THE THREE BLOCKS
Despite Novartis's success, Bellamy admits that Poland is a very challenging market to thrive in because of the difficult
institutional side of making a business. Adding to the complexities of the market are what he describes as three distinct
blocks of competitors in Poland: innovators, generics, and well-established players with a very strong Polish heritage who
"do a bit of both" and therefore make for tough competition in the market. With prices low, margins thin, and what he believes
is an overall underinvestment in healthcare, Bellamy again references the common theme of ambiguity breeding uncertainty and
requiring flexibility in order to gain a competitive advantage. "While there is no formula about succeeding in this market,
you just have to try to understand how the whole machine works in Poland; even then, you cannot predict results. Although
the whole environment is extremely challenging, the country is dynamic and changing. There is always this belief that tomorrow
will be better than today."
Ipsen’s Warsaw, Poland, offices
Falling into the third group that does "a bit of both" is Nycomed. Growing at 3.3% in 2010, consistent with the wider pharma
market, Nycomed is well diversified among innovative, generic, OTC, and food supplement products. However, with an appetite
to grow its innovative portfolio in order to crack the top 15 of pharmaceutical companies in Poland, Nycomed has felt hindered
by the government's conservative stance on reimbursing innovation. Certainly not reticent of government policy, country manager
Jacek Barlinski asserts that "although the access to innovation is easier in some areas, generally speaking, the attitude
of the Polish government is not in favor of innovative medicines. The pharma environment is going to change, as it is under
constant re-evaluation—and there is no question whether the Polish pharmaceutical market requires improvement of regulation.
There is also no doubt that the government has to be in a position where it must predict how much will be spent on reimbursement.
Nevertheless, the new regulation that is under preparation is not written for such purpose. It is clearly written against
the pharma industry and against the potential benefit of patients. The only purpose of this paper is to cut healthcare expenditures.
Even though I agree that a new direction is needed, I am strongly against the way it is prepared, and how it is intended to
be introduced without listening to what the industry or the patients have to say."
As innovation still fights its way through favorable legislation, Nycomed is reaping the benefits of manufacturing operations
in Poland in Lyszkowice, in the country's south, approximately 16 miles northeast of Krakow. A relatively new facility, Barlinksi
describes the factory as a center of excellence for Nycomed's global OTC manufacturing operations. The center also produces
prescription drugs through contract manufacturing. Previously operating at 30% capacity in 2004, utilization today stands
at over 70%, which is a testament to the robust growth of new production lines.
While Poland is perceived as a strong base for manufacturing, Barlinksi cogently advises industry and government to bear in
mind the similar competitive advantages of other Eastern European neighbors. "If Poland is still today a low-cost country,
Russia is even lower, and so too is Bulgaria." A highly skilled workforce, he believes, will naturally raise the cost structures
of the country and over time erode the competitiveness of current low-cost manufacturing. Heeding a warning to sufficiently
invest in the future, Barlinski concludes, "If such an unfriendly environment for the pharma industry is maintained, there
will be consequences."