Multinationals Cautious on Polish Drug Market

Local observers suggest that Poland's generics-dominated reimbursement list and harsh pricing policy is discouraging the multinational research-based sector. With not one innovative molecule added to the national reimbursement list since 1999, expectations are poor this year for producers of innovative medicines.

Market distortions created by the government's cost-containment policy are already affecting multinationals. Growing evidence suggests that as such medicines are generally only added to sections of the reimbursement list where competition is tough, innovative drugmakers' local margins have been hit hard. However, exclusion from the list presents an even more difficult scenario for research-based drugmakers. Unsurprisingly, the top two global pharmaceuticals firms have already announced plans to downscale in Poland.

Meanwhile, leading generic drugmakers have been the main beneficiaries of government policy in recent years. German producer Hexal's expectations for market growth this year are among the most upbeat of all local players surveyed, with the company forecasting market expansion at up to 8%. Local generics-based producer Adamed, however, forecasts flat growth despite the government's traditional bias toward the domestic industry.

The failure of the government to extend reimbursement significantly has also benefited drug retailing, as prices on nonreimbursed products are currently outpacing the rest of the market. Prices on both prescription and OTC drugs in this category were roughly 6% higher in early 2005, with the average packet costing PLN7 (US$2.16). In contrast, reimbursable drug prices fell 28% year-on-year in the period.

Nevertheless, the pharmacy sector could now consolidate, as local observers believe that drug retailing has expanded too rapidly in recent years on the back of favourable government drug-pricing policy.