10213 - Pliva

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Environmental Review Summary

Project Number

10213

Company Name

Pliva d.d.

Date ERS Disclosed

Sep 29, 2000

Country

Croatia

Region

Europe

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Nov 9, 2000
Signed : Nov 17, 2000
Invested : Dec 6, 2000

Sector

Pharmaceuticals and Medicine

Industry

other

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

The project supports the growth and strategic development (the "Project") of Pliva d.d. (the "Company" or "Pliva"), the leading pharmaceutical company in Central and Eastern Europe (CEE). The purpose of the Project is to finance the Company''s corporate investment program which targets to further strengthen Pliva''s original research capabilities in order to maintain its leading position in CEE markets and to continue its rapid expansion into Western Europe and the United States. Pliva is the only pharmaceutical company in the region which is successfully carrying out original research, and which has a globally recognised and marketed product (Azithromycin). Pliva''s strategy for continued growth and development is to: (1) focus on the core pharmaceutical business while divesting from non-core activities (such as foodstuffs and cosmetics), (2) increase competitiveness of the core business through investment, particularly in R&D and technology (investments in fixed assets 1994-1998 totalled US$240 million equivalent), and (3) focus on further international expansion through acquisitions (recent acquisitions include pharmaceutical companies in Poland and Czech Republic), and through organic growth via branded and generic products.

Pliva''s investment program will include a construction and outfitting of a new 22,500 square meter Research and Development ("R&D") facility. Currently the Company''s R&D is conducted in three different locations and suffers from significant space limitations. Consolidation of R&D activities in one state of the art facility will increase efficiency and multi-disciplinary interaction. The layout and infrastructure of the new facility will ensure that all Pliva''s R&D activities will be performed in compliance with the international quality requirements (GLP). The investment will also represent a significant improvement in the working conditions of the scientists by increasing laboratory space per scientist to 26 square meters per scientist from the current 8-10 square meters (the world standard is 25-40 square meters). The total project cost is estimated at approximately US$ 113 million equivalent, and includes a construction of a new building, building equipment and installation, (such as ventilation, and heating), and laboratory equipment. The project completion is targeted for the end of 2002.

Environmental and Social

Pliva has presented plans to address these issues and demonstrate that the proposed Project will comply with applicable local regulations and World Bank policies and guidelines. HEPA filters achieving efficiencies up to 99 percent will be installed in all areas generating particulates, as well as, in the areas where Class II microorganisms (EU classification) are handled. The released emissions will be less than the applicable 50 mg/Nm3 World bank guideline. Other air emissions will be also controlled to ensure compliance with the applicable World Bank guidelines.

The liquid effluents will be released to the municipal sewer system as the PBF wastewaters. Currently, the local authorities do not treat these discharged wastewaters. However, Pliva anticipates that the city of Zagreb will install a wastewater treatment plant (WWTP) that will treat their wastewaters by the year 2005. It is expected that the treated wastewaters will be in compliance with the applicable World Bank guidelines.

Pliva will keep IFC informed about the construction plans for the municipal WWTP. By year 2003, Pliva will inform IFC of the status of this project and if by year 2004, the city of Zagreb has not began the installation of such WWTP, Pliva will propose an alternative course of action that would bring wastewater treatment into compliance with the applicable World Bank guidelines by the end of 2005. The hazardous wastes generated will be destroyed at Zagreb’s hazardous wastes incinerator.

Pliva is preparing standard operating procedures (SOPs) for all laboratory operations. Copies of the SOPs relevant to environmental, health and safety aspects will be submitted to IFC as soon as they are completed but not later than Project completion.

The laboratory will install safety prevention devices, the employees will be fully trained in environmental, health and safety aspects, and will be provided with and required to use personal protective equipment. Personnel exposed to risky conditions (i.e., low temperatures) will be further trained regarding measures to reduce hazardous exposures. Pliva will ensure that indoor workplace concentrations of the laboratory are in compliance with applicable World Bank guidelines.

The materials to be used at the laboratory will be properly handled and stored to prevent risks of accidents, spills, or leaks. All biomaterials will be handled inside bio-safety cabinets. Contaminated tools will be sanitized and sterilized. Experiments with radioactive materials will be conducted only in a dedicated area (Hot Lab) by personnel fully trained on safety handling of these materials. No CFC containing equipment will be installed at the laboratory.

The preventive maintenance, accident prevention, and contingency and emergency response programs will be completed before the laboratory begins operation. Pliva will submit copies of these programs to IFC before Project completion.

Pliva’s existing operations consist of its core pharmaceuticals business, agrochemicals, cosmetics, and foodstuffs which are produced at several plants. Pliva’s strategy is to divest from its non-core businesses by 2005 and focus on its core pharmaceuticals business. IFC has analyzed the potential environmental, health, and safety impacts in the following Pliva’s plants: PBF, Savski Marof, Kalinovica, Hrv. Leskovac, and Trogir. Pliva will upgrade the environmental conditions of existing operations, as needed, to comply with the applicable World Bank guidelines and policies. The necessary upgrades will be specified in a corrective action plan (CAP) which will be submitted to IFC before the first disbursement and will indicate, for each facility, the specific actions to be implemented, the implementation timeframe, and the associated costs.

The wastewaters from PBF, Kalinovica, and Hrv. Leskovac will be treated at the planned city of Zagreb’s WWTP, as discussed above. Wastewaters from Savski Marof plant will be treated at the Zapresic municipality’s WWTP, scheduled to be built by 2002, and which is expected to meet the applicable World Bank guidelines. Pliva will inform IFC of the progress of municipal WWTP construction by the end of 2001. If by that date, the municipality has not begun the installation of such WWTP, Pliva will present to IFC alternative measures that would bring wastewtaer treatment into compliance with the World Bank guidelines. Pliva will include a plan in the CAP with the alternatives for treating the wastewaters of the Trogir plant to reach compliance with the applicable World Bank guidelines by the end of 2005. The air emissions of Pliva facilities will be upgraded as necessary to comply with applicable World Bank guidelines. The specific measures will be included in the CAP.

Hazardous wastes generated by Pliva are currently incinerated at a Zagreb hazardous waste incinerator specially designed to burn these wastes. The compliance with World Bank guidelines will be confirmed before first disbursement and corrective actions, if necessary, will be included in the CAP. Assessment of any soil and groundwater contamination and recommendations for corrective action will be submitted to IFC by April 2001. Pliva has standard operating procedures (SOPs) for most of its operations including handling of materials. Pliva is currently upgrading the existing materials handling and safety at the plant by implementing a comprehensive prevention and emergency response programs which will include process safety information, process hazard analysis, training, emergency equipment, planning coordination as required by the Croatian regulations.

At Project completion and after implementation of the CAP, Pliva will commission an independent environmental audit and will submit the results to IFC to demonstrate compliance of the Project with the applicable World Bank guidelines and the Croatian environmental regulations.

Pliva has an environmental department in charge of overseeing the environmental performance of the Project, and ensuring compliance of the Project with the applicable environmental requirements. Pliva will develop and implement an environmental management system integrating thereby the environmental, health and safety activities of their operations to ensure the sound environmental performance of all its operations. Pliva has implemented significant environmental improvements in recent years under the Environmental Action Plan developed in the context of EBRD’s investment program in 1995.

Conclusion & Monitoring

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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