More pharmacies to go bankrupt in 2010

2010-03-10

Nearly 470 pharmacies went bankrupt in 2009 even as the market grew by over 10%, and in 2010 the pharmacy network is expected to shrink further in Poland as chain outlets strengthen their dominance and more small players go over the brink, Dziennik Gazeta Prawna reported.
According to IMS data cited by the newspaper, most of the bankruptcies occurred among independent, family-owned pharmacies. However, the shutdowns were partly compensated for by new openings by bigger players. Also, almost 300 pharmacies changed owners in 2009. The high number of bankruptcies reflects a growing polarisation between bigger, stronger chains and small operators, after years of uninterrupted growth in the number of outlets that led to fierce competition, exerting a downward pressure on margins and pushing many pharmacies into debt. According to observers, last year may have been but a prelude to a wider shake-up.



The main reason for the bankruptcy of more and more pharmacies in Poland is over-saturation of the market, causing many outlets to operate at a loss. According to the conclusion from our latest report entitled “Distribution on the pharmaceutical market in Poland 2010”, in order for pharmacy outlets to be profitable, there should be no more than 9,000 pharmacies and pharmacy points in the country (the current number oscillates around 14,000), i.e. there should be around 4,000-5,000 inhabitants per one pharmacy outlet, in comparison with the current 2,700.
Similar problems are faced by other countries in the region. In Hungary, a difficult situation has arisen because, over the last three years, the number of pharmacies has increased from around 400 to over 2,400, due to a liberalisation of the law on establishing a pharmacy in the country, but the number of redeemed prescriptions, at 150 million, remained unaltered. Some 400 pharmacies may soon go bankrupt in Hungary, according to the estimates of the Hungarian Chamber of Pharmacists (MGYK). In the Czech Republic already in 2008 the number of pharmacies began to fall for the first time since 1990. After 1990 the number of pharmacies in the country began to grow rapidly and more than doubled by 2008, when the Czech Republic had twice the number of pharmacies as Austria, a country of comparable size. Also in Bulgaria several hundred pharmacies went bankrupt in 2009 and a further several hundred are on the verge of bankruptcy.

Agnieszka Stawarska, PMR Pharmaceutical Market Analyst