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Building ethical and generic partner deals poland, Mieczysla

Business Development & Licensing Journal

Building ethical and generic partnering
deals in Poland
The pharmaceutical industry has demonstrated a burgeoning will for co-operation between both
branded and generic companies. This trend is emerging in markets where the national budget is not
capable of financing growth expenses via reimbursement. This article reviews the factors that have
contributed to the growth of the generics business in Poland and gives an insight into the benefits of
ethical and generic company partnering deals.
by Mieczyslaw
Starkowicz,
Polpharma S.A.

Poland has one of the largest populations in
Europe (38 million). This exceeds the collective
total of all of the other Central and Eastern
European (CEE) countries. According to IMS
Dataview, in the year ending March 2006, the
pharma market was valued at 73.7billion (PLN
14.4 billion), with local currency growth in 2005 at
7.4% and a subsequent IMS forecast of 5.2% in
2006. In light of this, the share of generics in the
Polish market is 67% by value and 86% by volume.
Consequently, the development of the Polish
generic medicines market has benefited from
several political, cultural and historical factors.

Factors contributing to growth of
generics businesses
The liberal patent law
As late as 1993, only 15 years of patent protection
on the manufacturing process was granted. After
that time period, prior to Poland’s accession to the
European Union (EU), there was a short three-year
data exclusivity period (compared to six to ten
years granted in the EU at that time). This
prompted the entry of generic medicines into the
Polish market.

The reimbursement system
The reference price is the price of the cheapest
generic medicine for a specific molecule. For six
years, no new innovative compounds were added
to the reimbursement list. It is only lately that the
angiotensin-II receptor antagonists have been
included.

of incentives for physicians to prescribe generic
medicines and the financial penalisation of
pharmacists, in the form of regressive margins for
dispensing generics, hinders the development of
the market.

Historical factors
There are ten large pharmaceutical production
plants in Poland which, historically, reflects the
fact that Poland was a key provider of medicines
to the communist bloc, before the lifting of the
‘iron curtain’. Today these plants are largely
modernised and are now owned by international
companies such as GlaxoSmithKline (GSK), Pliva,
Valeant, Krka and Lek, or privately owned
businesses, like Polpharma. Additionally, there are
approximately 35,000 people employed in
pharma production work (excluding marketing
and sales).
At present, generic companies hold a very strong
position in the Polish pharma market, three of
them being in the top ten (figure 1): Polpharma,
Krka, and Lek/Sandoz/Hexal.
Figure 1: Top ten pharma companies in Poland
Rank

Company

1
2
3
4
5
6
7
8
9
10

GSK Pharma
Polpharma Group
Sanofi-Aventis
Server
Roche
Novartis Corp.
Pfizer Corp.
Lek Sandoz
Krka
AstraZeneca

m EURO MAT\3\2006
235
202
191
181
125
117
105
94
88
81

Cultural factors
There is a high volume of consumption which
derives from the favourable attitude of physicians
towards generic medicines. Currently, the market
is driven by branded generics. Doctors do not
prescribe brands by the international nonproprietary name (INN) and patients are used to
easy access to ‘their medicaments’. The role of
distributors and pharmacies has increased, but
still the doctor’s recommendation remains the
most important factor. On the other hand, the lack
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Moreover, generics of some leading molecules,
such as amlodipine, olanzapine and atorvastatin,
have been in the Polish market for some years.
When an important molecule loses patent
protection in a relatively small market like Poland,
the company’s headquarters are generally
reluctant to make a major price reduction, as such
a move could well lead to the loss of a multimillion dollar business overnight. This was the
case for Eli Lilly’s Zyprexa (olanzapine), where

Issue 1 • Spring 2006

Figure 2: Olanzapine market share (2002–2005)
Company
Adamed
Krka
Eli Lilly
Lek-Am

2002

2003

2004

2005

0%
0%
100%
0%

12%
0%
88%
0%

92%
1%
6%
0%

70%
24%
3%
2%

generic products flooding the marketplace led to
a 95% decline in sales, from 743.7million per year
to 72.17million per year.
Local country managers are well aware of this
threat and they constantly seek possible
remedies. More and more often, such a remedy
could be a partnership with a generic company.

Co-operation options
Co-marketing
The owner of an innovative molecule may choose
to grant a generic partner the right to sell the
product under a different brand name which, at a
lower price, can then compete with the ‘hostile’
generic. Interestingly, such a move would not
unduly affect the international floor price of the
innovator. Conterminously, this provides strategic
added value to the patent holder, as support for
this ‘defence flexibility’ makes an investment in a
particular molecule more risky for the ‘hostile’
generic companies. Some projects of this kind are
already in place, for example, the co-marketing of
formoterol between Novartis and Polpharma.

Building a strong ‘generic branch’
In Poland, GSK gained its dominant position
through the purchase of a large pharmaceutical
plant in Poznan. Other corporations with a similar
approach are Novartis (Hexal/Lek/Sandoz), Servier
(Egis; Anpharm) and Sanofi-Aventis (investment in
Zentiva). For now, these generic branches are fully
independent from their innovative parent
companies, but this will probably change as soon
as Servier starts to use Egis generics to defend
Prestarium (perindopril), its top brand.
Those corporations which cannot or will not cooperate face other strategic growth possibilities,
such as a focus on niche markets. For example,
Roche has concentrated on oncological
pharmaceuticals, whilst Wyeth has privileged
rheumatological products.
If this type of focus is not possible, innovative
companies can face a drastic drop in sales and a
scaling down of the business as the main brand
faces aggressive generic entry (for example, Eli
Lilly, Novo Nordisk and MSD).
Some innovative companies still believe, or are
forced to believe by their global headquarters,
that the only possibility of growth is to have
innovative compounds reimbursed. The problem
is that the reimbursement ‘value pack’ is almost
always tailored to Western standards. For the

majority of new compounds (the ‘me-too’ drugs),
the medical benefit makes it harder and harder to
get a new compound on the reimbursement list.

Conclusions
Consequently, the changing context means that
generic Polish companies will face an
unprecedented acceleration and transformation
in their marketplace:
• Some new powerful players, such as Teva,
Ranbaxy and possibly other Indian and
Chinese companies, are expected to provide
strong competition.
• By 31 December 2008, pharmaceutical
legislation in Poland will be modified in order
to meet EU requirements. This will result in a
large amount of cheap generic drugs having
to be removed from the market.
• The purchase of a pharmaceutical dossier is
now easier in light of the new EU regulation.
This will result in the accelerated price erosion
of the ‘most attractive’ off-patent molecules.
For example, Amaryl (glimepiride) lost its
patent protection four months ago and
currently there are 17 companies that have
registered a generic. The ease of market entry
can therefore result in losses for some small or
poorly governed generic companies, which
can also result in lower quality medicaments.
Therefore, co-operation between branded generic
and innovative companies is not only beneficial to
both parties (when drugs are approaching the offpatent point), but is particularly useful when some
molecules are not able to receive reimbursement.
Similarly, vital drugs can be sold and launched at
an acceptable price for both patients and
authorities. This level of co-operation is vital in the
era of globalisation and could, for example, pave
the way for the democratic distribution of cheap,
generic retroviral drugs to combat the human
immunodeficiency virus (HIV) epidemic in
poverty-stricken Africa.
The latter may have not happened yet, but as Bob
Dylan sang:“the times they are a-changin’”
.
© 2006 Mieczyslaw Starkowicz

Mieczyslaw Starkowicz is corporate business development director at Polpharma
S.A., Poland. He graduated from the Medical Academy in Gdansk. Since 1995, he has
also worked in sales, marketing and business development for ICN Rzeszów (Valeant)
and Stiefel.
Tel: +48 22 364 61 54
Email: mieczyslaw.starkowicz@polpharma-group.com
Website: www.polpharma-group.com

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