Pharmaceutical distribution market in Poland in 2010: consolidation, privatisation and development of new forms of distribution

According to our latest report “Distribution on the pharmaceutical market in Poland 2010. Development forecasts for 2010-2012”, in 2009 the pharmacy segment generated nearly 90% of the pharmaceutical market value in Poland. The hospital segment accounted for around 10% of the market’s value. During the years 2010-2012 the compound annual growth rate (CAGR) for the pharmacy market in Poland will be around 7.3%, according to our prognoses.

 

During the period 2008-2009 the pharmaceutical distribution sector in Poland saw further consolidation, both among distributors and among retailers. The most important event in the wholesale distribution segment was the buyout of Prosper by Torfarm, another leading distributor on the Polish market, in April 2009. After the fusion, the two companies together control more than 30% of the market of distribution to pharmacies in Poland. In February 2010 Torfarm announced that it will soon rename itself to Neuca. It will also slash 1,500 jobs, or some 28% of the workforce, until 2012. Most of the lay-offs will occur in warehousing operations, where 900 jobs will go from 2,400 at the moment, as the company reduces the number of warehouses from 34 to 12.

The takeover of Prosper by Torfarm was one example of a new trend that is becoming visible on the wholesale market in Poland – consolidation among the largest players. Prior to this, the takeover targets tended to be smaller, regional entities. In February 2008, for instance, Polska Grupa Farmaceutyczna (PGF) acquired 57.3% of the shares in the Aptekarz wholesaler, based in Rzeszow, for PLN 26m (€7.4m). In July 2008 Torfarm bought a 100% stake in the distributor Promedic for PLN 700,000 (€200,000).

Following the acquisitions on the Polish market in recent years, there are few entities left as potential takeover targets. One of them is the Legnica-based wholesaler Legfarm, the last of the Apofarm group companies. Hence we do not rule out acquisitions in the coming years between some of the biggest players on the market.

 

In April 2008 the State Treasury published a list of pharmaceutical distributors to be privatised in the coming years. In July 2008 Cefarm Krakow was privatised (the shares were acquired by PGF). In December 2008 the state surrendered its stake in Cefarm Wroclaw (36.31% of the shares were purchased by Farmacol, one of the leading distributors to pharmacies).

In July 2009 Farmacol also took over another wholesaler – Cefarm Bialystok for PLN 71.5m (€16.6m). Cefarm, which is active in north-eastern Poland, also has a chain of pharmacies numbering nearly 50 outlets. In November 2009 the State Treasury announced its intention to sell its shares in Cefarm Rzeszow. One of the likely potential buyers of these shares is ACP Pharma, which already has over half of the shares in the Rzeszow-based company.

In 2010 the privatisation of the last state-owned distributor – CF Cefarm – is scheduled to complete. In mid-January Farmacol, Eko-Berry (a property developer) and Polfarmex (a Polish maker of drugs and dietary supplements) following the completion of the due diligence process, submitted their binding offers for the acquisition of 85% of the shares in the company. Of the three investors who submitted final bids, the Treasury Ministry decided to open talks with Polfarmex and Eko-Berry. The ministry hopes to complete the privatisation in the first half of the year. It is estimated that due to its low level of profitability (0.8% in 2008), which is due to its small prewholesale margins, CF Cefarm could be sold for around PLN 30m or €7m (for an 85% stake), half of the price of Cefarm Bialystok.

 

In recent years new forms of distribution have developed on the Polish pharmaceutical distribution market. In March 2009 Sanofi-Aventis launched its Retail Pharmacy Supply Service for its cardiovascular drugs Clexane and Plavix and the drug Rilutek, used in patients with amyotrophic lateral sclerosis. It is designed as purely an interventionist measure (in case of problems with purchasing these drugs from the pharmacy’s regular supplier). As its partners in this programme, Sanofi-Aventis selected ACP Pharma, Farmacol and Prosper (now part of Torfarm), but sales to all the wholesalers with which it normally cooperates remain unaffected.

In May 2009 AstraZeneca rolled out a Direct Sales System for all its drugs on the Polish market. In November 2008 it chose the wholesalers PGF, Torfarm and Prosper (Prosper was later taken over by Torfarm) as its partners in the system. AstraZeneca data indicate that between 9 May (when the system was launched) and 31 August 2009 a total of 11,900 pharmacies (of the more than 13,000 operating on the market) had placed at least one order via the AstraZeneca system. In this period the concern sold 1.6 million packets of its drugs, and the average number of packets per transaction was five.

Our survey among the biggest pharmaceutical corporations in Poland indicates that around a third of pharmaceutical companies on the Polish market currently use a direct distribution system to some degree. In the relevant question, direct distribution was defined as supply of drugs by the manufacturer to pharmacies or hospitals directly, bypassing the wholesaler, though in fact wholesalers often become involved and offer manufacturers their services.