The Serbian government will provide guarantees for a EUR 70 million loan for the pharmaceutical company Galenika, Minister of Economy Nebojsa Ciric has stated.

He also announced that Galenika Director Nenad Ognjenovic and most of the company management would be replaced, adding that the government had ordered an investigation into Galenika's operation.

He told a new conference on Thursday that the government expected to reach an agreement with banks by the end of next week.

The situation is difficult in Galenika, but the fast reaction has prevented a shortage of medicine and the company account should be unfrozen soon, Ciric remarked.

Galenika was managed poorly, he explained, adding that he expected strict control and restrictions in the future to ensure successful operation.

Explaining why the government did not act earlier, since there had been indications about problems within the company, Ciric pointed out that it was necessary to study the situation inside such a complicated system of 3,000 employees and analyze all the figures. He added that it was done relatively quickly.

Health Minister Zoran Stankovic said there would be no drug shortage in Serbia and that all the requirements for the company to resume production had been met.

Galenika's account is frozen, which inhibits production of certain medicines, and the problem stems from debts owed by large pharmaceutical distributors.

Galenika's debt is currently at EUR 120 million.