Three years after graduating in radiophisics from Nizhny Novgorod State University, in 1985 Andrei Mladentsev joined Nizhpharm as a adviser to potential shareholders. He has since risen to become the CEO of the formerly Soviet pharmaceutical company. Having attended management training himself in the United States, he says he believes that personnel training and the nurturing of employee skills are the secret to business success.

Pharmaceuticals company Nizhpharm, a star of the Soviet economy founded in 1919, has proven it can also thrive in the market conditions of post-1991 Russia. Thesedays, the company employs some 1000 people Nizhny Novgorod an manufactures over 80 drugs. Nizhpharm CEO Andrei Mladentsev spoke with the Leader about his career and the importance of employee training at the company.

How did you come to head Nizhpharm? Was it luck or hard work?
A combination of both.

In 1995 a new executive generation took charge of the enterprise after privatization.
In a short time, they made Nizhpharm one of the top 20 large-scale pharmaceuticals producers in Russia. This made it an ideal niche for investments and I stepped in as an adviser to potential Nizhpharm shareholders. Eventually, the majority of my clients purchased the shares and, on Jan. 28, 1995 my leadership was recognized; I became a member of the board of directors (BOD).

A year later a diverse body of investors elected me a chairman of the BOD, because all our shareholders agreed to my proposal to concentrate on technical renovation, product promotion, research and cultivation of new production as well as personal training.

Later in 1998 the Nizhpharm heads were looking for additional sources of support, although in that period the company had been investing substantial amounts of money. We chose the European Bank for Reconstruction and Development (EBRD) as one option. The EBRD, upon evaluating the company's evolution, noted my leadership and contribution to its leading position on the local market. Bank representatives placed my becoming chief executive officer as one of their investment conditions.

Who are your investors, and what role do they play?
All our investors but one are unconnected to the pharmaceuticals business. Our company’s team owns 15 percent, outside individuals and companies control 60 percent and the EBRD has the remaining 25 percent. Starting from 1998, we have not had any outside investors except the EBRD, which invested $10 million that year. The EBRD has been playing a key role in our strategic planning for expansion on the national arena.

Nizhpharm was founded in 1919. How much has changed?
The enterprise’s long-lasting feature is its excellence in quality, which was once famous across the U.S.S.R. and among a number of countries in Eastern Europe, Asia and Africa. Our ointments and suppositories were well-known and are still our main source of profit. At present, despite multinational companies' intervention, we own 16.14 percent of ointment and 38.24 percent of suppositories market share.

Another virtue is the research experience once cultivated in the laboratories of Soviet Nizhpharm and the associated Kharkov University. It goes without saying that the fortune of past days contributed into our success as well.

Why is employee training so important?
We pay great attention to make sure our employees have the right background for the field they are operating in; e.g., every economist at Nizhpharm must have a degree in economics and a product manager a medical background. To advance the staff’s skills with respect to the evolving market, we send our people to train at top companies like Moscow-based Arthur Andersen. Unfortunately, we do not use trainers from Nizhny Novgorod companies as we require a broader perspective on local and global business.

How do people get involved with the training programs, and what kind of aspects of business do classes cover?
We assign or recommend particular training based on the results of an annual personnel-skills check. We find out the gaps people have and recommend the necessary program. Usually people never oppose a recommendation, since we all know the company's rule to promote successful students to higher positions.

The programs cover GMP and ISO education and training, professional education, like finance, sales, marketing and IT. We also develop administrative skills such as project and time management, strategic planning, negotiation and telephone skills and the like. We do not support, however, M.B.A. programs, since they take away too much of employees’ time.

How have the many training programs you have attended affected your attitude to employee training?
The first program that enriched my business philosophy took place in 1994 and was held by USAID in the United States and called "The Role of Banks in the Sub Market." At that time I was working in the finance markets. The study cases were New York Stock Exchange and the activities of investment banks.

Another eye-opening experience was in 1998 at pharmaceutical company Hoechst Marion Roussel in New Jersey. I learned about international marketing principals. This program was run under the auspices of Boris Yeltsin and was called “Presidential Program of Managerial Personal Training”

How have training programs influence my views? I consider them the source of the key to my personal success and that of Nizhpharm. I try to motivate my subordinates to participate in similar programs.

Why do you prefer the United States to Europe as a location for internships?
The fact that I went to the United States is the result of U.S. government investment. For Nizhpharm’s tight budget such long-distance trips are still quite expensive.

At the moment our company runs international personnel training and development programs that include internships for managers of finance, marketing, business development and personnel sectors. This kind of program is sponsored by various International Funds, which choose places in Europe. The only thing we can influence is the choice of the host company.

We also supply our engineers, technologists and quality experts with overseas training. These programs are supported by Nizhpharm and have the format of specific projects. We choose Europe in such cases since it is closer than the United States and less expensive.

Today about 10 percent of Nizhpharm products are exported to Baltic and C.I.S. countries. When do you plan to invade the Western market?
I support the idea of a Chinese philosopher who said that if one does not feel strong enough to attack, he should refrain from intervention. But the time will come once the warrior gains enough skill. In other words, yes, we are the leading Russian company in export of pharmaceuticals to the C.I.S. and Baltic countries and are one of the top five manufacturers.