IS THE CZECH MARKET ATTRACTIVE?
Four pillars
Leoš Heger, Minister of Health
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Richter Gedeon CR's managing director František Gyürüsi finds that the greatest appeal of the Czech market is its stability
relative to regional neighbors. Indeed, here, the pharmaceutical industry can think in long-term strokes. But how will companies
fare in the meanwhile, and what challenges will they face?
Zdenêk Zahradník, general manager for Teva CR, takes a pragmatic approach. "When we speak about how attractive a market is,
we must think about how we define 'attractiveness,'" he says. For Zahradník, the formula is simple. Is the market predictable?
Sustainable? Transparent? Growing?
Henning Sommermeyer, General Manager, Pronaos
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Growth is flat. What of the other pillars? Zahradník sees a challenging environment: "The Czech authorities are speaking about
long-term policy—however, the reality is that we more often face various ad hoc directives. It is very difficult to address
strategic principles when we face immediate measures such as the flat price cuts we have seen in the last two years."
Portentously, Zahradník adds a thought on volume: "I believe that the principle of sustainability is critical—especially in
a market like the Czech Republic, with a population of only 10 million. Small and medium-size companies may think twice about
doing business in an unfavorable environment."
Gyürüsi, for his part, acknowledges that Richter Gedeon has decided to withdraw products from the market in the past.
The sorcerer's apprentice
František Gyürüsi, Managing Director, Gedeon Richter CR
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In 2008, the Czech Republic set up a novel referential mechanism of pricing and reimbursement. Under this framework, the maximum
ex-factory price for a given drug is set at the average of the three lowest prices in a basket of eight reference countries
in the EU27. Reimbursement level is based on the price of the least expensive product within the relevant therapeutic reference
group in the entire EU. Effectively, the Czech Republic today has some of the lowest drug prices on the European continent.
Zdenêk Zahradník, General Manager, Teva CR
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The low prices have had troubling consequences. Gyürüsi notes that the State Institute for Drug Control (SUKL), the Czech
Republic's drug regulator, has officially stated that 10-15% of drugs passing through the Czech healthcare system are exported
to foreign markets. The problem has become more than an operational challenge; it has become one of access. Gyürüsi observes,
"For some companies, parallel export is a major problem—firstly, because of reputation; but more importantly, because of ethical
considerations towards patients. Representatives of the Ministry of Health recently confessed that the main problem is not
the price, but rather the availability of products."
Emil Zörner, Executive Director, CAFF
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Emil Zörner, executive director of the generic players' association Ĉeská Asociace Farmaceutických Firem (CAFF), offers a
more charged critique: "The Czech Republic has a healthy medium-strong economy—we are certainly not the poorest market in
Europe. And yet, we want to have the lowest prices on drugs. To whom do you give the lowest price? To a good customer—the
biggest customer, a customer that guarantees a certain volume. But the Czech government, as the customer, provides no guarantee
on volume, despite their stipulations of driving down price."
Zörner frowns. "The people that framed our pricing mechanisms did not foresee that changing just one parameter in the system
creates an imbalance somewhere else—and the imbalance was indeed created: we have a shortage of products. Re-export from this
country is a daily event. You will find drugs that simply do not exist on this market.
Lenka Polekova and the Celgene CR Team
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"It is like the sorcerer's apprentice—conjuring spirits that now cannot be tamed. Intelligent people in the Ministry say,
'Price is not our concern anymore; availability is our concern.' The authorities are now thinking of how to stop the trend.
But you cannot stop the free flow in Europe."
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