PAIN AND GAIN: INSIDE THE LOCAL MARKET
"I am confident that the health services and pharmaceutical industry will continue to work together in a spirit of partnership,
to ensure that the needs of the patient are to the fore when decisions are being made regarding the pricing and supply of
drugs." – James Reilly, Minister for Health
"Over the last five years," says Fergal Egan, commercial director for IMS Health Ireland, "the Irish market has gone through
an absolutely phenomenal flux. With the arrival of the recession in 2008, change has been dramatic. The health bill is the
government's largest expenditure and an obvious area to target for austerity.
James Reilly TD, Minister for Health
"Pharmaceutical exports are the biggest driver of Ireland's GDP—but nonetheless, officials have begun to increasingly decouple
their policies toward pharmaceutical manufacturing, from their policies toward the local drugs spend."
Welcome to the post-Celtic Tiger Irish market.
Fergal Egan, Commercial Director, IMS Ireland
The innovator side
For innovators, perhaps the most impactful outcome of the recession has been a recent drug supply agreement with the state
that, according to Servier Ireland General Manager Yann Mazeman, is the single largest cost-cutting deal, per-capita, the
industry has ever concluded in Europe. In November of 2012, in an agreement that Mazeman says would be worth three or four
billion euros on an Italian or French scale, IPHA member companies consented to deliver in excess of €400 million ($520 MM)
in savings to the state over the next three years—on top of the approximately €300 million ($390 MM) IPHA reports delivering
between 2006-2010, and the €200 million ($260 MM) delivered in 2011.
Takeda Ireland's GM Kieran Leahy calls the deal "short-term pain, long-term gain." Mazeman explains the pain: "The ramifications
of this agreement are huge. Looking at our product portfolio at Servier Laboratories, the agreement means that 12 of our 18
products will suffer a price decrease between minus one and minus 52 percent. This will have direct consequences on our activities—including
a very strong impact on our turnover in 2013.
Yann Mazeman, General Manager, Servier Ireland
"Furthermore, it is worth noting that the price cuts in Ireland will have a direct or indirect impact on markets worldwide.
In fact, several countries use the 'country of manufacture' as a reference price for their own market. The Irish authorities
need to bear this global domino effect in mind when taking decisions regarding the drug market locally."
Many Irish innovator operations have taken a significant loss in recent years, with the latest price reductions delivering
yet another blow. Coupled with the genericization of a number of key products, the climate has led to redundancies, restructuring,
and consolidation with other regional affiliates. Personnel recruitment in Ireland is stagnant; for some, investment in local
initiatives such as patient support and public outreach has taken a more conservative turn. Meanwhile, the ripple effects
of price changes in the Irish market are set to impact the operations of far larger affiliates overseas.
Zimmermann, Managing Director, Bayer Ireland
The longer-term consequences of the agreement,however, are more encouraging. The deal was, in part, a solution to a straightforward
but critical problem: the state lacked funds to pay for new medicines. A number of companies reported a recent freeze on reimbursement
for new products that lasted 6-9 months—even for products with EMEA approval that had proven cost-effective at the Health
Technology Assessment (HTA) stage in Ireland.
That freeze has seemingly been lifted. With the savings accrued from the markdown on existing products, the Department of
Health expects to allocate €210 million ($273 MM) to fund new drugs—ensuring that, at least for now, there is a clear mechanism
for innovative medicines to reach reimbursement in Ireland. Managers report that the market has gained a healthy measure of
Francis Lynch, General Manager, A. Menarini Ireland
Bayer Ireland MD Ralf Zimmermann points to an understanding between industry and state: "The government has acknowledged the
critical importance of better access to new, cutting-edge drugs for patients, while the industry is acutely aware of the financial
situation facing the government. I think both sides, throughout our negotiations, acknowledged each other's perspective, while
striving to make a deal that could benefit patients and the health system."
The level of constructive dialogue between the private and public sectors continues to demonstrate that Ireland is decidedly
pro-business. Menarini's GM in Ireland and current president of IPHA Francis Lynch says that, ever since the first structured
drug supply agreement was concluded in 1968, state and industry have preferred to "collaborate, rather than go to war."
Kieran Leahy, General Manager, Takeda Ireland
And of course, in the end, companies with a great offer will endure even the most challenging external conditions. Zimmermann
expects Bayer's strong pipeline to buffer his business from the vagaries of a market that IMS expects to decline by six percent
this year. In fact, Zimmermann expects his affiliate to grow at six percent in 2013. He comments, "The Irish environment is difficult—but it is not uniquely difficult. Portugal, Greece,
Spain, and Italy all face problems that are perhaps greater. Moreover, even in difficult times, if you have the right strategy,
with the right products, there is a way forward!"