RECENT GOVERNMENT MOVES FAVOUR POLISH DRUGMAKERS

According to industry observers, Poland's prescription drug sector is expected to grow by between 5% and 10% this year. However, last year's weak growth of only 1.5%, the worst rate since 2001, has prompted more cautious forecasts, as have uncertainties on the likely impact of a new reimbursement list. Estimates valued the market in 2004 at some PLN13.3bn (US$4.31bn), compared to PLN13.1bn (US$4.25bn) in 2003. However, the US$1bn OTC medicines market appears to have grown by roughly 7.7% last year.

Local studies indicate that a key feature of the year was a weakening of the position of major international drug companies, and a strengthening of local manufacturers. US drugmaker Eli Lilly was reportedly hit hardest in the first half, with revenue falling 47% year-on-year, mainly due to losses on its blockbuster schizophrenia treatment Zyprexa. The drug is currently the subject of a legal dispute with Adamed, which manufactures Zyprexa's active ingredient locally as Zolafren. Further, research suggests local insulin producer Bioton contributed to Denmark-based Novo Nordisk's losses in the period of some 19%.

Many local and international pharmaceuticals companies have also blamed the Polish government's new reimbursement list, introduced in December 2003, for the year's weaker performance. The new structure appears to have reduced bulk buying by wholesalers, pharmacies and patients, mainly by easing concerns on possible price increases. The addition of a number of cheaper, locally produced generics to the list soured relations between drugmakers and government, as did the decision to allow the state health fund to sue companies for an alleged customs revenue shortfall of PLN1bn (US$324.74mn) on imported drugs. Relations were further threatened by the government's creation of a holding company for three state-owned drugmakers, Polfa Waszawa, Polfa Pabianice and Polfa Tarchomin. The move was widely considered to result from the government's desire to create its own large-scale source for generics.