First Official Withdrawal of Pharma Company from Greece, Some Respite for Patients As Payments to Be Made to Pharmacies
The German pharmaceutical company Biotest has announced its imminent withdrawal from the Greek market due to late payments of debts, becoming the first multinational to officially announce its withdrawal of supplies to Greece. At the same time, some pharmacies are due to resume normal service for patients entitled to reimbursed drugs.
IHS Global Insight Perspective
Biotest, a German pharmaceutical company specialising in haematology and immunology, has become the first pharmaceutical company to officially announce that it will cease supplying the Greek market. At the same time, one association of pharmacists has recommended to their members to start dispensing reimbursed drugs as normal (on a conditional basis), following a promise of payments by the main health insurer.
As a medium-sized pharmaceutical company, Biotest is exactly the type of firm which may feel that it is unable to withstand the financial pressures which it is under in Greece, not able—unlike larger companies—to absorb the losses sufficiently.
There is a chance that once one company has made the step of officially announcing the withdrawal of supplies from Greece, it will be easier for others to follow suit—and even though many have reduced their supplies to Greece, there have been no official complete supply withdrawals announced until now. Meanwhile, if the EOPYY manages to fulfill its promise to pay its April liabilities, and a believable framework is put forward for subsequent payments, there may be a chance of some normality being restored to the pharmaceutical supply system. However, the threats of doctors concerning protests at accumulated debts would suggest that any improvement in one area is counterbalanced by a deterioration in another.
Biotest Announces Imminent Withdrawal from Greek Market
German pharmaceutical company Biotest, which specialises in the haematology and immunology sectors and is a major producer and supplier of plasma proteins, has announced that it is will cease supplies to Greece from July, reports German news source, Hessische Rundfunk, citing Börsen Zeitung. The source reports that Biotest appealed to the Greek Ministry of Health (MoH) in April to pay back the money it owed—reportedly around EUR7 million (USD8.84 million) from 2011—but to no avail.
As reports Reuters, the decision by Biotest makes it the first company to officially announce its withdrawal from Greece, and although it is a fairly small company in comparison with the major multinationals on which Greece is highly dependent for its pharmaceutical supplies, it is a precedent which will beg the question: Who next? In contrast with Biotest, other German pharmaceutical companies—including Bayer, Merck KGaA and Fresenius—have opted to continue supplying the country, in spite of the financial problems which have beset them, although they have implemented strict policies intended to restrict losses (see Germany - Greece: Bayer Demands Cash Up Front for Drugs Delivered in Greece).
Multinational pharmaceutical companies supplying Greece have faced a drastic loss in the value of the government bonds which were provided by the government as payment for the substantial hospital debts that mounted in the years preceding the financial crisis. As Reuters reports, Biotest was given bonds with a face value amounting to EUR15.8 million at the time of the bond payout, and the company estimates that the bonds are now worth around EUR4.5 million. Biotest was reportedly Greece's first private creditor which refused to participate in the sovereign-bond swap earlier this year, a part of the major restructuring of Greece's debts.
Some Pharmacists to Start Dispensing Reimbursed Drugs As Normal, But Not All
Simultaneously, one of the major associations of pharmacists in Greece, the Panhellenic Pharmaceutical Association, has called on its members to suspend their protest against late payment of drug reimbursement liabilities, which involves demanding upfront payment from patients covered by the main health insurance organisation, the EOPYY, for reimbursed drugs, with patients then left to seek reimbursement with their insurer directly. The Association has called on members to suspend the protest until 25 June, when the debts for April are due to be paid, reports Greek health news provider, Health View. Continued suspension of the protest is dependent on the payment of the full amount, at the time stated. The source reports that pharmacists' associations of Athens, Achaia, Chios, and Evros have called for the protest to be continued until all the outstanding liabilities have been paid, and Greek newspaper Ta Nea reports that the Pharmaceutical Society of Attica will probably at its forthcoming meeting on 20 June decide to continue with the protest too.
Ta Nea also reports that the fire of protest seems likely to be transferred from pharmacists to doctors soon, with doctors working under the auspices of the EOPYY reported to be threatening lawsuits and injunctions over backlogs of payments. The president of the Panhellenic Medical Association (PIS) is reported as saying that unless the situation is addressed to their satisfaction, the association's lawyers will go ahead with lawsuits aimed at gaining a mandatory freezing of the EOPYY's assets. The Greek Union of Doctors is reported by the source as estimating that the debts towards them from the EOPYY amount to around EUR570 million.
Outlook and Implications
Biotest, as a medium-sized pharmaceutical company with annual revenues of just over EUR400 million, may be a good example of the type of company which could see its position in Greece as untenable in the coming months, and, although in itself the withdrawal of the company is not majorly significant, its symbolic significance is much greater. This is because in all previous standoffs between the Greek authorities and pharmaceutical companies, such as Novo Nordisk and LEO Pharma (both Denmark) in 2010, and later ones involving Roche (Switzerland), Bayer (Germany) and others, there was never the suggestion that the company intended to withdraw all supplies from the market, and indeed, this possibility was studiously played down, considering the potential adverse publicity which could result from such a move. However, once one company has made this move, it becomes easier for others—and it is more probable that this would be the medium-sized or smaller pharmaceutical companies, for whom a loss of several million euro in Greece is an important issue, rather than the pharma majors, which are more capable of absorbing such losses.
Meanwhile, the respite for Greeks seeking medicines in pharmacies will be limited in terms of its geographic scope, and if the Pharmaceutical Association of Attica opts to continue the protest, as predicted, then in Greece's most populous region, the protest will persist (see Greece: 25 May 2012: Greek Pharmacies Continue Protest, Patients to Pay Upfront for Reimbursed Medicines). Although there is a small glimmer of hope here, with promises of payments in order to get the pharmaceutical care system flowing again, the prospect of major protests by doctors puts any optimism on hold.
More broadly, the success of the pro-bailout New Democracy party in yesterday (June 17)'s parliamentary election means that at least there is some sense of stability restored to Greece, which may have a positive influence on the healthcare sector, especially if—as is widely predicted—there is a relative easing of the severity of the austerity measures the country is undergoing.
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