Poland: A Sleeping Giant - Pharmaceutical Executive


Poland: A Sleeping Giant

Pharmaceutical Executive


Like many industries, the Polish pharmaceutical sector has capitalized on the country's inclusion into the EU, and key statistics are positive indicators of investor confidence in an open market. IMS estimates that more than 700 pharmaceutical companies presently operate in Poland, with increasing numbers every year. Similarly, the local market's 3.3% year-on-year revenue growth in 2010 is consistent with the average across all EU pharmaceutical markets over the same time.

Jacek Glinka, President of the Management Board of Polpharma
Prior to EU accession, foreign innovative companies were deterred from entering the Polish market due to weak patent legislation. During the communist era local manufacturers were essentially the sole providers of pharmaceutical products. Closed Eastern European markets and prohibitively stringent EU standards turned industry inward favoring a lower cost culture of generics. Companies such as Teva and Sandoz established a strong presence. With today's open borders, product marketing is less of a threat and greater data protection is now implemented.

Geography and a malleable East/West cultural cohesion is one driver behind an attractive pharmaceutical climate in Poland. "In Polish history, the country has always stood between two great powers: Germany and Russia," says Michael Pilkiewicz country manager of IMS Health Poland. Pilkiewicz assesses that in both market potential and value, Poland is recognized as a big Western European Union country that shares many similarities with other European markets. "At the same time," he adds, "Poland knows the culture of Eastern countries. Poland can easily talk to its partners in Russia, Slovakia, Hungary and the rest of the East. The East of Europe has a completely different culture to that of the West. Polish exporters therefore have a very good starting point in terms of knowing how to operate in these markets."

Maciej Adamkiewicz, CEO of Adamed
A recently liberalized market with a relatively low-cost base in the geographic heart of the continent also makes good economic sense for manufacturing. Innovative companies have invested hundreds of millions of dollars in Poland through the privatization process of state owned companies. GlaxoSmithKline, Sanofi-Aventis, and Novartis operate factories in Poland employing thousands of people and provide a positive stimulus for the local economy.

Recognizing operational benefits, perennial top-five pharma giant GSK has invested $417 million in modernizations for its manufacturing warehouse in Poznan, 175 miles west of Warsaw, which it deems one of its most strategic plants in Europe. As Big Pharma companies increasingly review global manufacturing sites for cost-saving synergies, "Poznan is definitely one of the key sites in the region where GSK continues to invest," according to Jerzy Toczyski, president of the board and general manager of GSK Pharmaceuticals in Poland. Capitalizing off of Poland's central location, production of one of GSK's R&D-based products is currently being shifted to Poznan. "Poznan is one of the four European multimarket warehouses where we keep the stocks of our products to be distributed to the regional markets," says Toczyski. "Additionally, since we have such good access to qualified personnel, one of GSK's global information technology (IT) hubs is located in Poznan. Indeed, more than 200 highly qualified IT experts work there to support GSK's global network. Apart from regular business operations such as marketing and sales activities, there are three other major areas of investment for the company: production, logistics, and IT."

Pawel Sztwiertnia, President of INFARMA
The closed market under communist times made it difficult for even generics players to enter Poland, notwithstanding the presence of Teva and Sandoz. Poland is therefore a relatively new market for multinational generics companies such as Canada's Apotex. Having registered several products such as Ranitidine or Verapamil in the early 1990s, it took Apotex nearly seven years to make the full leap into Poland, ultimately launching a range of medicines and employing 20 sales representatives in 1998. Today, managing director Michal Pietraszek says that "Poland is considered by the head office in Canada a very good market for the long run." Primed to take on the competition in a crowded generics market, Apotex is closely tracking patent expirations across Europe to seize potential new market share. "The company's best generic products have been chosen for registration in Poland, and the affiliate will now be focusing on new products," he says. "The group is looking at the patent situation in every European country. In Poland, if a patent expires today, Apotex is ready to enter the market tomorrow."

The rising tide of EU accession certainly benefitted Popharma, the No. 1 generics company in Poland. With drastic, industry-wide changes occuring in Poland following EU membership companies were requested to upgrade their documentation for existing products to conform to European standards, which, as Jacek Glinka, president of the Polpharma's management board tells, "practically meant for most of them that 100% of the product portfolio had to be invested in or redeveloped." While EU requirements were originally only on the development side, uniform standards also triggered major investments in manufacturing facilities. "Everything had to be upgraded to some extent," Glinka adds. "The result is that Polpharma has today one of the most modern facilities in Europe, completed over five to 10 years ago and based on state-of-the-art technologies. In a way, the company has been forced to build a more competitive platform to grow its generics business in Poland." Enhanced manufacturing facilities add to Polpharma's dominant market presence. With 13% of the market and 18% in value, Polpharma is both a mature and constantly growing company in Polish generics.


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