Another weak month for Polish pharmacies

 

 

After a very poor start to the year and a rebound in March, the pharmacy market slowed again in April. In the analysed period, retail pharmacy sales were worth PLN 2.2bn (€569m), down by 5.7% compared with March and only 2.2% higher than a year earlier. Although the monthly slump in sales can be put down to weaker patient activity due to the advent of spring and the associated fall in winter infections, in annual terms patient traffic remained virtually unchanged[1]. Furthermore, the annual rise in sales was helped by a significantly lower reference base compared with March (in April 2009 the pharmacy market rose by only 3.3% y-o-y, against growth of 13% y-o-y in the month before). And although the weaker sales performance in April may have been caused in part by the period of national mourning following the crash of the presidential plane in Smolensk (with the closure of some shopping centres and with the minds of the public concentrated on the media coverage of the event and its aftermath, pushing activities such as shopping, and personal problems such as health complaints, firmly to the background)[2], it is clear that demand is not as solid as it was a year ago.

In the first four months of the year the Polish pharmacy market declined by 1.3% y-o-y, to just over PLN 8.7bn (€2.2bn). The weak start to the year, caused mainly by an early peak of the flu season (which usually serves as the main engine of market growth in the early part of the year, but which occurred in the autumn this time around), suggests that full-year results may be significantly worse than last year and lower than even the recent market forecasts. Achieving solid sales growth will be further complicated by unfavourable base effects, as the reference base will be relatively high in the months ahead, and will rise even more in November, reflecting the peak of the 2009/10 flu season. And if the peak of the next respiratory infections season comes in the first quarter, as it usually does, with only moderate flu statistics and related sales in the autumn, then there is virtually no chance for the market to even approach last year’s results. Assuming a moderately positive scenario, we forecast that in 2010 the Polish retail pharmacy market will rise by 3-4%.

 

 

 

Compared with the previous month, pharmacy sales declined markedly in all the main product categories. The steepest fall (by 6.3%) occurred in sales of non-prescription medicines, which were worth just under PLN 768m (€198m). In comparison with April 2009, this represented an increase of 2%. At the same time, reimbursed prescription sales slumped by 5.8% m-o-m to PLN 1.01bn (€260m), whereas fully-paid prescription sales were down by 4.8% m-o-m, to PLN 414m (€107m). In annual terms these results translated into increases of, respectively, 2.9% and 0.3%. As a result, sales of prescription medicines reached PLN 1.42bn (€367m) in April, down by 5.5% compared with March but 2.1% higher y-o-y.

In terms of therapeutic class, dermatology medicines were the only category that registered a slight monthly increase in April (by 2.8%), a result of rising demand for cosmetics in the spring. In all the other therapeutic categories sales were lower than in March, with the sharpest drop observed in sales of anti-infection medicines. As in preceding months, the biggest categories by sales value were gastrointestinal tract and metabolism drugs and cardiovascular drugs, accounting for 17.5% and 15.8% of pharmacy sales over this period. In comparison with March, there was a decline in the share of medicines and of dietary supplements and dietetic food products in total pharmacy sales, respectively from 79.07% to 78.68% and from 7.29% to 7.04%, accompanied by a significant increase in the share of other products (from 13.64% to 14.13%). Over the 12 months to the end of April, the share of medicines dropped by as much as 2.7 p.p., whereas the shares of dietary supplements and dietetic food products and of other products rose, by 0.9 p.p. and by 1.8 p.p.

 

 

 

After a substantial fall in prices in the month before, in April the average price of a medicine sold in a Polish pharmacy edged up by 0.3%. This was apparently a result of a rise in the prices of fully-paid prescription medicines (PharmaExpert does not publish data on prices in this category), because the prices of both reimbursed medicines and of OTC products fell over this period.

Although prices were marginally higher than in March, the annual rate of price growth slowed markedly. In the period under analysis, the average price of a medicine sold in a Polish pharmacy was PLN 15.68 (€4.1), up 3.4% y-o-y (compared with a growth of 5.1% y-o-y in March), while the price of a reimbursed drug reached PLN 27.21 (€7), up by 2.2% y-o-y (against 5.6% y-o-y the month before). At the same time, the average price of an OTC product was PLN 9.41 (€2.4), 4.3% higher y-o-y (in March prices in this segment grew by 5.9% y-o-y). Despite the slowdown, the annual rate of growth in drug prices remained ahead of inflation, which slowed to 2.4% y-o-y in April.

 

The value of reimbursement amounted to a little under PLN 710m (€183m) in April. This was 5.7% lower than in March, and up by 3.3% compared with a year earlier. During the analysed period, the share of reimbursement in total pharmacy sales amounted to 32.2%, the same as in the previous month and up slightly (by 0.3 p.p.) in relation to April 2009. The share of reimbursement in total sales of reimbursed medicines, at 69.6%, was also unchanged from March, and 0.2 p.p. higher than a year earlier.

On the other hand, pharmacy margins improved in April, after posting a slight decline in the preceding month[3]. The average pharmacy margin was 26.7% in April, up by 0.6 p.p. compared with March and by 0.7 p.p. y-o-y. Over the 12 months to the end of April, the reimbursed medicines margin increased by 0.7 p.p. to 20.8%, whereas the margin on remaining products was up by 0.8 p.p. to 32%.

 

 

 

Paweł Sionko

Senior Economist

PMR Publications