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Shareholders: At the end of the period of 2006, consolidated several years of good results for the Colombian Entity of veterinary Products VECOL S.A , In my capacity as President and under the guidance of Board, I am pleased to present the report of the financial year from January 1st and 31 December of the year mentioned. In the period ended, the Company achieved a sales volume of $ 41.026 million and net earnings of $ 3,084 million, increasing in the last six years revenues of $ 1.668 million and net earnings totaling $ 21.798 million, figures that confirm their Continuing the modernization plan of the Company, the main goal for 2006 was the culmination of the construction of the plant to produce bio-safe vaccine against FMD that through the efforts of a committed human resources, was certified by the ICA on 18 August same year, thus meeting the requirements of the regulator that allowed him to continue the production and marketing of our flagship Within the process of continuous improvement, VECOL assure their image of quality, having achieved more demanding certification of Biological Safety NSB 3-A plant for vaccine production FMD and recertifications in Good Manufacturing Practices (GMP) product injectable pharmaceuticals and quality management standard ISO 9001:2000, which makes it the leading laboratory of veterinary In response to market growth policy adopted by the Company, was consolidated portfolio of the agricultural line with the market launch of 20 products contributing to agricultural chemicals development of government policy of cost reduction, through the Ministry of Agriculture and Rural Development, taking into account the falling prices of these inputs in relation to goods similar on the market In implementing the business expansion plan, the Company signed a strategic alliance with Corpoica giving access to the production of new organic products. Similarly, finalized agreements with trade bodies and entities linked to the agricultural sector, within which highlights FEDEPAPA, Molinos Roa Florhuila, among In developing the policy of strengthening the human resource, he complied with the programs occupational health training and guaranteeing a source of welfare for staff and organization. Of similarly, plans were advanced training on standards of Quality, Good Practices Manufacturing (BPM) and Biosafety, which fulfill In line with the employment goals, the pension fund established the Skandia Trustee S.A amounted to $ 11.683 million, covering 99% of the projected actuarial calculation at 31 December 2006 in the amount of $ 11,698 million, directed to give workers the security VECOL to have sufficient resources to pay future The General Secretariat of the company established itself as the coordinating office for relations between the Presidency and the administrative, planning, production and trade, ensure the transparency in the efficient management of internal relationships that determine corporate governance; likewise, managed recruitment processes, acting in accordance with current regulations for semi-public The Internal Audit requirements promptly attended authorities ensured the drivers and compliance and enforcement of institutional rules, looking for business VECOL gave strict compliance with the law 603 of 2000 regulating industrial property issues and copyright, of vital importance for the creation of competitive advantages that enable the company expansion and market their products As one of the key objectives of VECOL modernization, regulatory compliance emanating from the ICA, beginning in 2000 began the design and feasibility studies for new plants, priority to tackle these requirements and have the financial In 2003, started and completed construction of the Pharmaceutical Injectable Plant and Weight central, which is in operation since 2004, enabling them to optimize production processes of the company and bring new products to this portfolio Continuing with plans for expansion and modernization project in June 2005 began building a new plant producing bio-safe vaccine against FMD, which today VECOL proudly presented by the technology employed, becoming the first in the country and more Modern Latin America. During this period, in addition, was adapted and reshaped the area free for the production of cells and media, ensuring Consistent with the Modernization Plan, have been replaced and purchased equipment for laboratories of production of other biological, among which we mention Are currently carrying out the designs and technical and economic feasibility for the construction of other production plants in biological GMP regulations, will be implemented during the durations for the years 2008 and 2009. VECOL in the expansion and modernization plans has invested a figure close to $ 30,000 million, including infrastructure and equipment, thanks to the support given by our shareholders at capitalize on the profits of the last five years, the tax benefits granted by the government to appropriate investment and credit conditions, allowing them time and without limitations financing these projects. Thus, the Company may face in the best context the issue of economic globalization and as new situations and challenges that can generate the signing Planning The activity of this area it was essential to advancing the modernization plan layout by the administration to conduct a strict and constant monitoring of the bio-safe construction plant production of vaccines against FMD and the adequacy Similarly, contributed to improving the strategic planning model, conceived as monitoring tool for management indicators and progress of individual projects implementation. As part of the company, We advanced studies and research papers market intelligence, leading to the adoption of strategies for market penetration In coordination with the involved areas, we began internal studies of the modernization project and design of the new plant of production of other biological. Production The management of this area is focused to meeting the budgeted production schedules. It note that, after granting certification of biosafety production plant FMD vaccine, efforts were directed to the manufacture of new batches of the biological, the specific purpose of meeting the needs of the national eradication campaign and take the international commitments. As a result of the exercise, could have a VECOL inventory at the end of the year, 9 lots are packed, for a total of approximately 22 million doses of Aftogan 2ml product. In biological line, highlighting the launch of the new freeze dryer liofilization, which expanded the capacity of production Equine Encephalitis Vaccine, Cepa 19 and Colervec, aimed at covering the demand vaccination campaigns organized In pharmaceutical products, modified the production model, optimizing the capacity of plant and equipment, and it improved the batches manufactured and The research and development activities were aimed at revising formulations injecting drug approval and efforts of toxicological concepts, to obtain records of agrochemicals. Corpoica, Tibaitata office, meets a production plant destined for the production of baculovirus biopesticides, which will be marketed by VECOL. The area of Engineering participated actively and effectively in the certification process developed by the Entity and made the general preventive maintenance programs to its facilities and equipment under the objective of launching the new plant biosecurity and the proper functioning of your automation. Acting in accordance with regulations of the ICA, actively collaborated in structuring the plant personnel, who under the concept of biosecurity, monitor and This area, was erected at the base of support and follow up the certification process, with emphasis on system documentation, including manuals, historical records, testing and implementation of parallel programs for internal and external Developing quality policies were made of raw materials analysis, testing quality control of products and review of the different formulations, corresponding to the lines produced and distributed by VECOL. Additionally, with the support of field technicians, attended the concerns raised via our customer At the start of the period of 2006, had a significant VECOL available inventory of vaccine Aftogan 2ml. noncapsidal protein that, by not being able to sell in the domestic market, the Administration within their program of export growth and reputation in the markets Latin American markets it as Uruguay and Venezuela, thanks It should be noted that despite the low placement of the biological in the first national vaccination cycle the largest volume and value prices achieved in exports, coupled with the production of biological in the new plant biosecure in the new facility during the second half of the year, allowed to VECOL a record check on the validity analyzed to place it in $ 19,391 million, up 5.7% to sales 2005, The line of biological facture the amount of $ 5,651 million, highlighting the increase in sales vaccination against classical swine fever (Colervec), Cepa 19 and Equine Encephalitis, which is VECOL largest supplier of campaigns. Furthermore, pharmaceutical products reached sales of $ 8.881 million, representing sales growth of 10.7% over the previous year's $ 8.023 million. We emphasize the significant impact of new products in the portfolio, as Ivermectin 3.15 In Aviculture line, due to difficulties in the supply of the traditional suppliers, Lhomo Animal Health, the sales fell to $ 2.817 billion. In this situation, the Company began operations to get identification of new suppliers, which led to a partnership with laboratories Immuner from Argentina, that allows you to access products from this line towards the month of February 2007. In keeping with the commitment made by the Ministry of Agriculture and Rural Development with farmers in the country, the marketing activities VECOL be routed, in particular, to promote of agricultural products line with the timely dissemination of price lists to the public that in the practice, influenced the regulation of them. Sales of the line, comprising 20 products, within which are herbicides, fungicides and insecticides for domestic consumption amounted It should be noted that the launch strategy for the agricultural line began with meetings of a regional type in the cities of Yopal, Villavicencio, Neiva, Ibague, Espinal, Pereira, Pasto, Zipaquira and Monteria, which extended in 2007 to Medellin, Bucaramanga, Barranquilla and other venues. The events held were place to launch new products become a way of bringing a group comprising more than 1,600 people, which includes distributors, agronomists, farmers and customers. In support of the positioning of the portfolio of agricultural products, developed an advertising plan media guidelines included in major radio chains in the country, which covered 546 municipalities in the 25 departments discussed previously, Exports of the Company, which compared to total sales represent 23% to $ 9,331 million, excelling in this area Aftogán 2ml sales and pharmaceutical products to countries In the marketing and promotional activities, VECOL was present in 16 major exhibitions, 45 intermediate and 135 events between seminars, union meetings, field days and week promo. The technique area conducted training seminars and talks to producers, vaccinators, vendors and college students. Likewise, field work was carried out to document dossiers about the new formulations that complement the commercial portfolio and corporate videos were updated which included the presentation of the new plant biosecurity of the FMD vaccine. In the year under review, VECOL reached 7% growth in income for the year 2005, despite the transition period resulted in the modernization plan that will ensure its competitiveness and future sustainability. This percentage is very representative, given that overall growth the animal health industry in the country was 0.43%, as reported by Aprovet, unionization that consolidates performance The Company's assets grew by 20.5%, rising from $ 82.046 billion in 2005 to $ 98,895 million in 2006, is to be noted that this increase is given as a result of the construction of The new plant biosecurity and equipment purchases. The level of indebtedness reached a figure close to $ 27,000 million, including $ 22.000 million in investment plan to modernize the institution and $ 5,000 million Particularly noteworthy is the financial management deployed in obtaining credit, characterized by low rates interest, grace periods and made unreal guarantees. Similarly, during the period was made to free up resources by $ 1,924 million from the sale of assets unproductive, which had been purchased in The paid capital was increased by 41%, going from $ 15,610 million in 2005 to $ 21.985 million in the 2006. The legal reserve increased by 61% from $ 1.161 billion recorded in 2005 to $ 1.871 million in 2006, caused increase in the capitalization The gross income proceeds from this effect, reached the sum of $ 18,202 million, representing a decrease compared with the previous year, caused mainly by the amortization of costs and expenses of the adequacy of the area free of cells and media production, basic inputs for formulation of the vaccine FMD. Similarly, operating profit reached $ 4.699 million, equivalent to 11.5% of total Net income for the year was $ 3.084 million favorable result, considering that during the Effective financial expenses disbursed credit obtained to meet the construction and purchase of equipment for the new plant biosecurity. VECOL, business combination between the public and private proudly reaffirms its social commitment for contributing to the strengthening of government initiatives designed by the Ministry of Agriculture and Rural Development, through a policy of cost reduction as an incentive for production of the agricultural sector as the market regulator located, offering high quality products Shareholders: Whether this opportunity to thank, especially, that for the past five years has approved the capitalization of profits, which joined the effort given by the tax benefit Government investment has allowed VECOL forward the construction and equipping of teams production plants of injectable pharmaceuticals and vaccines To ensure the comprehensive development of the Company, is awaited with optimism that we continue providing the support and collaboration for the construction The result shows that the country today is the synthesis of a work coordinated by activities, developed by a human resource committed to the entity and executed under the guidelines and directives by Board and the policy environment for the national government through the Ministry of Agriculture and

Source: http://www.vecol.com.co/sitio/imagesAdmin/MANAGEMENTREPORT2006.pdf

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