Drugstore investors sidestep law

A graduate pharmacist will be the owner of a pharmacy, but the capital, the concept and the management will be provided by somebody else.”
By : Robert Wylot

    Acid test: New legislation threatens investors of pharamacy chains, who vow to bypass the new law.

   Owners of drugstore chains are determined that a new pharmaceutical law, due to be signed by President Aleksander Kwaœniewski this week, will not jeopardize their investments – even if the president passes the legislation.

   The new law, which proposes that only graduate pharmacists can own drugstores, will be circumvented regardless of the president’s decision through an appeal to the constitutional court. If the court fails to annul the legislation, investors will then bypass the law through franchising outlets.

   “If the president signs the bill, (franchising is) where things will go,” said Artur Djagarov, president of Apteki Polskie, a pharmacy chain. “A graduate pharmacist will be the owner of a pharmacy, but the capital, the concept and the management will be provided by somebody else.”

   The Sejm passed a pharmaceutical law on Sept. 6 that aims to bring Poland in line with European Union legislation. But a lobby group of graduate pharmacists – traditionally owners of mom-and-pop drugstores – managed to push through a regulation that pharmacies should be exclusively owned by pharmacists with university degrees and that no pharmacist should be able to own more than one store (see the Business Journal, Sept. 10-17).

   During the past 18 months, several drugstore chains have been set up by private investors such as Djagarov, which are furious that any proposed law changing existing regulations could threaten their investments.

   According to investors of pharmacy chains, the proposed law violates the constitutional right of every citizen to unrestricted economic activity, as it gives a monopoly to one vocational group.

   “(The Pharmacy Owners Association) has asked the president to appeal the bill to the constitutional court,” Djagarov said.

   Elżbieta Modzelewska-Wšchal, vice president of the Office for Competition and Consumer Protection (UOKiK), agreed. “The constitution generally guarantees freedom of economic activity, so every law has to provide a satisfactory justification for a restriction of this freedom,” she said. “If the president signs the bill and we find sufficient grounds, we may appeal the bill to the constitutional court.”

   Poland’s civil rights ombudsman, whose task is to guard the constitutional rights of citizens, wrote in a letter to Parliament on Aug. 23 that the bill raises serious doubts about its compliance with the constitution, and that the constitutional court has already annulled similar provisions proposed in 1992 as unconstitutional.

   “I’m sure the ombudsman will appeal the law to the constitutional court if the president signs it,” Djagarov said. According to Stanisław Wileński, the ombudsman’s spokesman, this may not even be necessary. “There have been so many calls on the president that it is uncertain whether he’ll sign the bill at all,” he said.

   But even if the bill becomes law, investors of pharmacy chains are optimistic about their plans. “Developing a network of pharmacies will still be possible through franchising,” said Marcin Pruchniewicz, operation coordinator at Super-Pharm, which has two newly launched pharmacies and plans to open up to 50 by 2005.

   Many investors cite Germany as an example of successful franchising despite legislation limiting their activity. “Germany has had this system (based on ownership of graduates) for many years, but chains exist there anyway,” Djagarov said.