Poland: A Sleeping Giant

Jul 01, 2011

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Niebianska Parmiec (Celesitial Memory) by Elzbieta Murawska
Stretching across the heart of continental Europe, Poland is a massive bridge that links east and west, old and new, and which epitomizes a changing continent. At one time an enigmatic behemoth cast behind an iron curtain, Poland's accession to the European Union in 2004 has injected its economy with new levels of competition and investment. A population of 38 million citizens, in turn, offers an enticing market for companies looking to expand east. The country's leaders proudly boast that Poland was the only EU economy to grow in 2009—the nadir of the financial crisis—and last year Poland surpassed the Netherlands as Europe's sixth-largest economy. Today the pharmaceutical industry looks to Poland for a skilled pool of human resources, an eastern platform for competitive manufacturing, and high-quality clinical trials. Yet there is still much work ahead, and in order to fully embrace the future the industry must overcome certain communication barriers stemming from the country's long, closed-market past. Greater room for innovation and increased dialogue between business and government are necessary steps to truly awake Europe's sleeping giant.


Ewa Kopacz, Minister of Health
The past two decades have brought about sweeping changes and lasting benefits for Poland through its transition to a market-based economy and, more recently, incorporation into the European Union. The Balcerowicz Plan of "shock therapy" undertaken in the early 1990s liberalized trade and privatized former public assets, thereby increasing industrial competition and promoting foreign direct investment. Poland was widely lauded as a success story among transitional economies. Since 2004, EU membership has compounded the positive effect of capitalist reforms by granting the Polish economy access to structural funds. Today the country is the largest beneficiary of EU funds among the 27 member states, receiving approximately 20% of total EU financial support. While GDP per capita in Poland is still below the EU average, it is on par with that of its neighboring Baltic states. With 1.5% GDP growth in 2009, Poland was the best-performing European economy during the global financial crisis. Peter Koetsier, general manager of Bristol-Myers Squibb Poland beams that "the country has gone through a remarkable transition in the past twenty years, if you consider the huge steps forward in terms of infrastructure and the financial and legal systems. I look forward to continued progress in healthcare that will see the people of Poland reach health outcome levels more akin to other EU countries."


Valued at slightly over €5 billion, Poland is the sixth-largest drug market in Europe, according to classifications by the European Pharmaceutical Market Research Association. The country's pharmaceutical industry is shaped by high generic penetration and government-dictated cost-containment which limits market access to innovation.

Waldemar Pawlak, Minister of Economy
However, compared to similar-size markets such as Spain, Poland has an uncharacteristically high penetration of generics, which account for 85% of volume and 66% of value, according to PZPPF, the leading association for generics companies in Poland. As PZPPF president Cezary Slediewski explains, the dyamics behind high generic rates stem from "a patent system and data exclusivity which allowed Polish companies and importers to introduce generics earlier on in Poland than in Western European countries. There are some molecules in Poland that are already generics, whereas in Western Europe, generics for the very same molecule are not yet in the market."

Additionally unique to Poland are minimal price spreads between generic and innovative drugs. Pawel Sztwiertnia, general director of INFARMA, the leading association for R&D companies in Poland, notes that "the average price of innovative originator products is one of the lowest in Europe. Subsequently, there are expensive generic products in Poland when compared to the average originator product prices in Europe. This is due to a market structure overpowered by generics. IMS Health data demonstrates that the average generic price is roughly 70% of that of an originator."

POLAND - market value mln EURO, ex-manufacturer net prices
Per capita expenditure on healthcare and pharmaceuticals—less than $100—is one of the lowest in the OECD, three times less than Slovakia and the Czech Republic, and six times less than France and Germany.

As Sztwiertnia explains, "The system in Poland reduces the already very limited window for innovative products. When a company manages to establish its product on the reimbursement list, it can then be prescribed by any doctor and be made available in every pharmacy. Thus, from the government's perspective, there is always the fear that reimbursement costs will skyrocket if a new product is added to the list. Reimbursement costs are very difficult to control; monitoring of prescriptions is practically nonexistent in Poland. There are no specialized categories of drugs that specialists could prescribe under certain conditions. For instance, because many patients need treatment for diabetes or cardiovascular diseases, the government is afraid that costs could grow out of control."

POLAND - share of generic products
The federal government notes the necessary limitations on health expenditures in even the most developed countries. "The reasons for this are, among others, constantly growing health needs resulting from the aging of the population, quickly growing costs of medical technologies, and financial expectations of medical staff," cites Ewa Kopacz, Poland's minister of health.

Despite the prevalence of generics, INFARMA assesses that market growth for innovative drugs is quite sustainable in Poland. Compound annual growth of 8.5% for innovative medicines from 2007 to 2010 exceeds EU-15 markets over the same period, a trend that reflects growth in value more so than volume.

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