Weaker ending to the year for Polish pharmacy market

After peaking in late November[1], in subsequent weeks the number of new flu cases began to fall appreciably, resulting in a decline in patient traffic at pharmacies. In December the number of patients visiting the average pharmacy amounted to 3,860, i.e. 2% fewer than in November and down by 3.6% on the same period a year earlier.

The weaker patient activity feed through into retail pharmacy sales. Although in comparison with November sales were up by 1.1%, topping PLN 2.36bn (€571m), the annual growth rate slowed dramatically, to 2.8% y-o-y from 19.5% y-o-y in the previous month. In our view, the observed slowdown was in large part due to statistical factors, namely a high reference base (in December 2008 the market grew by an impressive 16.3% y-o-y).

Despite the poorer result in December, in 2009 as a whole the Polish pharmacy market grew by 8.3% and was worth nearly PLN 26.1bn (€6bn). We expect the strong level of activity to be maintained also this year. We forecast that in 2010 retail pharmacy sales will rise by about 7%.

Contrary to an established trend for this time of the year, the main driver of market growth in December were reimbursed sales, which rose 3.4% and exceeded 1.04bn (€251m). In annual terms growth in this category amounted to 1.3%. At the same time, fully-paid prescription sales fell by 3.2% m-o-m and by 0.7% y-o-y, to PLN 426m (€103m). As a result, sales of prescription medicines were worth nearly PLN 1.47bn (€354m), which represents an increase of 1.4% in relation to November and of 0.7% compared with a year earlier. At this point it is too early to determine the impact on pharmacy sales of the changes on drug reimbursement lists introduced in December. We must wait for sales figures for the following months.

On the other hand, there was a marked slowdown of growth in the sales of non-prescription medicines compared with the previous month. Non-prescription sales were worth over PLN 887m (€214m) in December, which represented an increase of just 0.8% on November. Nevertheless, in annual terms sales were up by a solid 6.3%. It should be noted that these results were achieved despite a very high reference base: in November sales of non-prescription medicines rose 6.2% m-o-m and 34.5% y-o-y, while in December 2008 they were up by 27.5% m-o-m and 15.5% y-o-y, respectively.

In terms of therapeutic class, the highest rate of sales growth in December 2009 (up by more than 12%) was noted among oncology drugs. On the other hand, sales of anti-infectious medicines declined by almost one fifth in relation to November.

Compared with November, the shares of medicines and of dietary supplements and dietetic food products in total pharmacy sales declined, respectively, from 79.58% to 78.81% and from 7.21% to 7.07%, while the share of “other products” increased from 13.21% to 14.12%. This shift was a consequence both of the fall in flu numbers and of the advent of the Christmas/New Year period, when more customers visit pharmacies in search of gifts (leading e.g. to higher demand for cosmetics).

After several months of slight declines, in December the average price of a medicine sold in a Polish pharmacy rose significantly on monthly basis (by 3.8%), driven mainly by higher prices of OTC products (up by 4.3%) and reimbursed medicines (up by 2.5%). It should be remembered that an acceleration in price growth is a normal occurrence at this time of the year.

In the period under analysis, the average price of a medicine sold in a Polish pharmacy amounted to PLN 15.77 (€3.8), up 6.8% y-o-y (compared with a growth of 4.6% y-o-y in November), while the price of a reimbursed drug reached PLN 28.08 (€6.8), up by 6.6% y-o-y (against 5.1% y-o-y growth in the month before). At the same time, the average price of an OTC product was PLN 9.76 (€2.4), a full 8.4% higher y-o-y (in November the growth was even steeper, by 11.4% y-o-y). The rate of price growth in the pharmacy market was thus well ahead of inflation, which in December amounted to 3.5% y-o-y.

Meanwhile, the value of reimbursement totalled just under PLN 733m (€177m) in December. This was 2.1% higher than in November and up by 4% on a year earlier (against growth of 14.5% y-o-y in the previous month). In the analysed period, the share of reimbursement in total pharmacy sales amounted to 31%, the same as in December 2008 and 0.2 p.p. higher than in the month before. At the same time, the share of reimbursement in reimbursed sales stood at 69.8%, i.e. 1 p.p. lower than in November but 1 p.p. higher than in December 2008.

At the same time, margins eroded substantially in December, after more than a year of robust growth. In the analysed month the average pharmacy margin amounted to 26.3%, i.e. down by 1.2 p.p. compared with November and 1.8 p.p. higher than a year earlier. Over the 12 months to December, the reimbursed medicines margin increased by 1 p.p. to 19.6%, whereas the margin on the remaining products rose by 2.6 p.p. to 32.3%.

The data used in this article was sourced from PharmaExpert. All data at retail prices.

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[1] According to data from the National Institute of Hygiene (PZH), in November 2009 more than 290,000 confirmed and suspected flu cases were reported, a more than nine-fold increase compared with October and more than 20 times higher than in the corresponding period of 2008.