UOKiK completes its sector inquiry into the retail pharmaceutical market, including the scope of state intervention in business operations on the market.

Poland’s Office of Competition and Consumer Protection (UOKiK) has completed its sector inquiry of the retail pharmaceutical market. The inquiry sought to analyse laws and assess them in terms of competition mechanisms as well as to compare the regulatory standards between some countries of the European Union. The structure of the market in Kujavian-Pomeranian voivodship was analysed in particular detail. The Authority solicited the opinions of more than 400 enterprises that run pharmacies.  

Results of the inquiry

The information gathered by UOKiK shows that as of December 1^st 2014 there were 14 352 pharmacies and pharmacy outposts in Poland. The highest concentration can be found in the Mazovian and Silesian voivodships, each of which has 1500 stores, one per 2 600 - 2 700 inhabitants. For comparison, the average number for the EU as a whole was one pharmacy for every 4 500 inhabitants, with the figure varying from 2 200 in Belgium to 7 500 in Sweden. Since the beginning of 2014, the number of pharmacies has increased, reversing the trend that characterised the market in 2013, when the reimbursement bill came into force. The bill introduced fixed prices for reimbursed drugs, the obligation for pharmacies to sign a contract with the National Health Fund and a ban on pharmacy advertising, among other changes.

Meanwhile the number of pharmacies being run by pharmacy chains has grown over the last few years, and presently accounts for roughly 30 percent of the market. Most of the pharmacies being shuttered are individual undertakings, while those being opened tend to be run by the large chains. The decreased viability of smaller pharmacies may be the result of tough price competition on over-the-counter drugs, the increasing costs of running a business and weaker leverage in negotiations with pharmaceutical wholesalers. This last reason has lead enterprises to pool together in buying groups, enabling them to secure better terms when purchasing products.

The inquiry further revealed that pharmacy operators compete with one another in small geographic areas. Most of the companies researched saw their competitors as those located in closest proximity to their own stores — often in the same neighbourhood or even on the same or a nearby street. This explains why the Authority considers the market to have a local dimension and defines the area as being within a one-kilometre radius of a given pharmacy. It is a rare company that enjoys a leading position on a national scale while commanding the same status on particular local markets.

The legal situation

UOKiK’s analysis showed that Poland’s model of legal regulations governing pharmacy business activity does not differ from the standards observed in some other EU countries, which favour less state intervention. For their part, Polish lawmakers have not entirely ruled out regulation, though they have generally allowed the industry to be guided by market processes. Limitations that have been introduced include a provision of pharmaceutical law banning entities or capital groups that control more than 1% of the pharmacies in a given voivodship from opening others there. In contrast to pharmacy law, antimonopoly law defines a dominant market position — in this case a local market and specifically a voivodship — as exceeding 40 %.

Issues on the medications market

One pressing issue on the pharmaceutical market is parallel export, or the non-audited sale of pharmaceuticals to countries in which the same medicine is sold at a substantially higher price. An amendment to pharmaceutical law passed on 7 May might curb this problem. The amendment establishes the requirement of regular, daily reporting on inventories and product sales volumes, and also requires companies to report their intention to ship medicine abroad.

Additional information for the media:

Press Office, UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Phone.: +48 22 827 28 92, +48 22 55 60 314, +48 22 55 60 430
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]