Alkaloid plans to establish a production plant in Serbia in partnership with Infarm, a small Serbian pharmaceutical company. In the first phase of the project Alkaloid is expected to invest € 4m and employ 25 people. The firm is expected to produce 19 products and export pharmaceuticals to the 15 countries where Alkaloid has an established presence. Once all investments have taken place Alkaloid will increase the number of staff to 70, which will enable the firm to receive official status as a domestic drug manufacturer on the Serbian market. Our view: We expect this news to have a positive trading impact as the development of production facilities in Serbia will allow Alkaloid to increase penetration in Serbia and boost sales on the Serbian market where it has 14.0% exposure. Alkaloid did not disclose the time frame of this investment; however, we believe this recent decision will not change the firm’s overall capital expenditures plan. It should be remembered that Alkaloid cancelled the development of a production facility in Vranje (in southern Serbia) earlier this year and we assume this latest plant will be a similar investment size. The firm probably changed the original investment plan with the intention of obtaining a better strategic location for the development of capacities. Alkaloid currently trades at MKD 4,411, or 52.0% below our fair value estimate. The stock is not widely covered and no consensus estimate is available.