Reimbursement Act had a strong impact on the pharmaceutical distribution segment in Poland

More information on this topic is presented in the PMR report:

In 2012, the pharmacy distribution market in Poland saw a decline for the first time in several years, reporting negative growth of -6%. Companies operating in the pharmaceutical market are poised to recover their market positions throughout 2013 after the revolution triggered by the entry into force of the Reimbursement Act. Given a low base of comparison, sales are expected to increase, though many companies will struggle to survive.

Reimbursement Act and its implications

The entry into force of the Reimbursement Act in January 2012 resulted in a true revolution of the pharmaceutical market in Poland. The segment of reimbursement drugs declined by a steep 20%, while the National Health Fund (NFZ)’s reimbursement expenditure fell by PLN 2bn or €482m (concurrently, patient payments for medicines increased substantially). Sales of OTC medications (non-prescription drugs, dietary supplements and other products) inched up by several percent but not as fast as anticipated. It appears that Polish consumers reduced spending on less important OTC products, which were frequently luxury items, in view of having to pay increased prices for reimbursed medicines (which are often necessary to save life or preserve the health).
The Reimbursement Act also resulted in reduce sales, lower margins and employment cuts at manufacturers, wholesalers and pharmacies. The introduction of the ban on pharmacy advertising eventuated in termination or transformation of customer loyalty programmes and forced companies to develop new business growth strategies, e.g. they launched para-pharmacies which are exempt from the pharmacy advertising ban.
The years 2013-2014 will be affected by the implications of the Reimbursement Act too, though the impact will be less severe than in 2012 which was a year of adjustment. As a result of continued declines in wholesale margins (down by 1 p.p. per year from 2012 onwards to 5% in 2014), pharmaceutical wholesalers will be required to further reduce costs (Pelion, a major market player, estimates that cost-cutting measures in the wholesaler segment might amount to around PLN 140m or €33.7m in 2013). The coming years may also see a decline in the number of pharmacies by up to 2,000-3,000. Thanks to a strong end of 2011 (a buying panic on the eve of the entry into force of the Reimbursement Act) and end of 2012 (a high incidence of flu), part of pharmacies steered away from bankruptcy, but many companies still may face a decision to close down business.

Online pharmacy market reshuffling

The Reimbursement Act also had a strong effect on the online pharmacy market in Poland. In the first place, there were some online pharmacies closed down. These were mainly smaller market players, which could have had financial problems already before, that decided to close down their outlets (furthermore, a failure to adjust websites to new regulations was connected with the risk of control and fines imposed by the inspection). The Reimbursement Act also resulted in a reduced number of newly established online pharmacies (only around 10 in 2012, compared with 30-40 in the previous years).
In 2012, online pharmacies developed many solutions that allowed them to minimise the threats related to the Act. One of them featured introducing special offers commissioned by manufacturers on online pharmacy websites. This allows to avoid an accusation of advertising the pharmacy itself through purchase incentives, while website visitors still have an impression of having access to promotions. Another solution involved starting the cooperation of e-pharmacies with medical portals or opening such portals for their own purposes. In this model, this is the portal that is responsible for drug advertising and redirects patients to a particular subpage of the online pharmacy (exclusively for the purpose of purchasing, by presenting e.g. a price catalogue).
The most significant change, however, was related to the fact of opening by companies already operating pharmacies, specialised shops mainly with cosmetic products or possibly dietary supplements. Such websites are not notified to the WIF (since they do not offer online sales of medicinal products), and the sales are not processed as a fiscal receipt by the pharmacy. In this model, the company purchases pharmacy goods and moves them to the cosmetics shop which then sells them to patients. In this way, the pharmacy goes beyond the advertising ban and may legally advertise a new website with a slightly limited product portfolio.

Rebound expected in 2013

The coming into force of the Reimbursement Act had an effect in curbing the growth of the pharmacy market in Poland for the first time in many years. In 2012, the market’s value fell by 6% year on year. According to PMR’s projections, the pharmacy market will grow at a positive rate of around 4% throughout 2013. A rebound in pharmacy sales will be driven mostly by the effect of a low base of comparison from 2012. The entry into force of the Reimbursement Act was preceded by a buying panic and a substantial increase in sales in Q4 2011. This resulted in significant declines in sales reported at the beginning of 2012. 2013 will continue to feel the effect of adverse factors which impacted the market throughout 2012, such as declines in sales in the segment of reimbursed medicines or frequent changes in the lists of reimbursed medicines and a continued downward pressure on prices.


More information on this topic is presented in the PMR report:
Distribution on the pharmaceutical market in Poland 2013. Impact of the Reimbursement Act and development forecasts for 2013-2015