Poland Pharmaceuticals and Healthcare Report Q2 2008

Growth in Poland's drug market is beginning to slow down although it should still remain robust over the forecast period. By 2012, BMI expects total drug expenditure to reach US$6.36bn by 2012, representing a compound annual growth rate (CAGR) of 4.39%. Slowing growth, however, could damage investment as companies that earlier pledged to invest in Poland are failing to follow through with announced plans.

This has led to concerns about the future of the local industry, although the recent purchase of local leader Polpharma by Hungary's Gedeon Richter suggests much confidence still remains.

The Polpharma deal was the stand out event in the last quarter. Richter became the largest pharmaceutical firm in the Central & Eastern European (CEE) region with the joint purchase of Polpharma and Russia's Akrihin for US$1.46bn. As a result of the deals, Richter will have a market capitalisation of HUF923bn (US$5.3bn) taking it ahead of Slovenia's Krka and the Czech Republic's Zentiva. Richter bought a 99.7% stake in Polpharma for HUF231bn (US$1.33bn), making it the second-largest drugmaker in Poland.

Meanwhile, Health Minister Ewa Kopacz has announced far reaching reforms to Poland's health system.

One of the first projects will be the restructuring of health centres to give them a greater commercial emphasis, albeit with local governments being the main shareholders. Kopacz has also called for tighter reimbursement for pharmaceuticals and a more transparent system for deciding which drugs are included for state coverage. This could include removing the Polish National Health Fund's monopoly. Along with the decentralisation, the ruling Civic Platform (PO) party has also promised a bill on patients' rights.

BMI 's new Business Environment Ranking for the CEE region, which ranks Poland in 10th place regionally and 37th globally. Going forward we are optimistic that the victory of the Civic Platform party in the national elections will result in pro-business reforms in the country, although these gains could be tempered by cuts in social security expenditure - including health.