Romania: Staking its Claim - Pharmaceutical Executive


Romania: Staking its Claim

Pharmaceutical Executive


Apart from national insurance and health infrastructure reforms, the government has also tightened the belt on the pharmaceutical industry. In mid-2009, former Health Minister Ion Bazac imposed a crisis tax of 5% to 15% on the total sales of prescription drugs, known as the "clawback-mechanism." While government failed to collect taxes due to the vague outline of the measure, current Minister Ladislau Ritli has announced that a revised law is under way.

Cristina Garlasu, General Manager of Dr. Reddy’s Romania
Far from ignorant to such measures, the industry is grasping for more air. Franz Zinsberger, ARPIM's president and country general manager of Boehringer Ingelheim, describes the current situation as a "decisive crossroads." "How far can the Romanian government go with cost containment measures, late payments, and delayed reimbursements until companies decide to downgrade Romania in the interest of their business?" Zinsberger warns.

Others may ask themselves whether a 20-year-old market can be expected to have the same level of stability as the more developed pharmaceutical markets. "When we started the first professional evaluation of the Romanian market in 1996 it was $300 million, and today it is over $3 billion. There has been a huge development in such a short period of time," says Petru Craciun, general manager of the Romanian arm of Cegedim.

Franz Zinsberger, General Manager, BI and President, ARPIM
Renowned as a world leader in customer relationship management (CRM) and a trusted supplier of strategic healthcare industry data, Cegedim has leveraged its early presence in Romania. Craciun recalls how a strong customer base combined with in-depth local market knowledge reassured Cegedim during the country's more turbulent times. "The market obviously has ups and downs, and by the time the last 'up' occurred between 2004 and 2008, we were very well prepared and positioned in the market. This enabled us to reap the rewards of our efforts. On top of our customer base, there is also the local knowledge that Cegedim has been able to build upon. Local implementation accounts for at least half of the success," Craciun explains.

Never too worried about the rollercoaster pattern in his company's local revenues, Cegedim's Craciun recalls how variations of +70% and -50% must have seemed strange for newcomers in the market. "Romania was not a mature market and the dynamics were not too predictable. After a period of double-digit growth the market is now significantly challenged by the regulatory aspects and public spending containment."

Based on 2010 Cegedim data
In spite of the historical underfunding of its healthcare system, as a pharmerging nation, Romania has fared better than other countries in certain metrics. J&J's Papataxiarchis points out that "it is important to look at Romania's macroeconomic environment. Government debt as a percentage of GDP, for example, is the most attractive in Europe at only 34%. In countries like Hungary, Germany, and Greece, these figures run up to 72,%, 76% and 134%, respectively", Papataxiarchis says. "Romania has successfully managed to keep a stable exchange rate with the euro, which is extremely important ... The Romanian pharmaceutical market has experienced double-digit growth over the past few years, which IMS expects to continue through 2016. This is three or four times more than the average growth rate of other European countries," he explains.

"Romania has all the key ingredients in terms of growth, demand, and talent. That is why it is now time to find, together with all stakeholders, the necessary resources so that the Romanian people can receive the treatment they deserve," Papataxiarchis continues. "This is why we, as well as many other innovative companies, are present here in this market. It is why we invest significantly, and why we try to reshape healthcare in Romania together with the country's policymakers," declares Papataxiarchis.


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Source: Pharmaceutical Executive,
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