit's problems -- on a market where GELSOR's Vlas says liquidity is now next to zero.

"Sanevit is a sound Romanian financial product. With another few good Romanian companies quoted on the bourse, stock exchange trading is sure to take wings," Vlas said.
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