The potential export of over 30% of Poland’s pharmaceutical wholesale market to China is raising eyebrows and prompting discussions worldwide. At the center of this speculation is Neuca S.A., a prominent Polish pharmaceutical company with significant influence and a growing presence in the market. As the company engages in advanced negotiations with Chinese investors, several key factors and controversies are shaping the narrative.
Neuca S.A.: A Powerhouse in the Polish Pharmaceutical Scene
Neuca S.A. stands as a towering figure in the Polish pharmaceutical landscape. With a staggering workforce of 5000 employees and an annual revenue of 3 billion USD, the company has managed to secure a substantial 30% share of the wholesale market. This significant market share underscores Neuca’s influence and control within the industry.
Poland’s Regulatory Changes to Pharmaceutical Laws
A crucial backdrop to the potential market shift is Poland’s recent regulatory amendments. The introduction of the “Pharmaceutical Law” and the “Drug Reimbursement Act” (ADA and ADA2) has undoubtedly favored Neuca’s endeavors. These regulatory changes, championed by Waldemar Buda, the Polish Minister of Development and Technology, have provided Neuca with advantageous conditions to navigate the evolving landscape.
These amendments introduce a series of significant alterations that have stirred the industry landscape.
Understanding the Polish Pharmaceutical Market
Poland currently has 12,000 pharmacies to service their 38m citizens. The larger pharmaceutical chains procure medicine from multiple wholesalers, while a third of the pharma market numbering 4000 branches, acquires their prescription drugs exclusively from the wholesaler Neuca.
One of the key aspects of the newer ADA amendments is the curbing of pharmaceutical franchise chains. These changes now restrict companies from establishing expansive chains of pharmaceutical franchises or owning more than five branches. Furthermore, the amendments take a firm stance against the transfer of ownership or the sale of existing pharmacies, throwing a curveball at potential corporate exit strategies or mergers.
Poland to Close 1,000 Pharmacies Costing 6,000 Jobs
However, the ripple effect of the ADA legislation doesn’t stop there. A more alarming provision grants the Polish Provincial Pharmaceutical Inspectors the authority to retroactively withdraw existing pharmacy licenses. This effectively puts established pharmacies on the brink of closure.
This ominous move is predicted to have a profound impact, potentially leading to the shuttering of around 1,000 pharmacies and the unfortunate loss of over 6,000 skilled pharmaceutical jobs. The implications for the economy are stark and worrisome.
The ADA amendments, by design, cast a shadow over the pharmacy industry’s growth prospects. The limitations imposed on the expansion of branches and clientele have a direct consequence on the pharmaceutical chain’s purchasing power.
With diminished leverage by limiting each franchise to 5 branches, pharmacies find themselves unable to negotiate favorable bulk deals for essential medicines and medical devices. This results in higher costs for both pharmacies and consumers. The only viable route to secure better pricing for medicines lies in forging long-term service agreements with the largest pharmaceutical wholesaler Neuca S.A.
Political Reservations and Controversies
However, not everyone is on board with the recent regulatory amendments. Critics within the political arena have voiced concerns regarding the process through which these amendments were enacted. The lack of prior consultations and the manner in which they were introduced as additions to the KUKE act have drawn criticism. Moreover, the absence of parallel adaptive regulations has added to the contention surrounding these changes.
Polish President Andrzej Duda and his team have expressed reservations about the ratified changes. As the leader of the country, responsible for the health and welfare of his citizens, he has the legal right to veto the newly amended laws.
Unveiling Allegations of Lobbying and Controversial Transfers
Adding further complexity to the situation is the emergence of allegations and controversies. Jakub Kulesza, a member of the libertarian political party Wolnościowcy, has taken proactive steps to scrutinize the legislative process that led to the ADA legislation.
This move involves formal complaints to both the Central Anti-Corruption Bureau (CBA) and the Polish Supreme Audit Office (NIK). Mr. Kulesza’s complaint suggests illegal lobbying activities and corrupt political activity influenced the regulatory changes.
Corporate Structure and Stock Transfer Intricacies
Intriguingly, insiders familiar with the corporate structure and advanced negotiations reveal a twist in the tale. The founders of Neuca, Mr. Kazmierz Herba and his wife Wiesława, previously held their controlling interest in a Cypriot company named Abrasco Ltd.
This Cypriot structure, seemingly designed for tax-related advantages, enabled the Herba family to circumvent paying the 19% capital gains tax in Poland, amounting to millions of Euros annually, for nearly three decades.
However, a sudden transfer of stock from the private Cypriot entity to a newly established Polish entity has raised eyebrows. Industry insiders claim it does not seem feasible the move of stock was to begin paying the 19% Polish capital gains taxes, rather instead, appears to be strategically aimed at reducing government and public scrutiny concerning the company’s imminent sale.
The Road Ahead: Speculation and Contemplation
As Neuca S.A. engages in advanced negotiations with Chinese investors, the Polish pharmaceutical wholesale market’s potential export to China remains a topic of intense speculation. The influence over Poland’s regulatory amendments, political reservations, allegations of lobbying and corruption, and intricate corporate maneuvers have collectively woven a complex narrative.
Why Would Poland Rely on China for 30% of Medicine?
China’s historical track record in safeguarding medicine, sensitive data, and medical devices is far from commendable. Recent expert testimonies and substantiating evidence presented to a congressional oversight committee shed light on China’s dubious actions. Reports related to the SARS disease highlight instances where the Chinese government obliterated crucial samples, concealed vital records, incarcerated domestic journalists, and actively propagated false information to veil the true nature of the Covid-19 pandemic.
Dr. Robert Redfield, formerly at the helm of the U.S. Centers for Disease Control and Prevention (CDC), recently provided testimony and evidence before Congress. He claimed that all the scientific evidence overwhelmingly points to the notion that the extensive spread of COVID-19-related illnesses, responsible for infecting more than a billion victims globally and tragically claiming over 10 million lives, stemmed from a laboratory leak in Wuhan, China.
Earlier this month, President Joe Biden issued a sweeping Presidential Executive Order against China. The order serves as a stern directive, effectively halting the flow of U.S. investments into China’s technology sectors. This strategic move is a testament to the heightened concerns regarding the security and integrity of critical technologies and sensitive data when intertwined with China’s tech landscape.
The outcome of these negotiations between Neuca and Chinese investors (potentially Sinopharm) could significantly impact not only the Polish pharmaceutical industry but also the broader implications for international market dynamics.
As the story continues to unfold, industry experts and observers alike are closely monitoring every development, waiting to see whether Poland will indeed export its pharmaceutical wholesale market to China.