The 1996 presidential elections brought candidate Vladimir Bryntsalov mixed blessings.
The bad news was that he came in dead last -- No. 10 out of 10 candidates, with only 0.16 percent of the vote. The good news was that the flamboyant and eccentric billionaire gained international attention and got to keep his pharmaceuticals holding and the rest of his business empire, which Bryntsalov estimates brings in about $2 billion per year.
Bryntsalov is a man of many faces: He was admitted just last month to the pro-government Our Home Is Russia faction of the State Duma, but he has a long reputation as a deputy who rarely shows up for work. He has been described as a New Russian playboy, a man who, during the run-up to the presidential elections, playfully demonstrated his young wife's spandex-clad backside to a national television audience. Paris Match recently estimated his personal worth at some $2 billion. And to Russia's vodka drinkers, he is the man whose grainy portrait graces bottles of Ferane-brand vodka.
But the most serious side of Bryntsalov, 51, is as the leader of the Bryntsalov Individualno-Chastnogo Predpriyatiya -- the Bryntsalov Private Enterprise -- a holding company that includes four pharmaceuticals producers, a bank, sales and marketing divisions, and facilities that produce porcelains, fabric, stockings and vodka.
Those holdings, he says, are what makes him unique in the world of Russian politics: "Can you compare me with [Communist leader Gennady] Zyuganov or [LDPR head Vladimir] Zhironovsky, for example? These are senseless people who do nothing for the country. These are not creative people, they're destructive."
Duma deputies, by law, are prohibited from having private business interests. Bryntsalov, a native of Karachayevo-Cherkessia in the Caucasus Mountains, said his business empire does not get in the way of his job as a deputy. During the 1996 presidential elections, he said that his business proceeds go to his wife, Natasha.
"As a matter of principle I don't do business. But I do try to create conditions so that business can flourish in the country: lobbying for laws, creating laws for business," he said. "Of course, I live on dividends from the businesses I own, not on my salary as a State Duma deputy. I came to the Duma to serve the economy, to create conditions so that all parts of the economy could function well."
Despite his declared distance from business, one part of the economy that is functioning well is Bryntsalov's own corner of it.
The centerpiece of the Bryntsalov Enterprise is Ferane, Russia's largest pharmaceuticals holding company, which employs some 7,000 workers. Although domestic pharmaceuticals account for only 20 percent of the market, Bryntsalov has the largest piece of the Russian drug pie.
A rating published last month by the English pharmaceutical journal SCRIP listed Ferane as Russia's No. 1 pharmaceuticals producer last year. According to SCRIP figures, Ferane had $93.5 million in revenues in 1996. Its next closest competitors were Biosintez and Biokhimik, with revenues of $92.9 million and $73.2 million, respectively.
Bryntsalov estimated that his businesses account for nearly 500 billion rubles a month in revenues -- about $1 billion a year. Pharmaceuticals, by his calculation, account for about 20 percent of that, or $200 million a year.
The Bryntsalov Enterprise also owns the Rakhmanov textiles plant in Pavlov Posad, a porcelain plant in the southern Russian city of Cherkessk, alcohol production facilities and Medinvestbank, which provides financial services for other Bryntsalov divisions.
For its part, Ferane includes some of the most advanced drug-making facilities in Russia, producing insulin, antibiotics and gelatin capsules, according to the Skate information agency.
"We simply had no choice more than two years ago when determining who our partners should be for producing drugs under our license," said Jostein Davidsen, the head of the Russian representative office of the Norwegian pharmaceuticals company Nycomed. "Today, Ferane is one of the few firms in this country capable of producing medicines according to GMP [international Good Manufacturing Practice] standards."
Bryntsalov began to cobble his pharmaceuticals empire together in the 1980s. As head of the Pchyolka cooperative, which produced honey and medicines made from pollen and royal jelly, Bryntsalov founded the Drug Manufacturers Association, an organization that included, among other production sites, the huge Karpov Mosmedpreparaty pharmaceuticals plant.
When Moscow's Karpov plant was privatized in 1990, Bryntsalov bought 12 percent of the main factory at the Karpov plant for 480 million rubles -- $16 million by 1990 ruble rates, according to National News Service. He was made financial director at that time and given control of the firm's finances.
"I was involved in cooperatives for five years. During that time, I was able to save a bit, part of the money I invested into the factories I owned," he said when asked the source of his original capital.
Bryntsalov said that careful consideration, not happenstance, led him to target the pharmaceuticals industry.
"This is a profitable business. I read and watched to see what was profitable: Construction wasn't; arms production was good, but hard to get into; narcotics were illegal," he recalled. "The pharmaceuticals business had social significance and was quite profitable. Because of the research that goes into them, you can charge any price for drugs."
Bryntsalov was elected president of Karpov Mosmedpreparaty at a 1992 worker's collective meeting.
One of his first steps as president of Karpov Mosmedpreparaty was to register a trademark for a new pharmaceuticals holding company which united the Moscow factory with plants in the Moscow region city of Elektrogorsk. He chose the name Ferane, a variation of Verein, the name originally given to the Karpov plant by its pre-revolutionary German owners.
Before perestroika, the Karpov plant produced nearly 40 branded medical products, a large portion of which were ingredients used in subsequent drug production. The plant now takes a more profitable direction of producing finished products from ingredients processed elsewhere. The plant now manufactures some 200 branded products. In 1993, Ferane also began packaging Bulgarian and Indian drugs.
The Bryntsalov Enterprise has carried out large-scale modernizations, investing some $300 million to bring the Karpov plant up to standard to produce drugs under license for foreign pharmaceuticals companies, including Nycomed, Germany's Schering and U.S.-based Schering Plough, according to research by Skate.
Lilia Titova, Ferane's marketing director, said nearly 20 percent of Ferane's products are made using foreign equipment and with foreign technology.
"Russian-produced Actovegin is practically no different from that produced in Austria," said Nycomed's Davidsen.
According to Bryntsalov Enterprise director Viktor Kolomin, only about 20 percent of Ferane's production is sold commercially, Skate reported. The remaining 80 percent is produced to fill state orders. Because the state may pay in consumer goods rather than cash, he said, a special barter division has been set up within the company. Goods obtained as barter payments account for 20 percent of Ferane's sales.
Bryntsalov's Ferane has had its share of high-profile troubles: Last spring, Moscow Mayor Yury Luzhkov declared a tax war on the company.
At the time, Luzhkov said, Bryntsalov owed 18 billion rubles ($3.2 million) in tax arrears to Moscow tax authorities. City officials accused him of trying to evade paying taxes by re-registering his company in the Caucasian region of Kabardino-Balkaria. Luzhkov told news services that the city's government was considering harsh measures to force Bryntsalov to pay his debt, including the possibility of cutting short the lease for the land where Ferane is located.
"It wasn't Luzhkov who opened my plant, and it won't be him who closes it down, and this won't ruin our relations," Bryntsalov said at the time.
According to Boris Khalkechev, head of the Cherkessk tax inspectorate, Ferane is still registered in Karachayevo-Cherkessia -- Bryntsalov's homeland, which is next door to Kabardino-Balkaria -- and is the largest source of income for the local budget.
"I won't tell you how much it pays, but it would take me my entire life to earn that much," Khalkechev said.
Vodka production remains a significant source of income for the Bryntsalov Enterprise, although the exact revenue figures may be difficult to approximate.
"Alcohol production creates possibilities that are simply hidden from observers: I don't think that even the Federal Security Service or tax police could figure it out," said Vladimir Pribylovsky, an expert from the Panorama center, which is currently researching Bryntsalov's biography.
Bryntsalov himself says that his vodka distillery accounts for less than 6 percent of the company's revenues.
"I've rented out my vodka production," he told Kapital. Bryntsalov says high taxes have made vodka production unprofitable. In the future, the businessman plans to begin growing grapes in the Krasnodarsky Krai and producing wine in Elektrogorsk.
Bryntsalov may have good reason to hope for a profitable wine-making business. Over the past few months, observers have noted a decline in his pharmaceuticals empire. SCRIP reported that Ferane sales fell by 5 percent last year, while Russia's second-largest pharmaceutical maker, Penza-based Biosintez, witnessed an increase of 3.8 percent.
Viktor Kuzmin, deputy director of Biosintez, said the drop in sales might be explained by the fact that Ferane products are priced approximately 50 percent higher than those made by regional producers such as Biosintez.
-- Alex Bratersky contributed to this article.
The bad news was that he came in dead last -- No. 10 out of 10 candidates, with only 0.16 percent of the vote. The good news was that the flamboyant and eccentric billionaire gained international attention and got to keep his pharmaceuticals holding and the rest of his business empire, which Bryntsalov estimates brings in about $2 billion per year.
Bryntsalov is a man of many faces: He was admitted just last month to the pro-government Our Home Is Russia faction of the State Duma, but he has a long reputation as a deputy who rarely shows up for work. He has been described as a New Russian playboy, a man who, during the run-up to the presidential elections, playfully demonstrated his young wife's spandex-clad backside to a national television audience. Paris Match recently estimated his personal worth at some $2 billion. And to Russia's vodka drinkers, he is the man whose grainy portrait graces bottles of Ferane-brand vodka.
But the most serious side of Bryntsalov, 51, is as the leader of the Bryntsalov Individualno-Chastnogo Predpriyatiya -- the Bryntsalov Private Enterprise -- a holding company that includes four pharmaceuticals producers, a bank, sales and marketing divisions, and facilities that produce porcelains, fabric, stockings and vodka.
Those holdings, he says, are what makes him unique in the world of Russian politics: "Can you compare me with [Communist leader Gennady] Zyuganov or [LDPR head Vladimir] Zhironovsky, for example? These are senseless people who do nothing for the country. These are not creative people, they're destructive."
Duma deputies, by law, are prohibited from having private business interests. Bryntsalov, a native of Karachayevo-Cherkessia in the Caucasus Mountains, said his business empire does not get in the way of his job as a deputy. During the 1996 presidential elections, he said that his business proceeds go to his wife, Natasha.
"As a matter of principle I don't do business. But I do try to create conditions so that business can flourish in the country: lobbying for laws, creating laws for business," he said. "Of course, I live on dividends from the businesses I own, not on my salary as a State Duma deputy. I came to the Duma to serve the economy, to create conditions so that all parts of the economy could function well."
Despite his declared distance from business, one part of the economy that is functioning well is Bryntsalov's own corner of it.
The centerpiece of the Bryntsalov Enterprise is Ferane, Russia's largest pharmaceuticals holding company, which employs some 7,000 workers. Although domestic pharmaceuticals account for only 20 percent of the market, Bryntsalov has the largest piece of the Russian drug pie.
A rating published last month by the English pharmaceutical journal SCRIP listed Ferane as Russia's No. 1 pharmaceuticals producer last year. According to SCRIP figures, Ferane had $93.5 million in revenues in 1996. Its next closest competitors were Biosintez and Biokhimik, with revenues of $92.9 million and $73.2 million, respectively.
Bryntsalov estimated that his businesses account for nearly 500 billion rubles a month in revenues -- about $1 billion a year. Pharmaceuticals, by his calculation, account for about 20 percent of that, or $200 million a year.
The Bryntsalov Enterprise also owns the Rakhmanov textiles plant in Pavlov Posad, a porcelain plant in the southern Russian city of Cherkessk, alcohol production facilities and Medinvestbank, which provides financial services for other Bryntsalov divisions.
For its part, Ferane includes some of the most advanced drug-making facilities in Russia, producing insulin, antibiotics and gelatin capsules, according to the Skate information agency.
"We simply had no choice more than two years ago when determining who our partners should be for producing drugs under our license," said Jostein Davidsen, the head of the Russian representative office of the Norwegian pharmaceuticals company Nycomed. "Today, Ferane is one of the few firms in this country capable of producing medicines according to GMP [international Good Manufacturing Practice] standards."
Bryntsalov began to cobble his pharmaceuticals empire together in the 1980s. As head of the Pchyolka cooperative, which produced honey and medicines made from pollen and royal jelly, Bryntsalov founded the Drug Manufacturers Association, an organization that included, among other production sites, the huge Karpov Mosmedpreparaty pharmaceuticals plant.
When Moscow's Karpov plant was privatized in 1990, Bryntsalov bought 12 percent of the main factory at the Karpov plant for 480 million rubles -- $16 million by 1990 ruble rates, according to National News Service. He was made financial director at that time and given control of the firm's finances.
"I was involved in cooperatives for five years. During that time, I was able to save a bit, part of the money I invested into the factories I owned," he said when asked the source of his original capital.
Bryntsalov said that careful consideration, not happenstance, led him to target the pharmaceuticals industry.
"This is a profitable business. I read and watched to see what was profitable: Construction wasn't; arms production was good, but hard to get into; narcotics were illegal," he recalled. "The pharmaceuticals business had social significance and was quite profitable. Because of the research that goes into them, you can charge any price for drugs."
Bryntsalov was elected president of Karpov Mosmedpreparaty at a 1992 worker's collective meeting.
One of his first steps as president of Karpov Mosmedpreparaty was to register a trademark for a new pharmaceuticals holding company which united the Moscow factory with plants in the Moscow region city of Elektrogorsk. He chose the name Ferane, a variation of Verein, the name originally given to the Karpov plant by its pre-revolutionary German owners.
Before perestroika, the Karpov plant produced nearly 40 branded medical products, a large portion of which were ingredients used in subsequent drug production. The plant now takes a more profitable direction of producing finished products from ingredients processed elsewhere. The plant now manufactures some 200 branded products. In 1993, Ferane also began packaging Bulgarian and Indian drugs.
The Bryntsalov Enterprise has carried out large-scale modernizations, investing some $300 million to bring the Karpov plant up to standard to produce drugs under license for foreign pharmaceuticals companies, including Nycomed, Germany's Schering and U.S.-based Schering Plough, according to research by Skate.
Lilia Titova, Ferane's marketing director, said nearly 20 percent of Ferane's products are made using foreign equipment and with foreign technology.
"Russian-produced Actovegin is practically no different from that produced in Austria," said Nycomed's Davidsen.
According to Bryntsalov Enterprise director Viktor Kolomin, only about 20 percent of Ferane's production is sold commercially, Skate reported. The remaining 80 percent is produced to fill state orders. Because the state may pay in consumer goods rather than cash, he said, a special barter division has been set up within the company. Goods obtained as barter payments account for 20 percent of Ferane's sales.
Bryntsalov's Ferane has had its share of high-profile troubles: Last spring, Moscow Mayor Yury Luzhkov declared a tax war on the company.
At the time, Luzhkov said, Bryntsalov owed 18 billion rubles ($3.2 million) in tax arrears to Moscow tax authorities. City officials accused him of trying to evade paying taxes by re-registering his company in the Caucasian region of Kabardino-Balkaria. Luzhkov told news services that the city's government was considering harsh measures to force Bryntsalov to pay his debt, including the possibility of cutting short the lease for the land where Ferane is located.
"It wasn't Luzhkov who opened my plant, and it won't be him who closes it down, and this won't ruin our relations," Bryntsalov said at the time.
According to Boris Khalkechev, head of the Cherkessk tax inspectorate, Ferane is still registered in Karachayevo-Cherkessia -- Bryntsalov's homeland, which is next door to Kabardino-Balkaria -- and is the largest source of income for the local budget.
"I won't tell you how much it pays, but it would take me my entire life to earn that much," Khalkechev said.
Vodka production remains a significant source of income for the Bryntsalov Enterprise, although the exact revenue figures may be difficult to approximate.
"Alcohol production creates possibilities that are simply hidden from observers: I don't think that even the Federal Security Service or tax police could figure it out," said Vladimir Pribylovsky, an expert from the Panorama center, which is currently researching Bryntsalov's biography.
Bryntsalov himself says that his vodka distillery accounts for less than 6 percent of the company's revenues.
"I've rented out my vodka production," he told Kapital. Bryntsalov says high taxes have made vodka production unprofitable. In the future, the businessman plans to begin growing grapes in the Krasnodarsky Krai and producing wine in Elektrogorsk.
Bryntsalov may have good reason to hope for a profitable wine-making business. Over the past few months, observers have noted a decline in his pharmaceuticals empire. SCRIP reported that Ferane sales fell by 5 percent last year, while Russia's second-largest pharmaceutical maker, Penza-based Biosintez, witnessed an increase of 3.8 percent.
Viktor Kuzmin, deputy director of Biosintez, said the drop in sales might be explained by the fact that Ferane products are priced approximately 50 percent higher than those made by regional producers such as Biosintez.
-- Alex Bratersky contributed to this article.
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