Poland. Polish Pharmaceutical Industry
Resilience and reinvention in a changing marketplace”. A summary of Polish pharmaceutical industry After Q3 2013, there were 66 pharmaceutical companies (employing more than 49 workers) operating in Poland, and domestic drug production satisfy 60% of the national medical drug consumption in volume terms, according to the data presented by the Minister of Economy Janusz Piechociński on his blog.
The most important pharmaceutical manufacturers include Polpharma, USP, Adamed and LEK-AM. The pharmacy sector in Poland suffered a decline in financial performance of companies in years 2011-2012. The gross profit in 2010 reached PLN 1.81 bln, while in 2012 it declined to PLN 0.99 mln. In 2010, the debt amounted to PLN 4.42 bln, while in Q4 2012 it reached PLN 4.63 bln and in Q2 2013 – PLN 1.03 bln. The capital expenditure has also declined: from PLN 653 mln in 2010 to PLN 448 mln in 2012 and PLN 198 mln in 9M 2013.
According to the Ministry of Economy, the decline in revenue has also resulted in staff downsizing – from 21,842 employees in 2010 to 19,471 after Q3 2013. In 2010, the gross margin in this sector amounted to 11.35%, but it dropped to 9.2% in 2011 and to 7.17% in 2012. After Q3 2013 it rebounded to 11.82%. The Polish pharmaceutical market is quite peculiar due to the high share of generic drugs in national sales.
Generic drugs dominate the local market with 66% in national sales in 2012, according to the Polish Agency of Information and Foreign Investment. The share of generic drugs is the highest in Europe.
The global sales of generic drugs is rising. Deloitte reports that, while in 2004 generic drugs made up a
mere 5.9% of the global sales, in 2018 this share is to increase to 10.3%. This development is a result
of ongoing expiry of patent protection for drugs. The consequence is that in 2012 alone, the
pharmaceutical companies lost USD 38 bln around the world due to the loss of patent protection of
their products.
Is recovery on its way?
The experts look to the next couple of years with optimism. Deloitte reports that despite the
unfavorable environment and bad situation in the industry, the pharmaceutical companies will
experience recovery in 2014 as well as face certain challenges.
“The development of this sector is driven by the aging society, higher frequency of chronic conditions,
as well as expected increase in government funding on healthcare.
The projected increase in
government expenses on healthcare will reach globally ca. 5.3% annually. Emerging markets, where
the economic growth rate is the highest, provide the most opportunities of increased revenue for
life-sciences companies,” said Lukasz Slawatyniec, a managing associate at Deloitte Legal in a
conversation with egospodarka.pl website, at the end of April.
The authors of Deloitte report point out however that pharmaceutical, biotechnology and medical
technology sectors will have to deal with certain problems.
The first problem is healthcare reforms
planned in a number of countries, second one is the need for innovation, third one is the need for
adherence to rigorous laws and finally, the last problem is the process of consolidation and
globalization of the global markets.
OTC market - the best performing segment
Experts are the most optimistic towards OTC drugs segment of the pharmaceutical industry in Poland.
Poland's over-the-counter drug market is expected to reach 6.6% average annual growth in years
2013-2016, researcher PMR said in a report at the end of October 2013.
“Higher interest of retail stores in drugs and dietary supplements will cause a dynamic growth in sales
in the non-pharmacy sector, which will achieve higher growth rate than the pharmacy sector,” the
report added.
Maintaining an increased 8% VAT rate on drugs until end-2016 will not have a negative influence on the
OTC growth market growth rate in this period, the researchers also said.
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