Polish Generics to Bear Highest Cost of EU Accession

Poland's generics-dominated drug manufacturing industry expects the cost of adherence to European Union (EU) directives at some PLN1bn (US$280mn), equivalent to roughly 7% of market value. However, beyond the extra expenses implied by the obligation to make more data available to regulators and the modernisation of production processes, new patent norms could spell severe problems for the industry's long-term future.

In common with many new Eastern European members of the EU, Poland was obliged to reform industry regulation in exchange for a delay in implementing the EU's pharmaceutical industry rules. A key concession was the granting of prolonged protection for pharmaceuticals through the Supplementary Protection Certificate regime. This provision extends patent protection on original drugs up to five years, only permitting the launch of generic versions after this period has lapsed. Previously, it was possible to develop generics provided the patent expired after the usual 15- to 20-year period.

With a limited innovation capability and fierce competition among local drugmakers, it appears that the Polish drug manufacturing industry will experience a sizeable contraction in the coming years. Further, the entry of competitive generics makers from regional markets including Germany and Russia poses a threat in terms of pricing and therapeutic coverage that local drugmakers will find hard to match.