The Polish pharmaceutical market, valued at approximately EUR 4.4bn in 2013 (IMS, 2013; at manufacturers’ net prices) ranks high in terms of size as the sixth biggest in Europe. However, in terms of per-capita market value, Poland holds one of the last places in the ranking, after Estonia, the Czech Republic and Bulgaria, with only EUR 115 per capita (IMS, 2013). Prices of drugs in Poland are among Europe’s lowest; generic drugs cost approximately 30% less than the European average, and the gap widens even further in the case of innovative drugs, which are 56% cheaper in Poland (IMS, 2013).
The structure of sales of open pharmacies in 2014 remained unchanged on 2012 and 2013, with reimbursable prescription drugs accounting for 37% of total sales, non-reimbursable prescription drugs – 22%, and OTC drugs and other products (referred to jointly as the OTC segment) – 41%. It should be noted that in 2011 reimbursable prescription drugs represented a major share of the market (45%), with non-reimbursable prescription drugs and the OTC segment accounting for 19% and 36%, respectively. Entry into force of the new Reimbursement Act marked a permanent change in the market structure – which is unfavourable for patients, as the average patients’ share in the price of drugs has increased.
Reimbursable drugs account for 37% of pharmacy sales. Therefore, decisions related the list of drugs and medical products eligible for reimbursement from public funds, drawn up by the Minister of Health, as well as their prices and the share of public funding, are a major factor for the financial condition of drug wholesalers and pharmacies. On January 1st 2012, the new Polish Act on Reimbursement of Drugs, Foodstuffs Intended for Particular Nutritional Purposes and Medical Products (referred to as the ‘Reimbursement Act’) came into effect, marking the most significant and comprehensive amendment of the pharmaceutical law of the past decade or more, affecting all players of the pharmaceutical market: drug manufacturers, drug wholesalers, hospitals, pharmacies and doctors. The new Act introduced a number of changes, including regulated fixed selling prices, fixed wholesale margins, and standardised method for calculating retail margins on reimbursable drugs, a ban on any sale incentive systems for reimbursable drugs, a new method for calculating limits for patient cost sharing in different limit groups, and making the amount of reimbursement contingent on the cost and time of drug therapy.
The Reimbursement Act has worsened the situation of patients and triggered a number of adverse effects on the Polish pharmaceutical market. The patient cost-sharing has increased and is now among Europe’s highest; as a result, the share of public drug reimbursement in the overall spending on drugs in Poland is very low. The situation is further aggravated by other barriers to access to medication, caused, among other factors, by the ‘reverse distribution chain’ (illegal sale of drugs by pharmacies to wholesalers and their subsequent resale abroad) and a ban on pharmacy advertisement (introduced by the Pharmaceutical Law and effective as of January 1st 2012). The latter provision, and more specifically its broad interpretation, not only prevents access to information about drugs and their availability, but also rules out the use of innovative solutions to facilitate drug purchases.
In addition, the conditions for retail and wholesale distribution of reimbursable drugs have deteriorated steadily since 2012. In 2012, the regulated wholesale margin on reimbursable drugs was fixed at 7%, to be cut down to 6% in 2013 and finally to 5% in 2014 (and is expected to stay at that level). Set at such a low level, the wholesale margin is not sufficient to cover costs and forces wholesalers to subsidise the distribution of such products. On the other hand, the financial standing of pharmacies has also been undermined as a result of lower margin on reimbursable drugs and development constraints due to the ban on using modern channels of communication with patients.
The size of Poland’s pharmaceutical market may the determined at three different levels:
One segment of the market is sales to hospital pharmacies, which buy drugs from wholesalers and directly from manufacturers.
In 2014, the value of pharmacy sales reached PLN 28,496m (up 2.7% year on year), the value of wholesaler-to-pharmacy sales was PLN 25,229m (up 5.1% year on year), and the value of drugs sold to hospital pharmacies stood at PLN 4,343m (up 14.7% year on year).
Source: Barometr PharmaExpert
Source: IMS Health (2014)
Source: IMS Health (2014)
The situation on the Polish pharmaceutical market will be driven by both internal regulations and developments, as well as on global trends. The latter include rising popularity of generic drugs, fast development of the specialist drugs segment, growing number of pharmacy networks, innovative methods of drug distribution and health monitoring (e-health), as well as strategic partnerships and gradual market consolidation.
Internal factors, which will provide strong drivers for growth of Poland’s pharmaceutical market in the coming years, include the accelerating population ageing process and higher incidence rate of lifestyle and chronic diseases. In addition, there is an overall trend towards the narrowing of differences in the standard of living and health expenditure between Poland and Western European countries where the healthcare spending is several times higher. On top of that, Poles are becoming increasingly aware of health-related matters and buy more drugs for disease prevention.
Source: GUS (Polish Central Statistics Office)
Source: in-house analysis on the basis of OECD data
The Lithuanian pharmaceutical market is small in comparison with markets of other CEE countries, with the annual turnover of EUR 0.4bn (IMS, 2013; at manufacturers’ net prices) and EUR 144 EUR per capita. On the one hand, the small size of the Lithuanian population puts a bar on a strong long-term growth of the country’s pharmaceutical market; on the other hand, however, predictability of the market and limited risks have driven the growth rate up to a solid single-digit figure over the past several years, and the CAGR until 2018 is expected at 3.7% (according to BMI). The Lithuanian market is home to 1,300 pharmacies and is highly consolidated – the top four players control 80% of Lithuanian pharmacies and hold an 85% market share.
The 2008 macroeconomic crisis gave rise to a need for higher operational efficiency in the pharmaceutical sector and for cuts in the public spending on drugs. As a result, in 2009 the country’ Ministry of Health launched the Plan for Drug Availability Improvement and Price Cuts, which reduced the National Fund’s spending on drug reimbursement. At present, pharmaceutical companies and Lithuanian government have reaffirmed their commitment to improving the access to innovative drugs for patients. In response to the trends prevailing in many Western European countries and in order to ease the burden on clinics, Lithuanian Parliament plans to amend the Act on Drugs to authorise pharmacists to provide pharmaceutical advice to patients.
In 2014, the value of wholesaler-to-pharmacy market in Lithuania reached LTL 1,646m (up 2.6% year on year)
Source: IMS Health
