Focus on Drugs
The pharmaceutical market managed to resist negative economic conditions last year, and will likely see continued growth this year, despite the ongoing slowdown and high unemployment.
The country's pharmaceutical sector grew by 8.8% in 2002, generating a total €2.97 billion ($3.2 billion), calculated in producers' net prices, according to Azyx Polska's estimate.
BRE Bank brokerage says that medicine consumption per capita was €76.1 ($82) last year, slightly below that of Hungary at €92.8 ($100), but also below Spain at €125.3 ($135), Germany at €160.6 ($173), and France at €213.4 ($230). Lower per capita usage of medicines compared with other countries was due to the less expensive prices of domestic generic medicines as well as lower rates on selected domestic (homemade) drugs, which are set by the government.
Polska Grupa Farmaceutyczna, which holds 20% of the market, reported a 2.5% increase in its sales income in 2002, while its rival, Farmacol, boosted its sales by 28.7%, closing in on some of PGF's market share.
PGF's weak sales were due to its focus on its restructuring, while its rivals focused on earnings growth. Orfe, for example, had a 9% increase in sales in 2002, while Prosper gained 7.2%.
PGF's consolidated net profit was €5.8 million (zł. 25.4 million) in 2002 compared with €102,288 (zł. 447,000) the previous year, making PGF the pharmaceutical distributor with the highest net profit growth dynamics on the WSE. The company's management board said that this year it plans to reach €778 million (zł. 3.4 billion) in sales and a net profit of 1% of sales. The estimates do not include results of Cefarm Kraków, which will join PGF in 2003.
Farmacol's good sales results were due to its acquisition of Cefarm Kielce and Cefarm Wrocław in 2001 as well as Cefarm Warszawa in 2002. Following Farmacol's acquisition of Cefarm Szczecin, BRE Bank analysts now expect the company's market share to reach 17%. Farmacol's net profit jumped to €8.4 million (zł. 36.5 million) in 2002, up 288.2% compared with 2001. Analysts, however, are worried about a sharp increase in Farmacol's sales' costs incommensurable with its sales growth. Farmacol's fourth-quarter sales costs rose 24.4%, while its earnings increased by only 16%. Its full-year sales costs were 48% higher than in 2001. BRE Bank brokerage forecasts that Farmacol's earnings will be about €630 million (zł. 2.8 billion) this year with a €9.5 million (zł. 41.3 million) net profit. The company's management board is more optimistic, forecasting its sales earnings at €700 million (zł. 3.1 billion) this year and net profit at €11.5 million (zł. 50.1 million).
The good financial performances of PGF and Farmacol shrank the market share of Prosper, which lost 2% of the market. According to BRE Bank brokerage, Prosper's financial condition is difficult, despite it ending 2002 with a €663,615 (zł. 2.9 million) consolidated net profit, down from €1.4 million (zł. 6.1 million) in 2001. Analysts say that even though the company reported consolidated earnings of €336.4 million (zł. 1.5 billion), there is a chance that its income increased as a result of co-operation with unreliable receivers with whom other pharmaceutical distributors limited their collaboration. This could result in an increase of due bills and the necessity of creating large reserves this year. Tomasz Wesołowski, Prosper's president, said that his company is willing to merge with either PGF or Farmacol. However, both companies remain cautious about a possible merger.
Orfe, with a 7% market share, was the only pharmaceutical distributor to finish last year with a net loss, of €2.6 million (zł. 11.4 million), as a result of write-offs for reserves.
According to the World Bank, the domestic pharmaceutical market should grow 9% on average each year, and account for €3.7 billion ($4 billion) in 2005. BRE Bank analysts, however, are not so optimistic. They forecast 6% growth during the next few years, arguing that the volume of the market will rise faster than its value.
The country's pharmaceutical sector grew by 8.8% in 2002, generating a total €2.97 billion ($3.2 billion), calculated in producers' net prices, according to Azyx Polska's estimate.
BRE Bank brokerage says that medicine consumption per capita was €76.1 ($82) last year, slightly below that of Hungary at €92.8 ($100), but also below Spain at €125.3 ($135), Germany at €160.6 ($173), and France at €213.4 ($230). Lower per capita usage of medicines compared with other countries was due to the less expensive prices of domestic generic medicines as well as lower rates on selected domestic (homemade) drugs, which are set by the government.
Polska Grupa Farmaceutyczna, which holds 20% of the market, reported a 2.5% increase in its sales income in 2002, while its rival, Farmacol, boosted its sales by 28.7%, closing in on some of PGF's market share.
PGF's weak sales were due to its focus on its restructuring, while its rivals focused on earnings growth. Orfe, for example, had a 9% increase in sales in 2002, while Prosper gained 7.2%.
PGF's consolidated net profit was €5.8 million (zł. 25.4 million) in 2002 compared with €102,288 (zł. 447,000) the previous year, making PGF the pharmaceutical distributor with the highest net profit growth dynamics on the WSE. The company's management board said that this year it plans to reach €778 million (zł. 3.4 billion) in sales and a net profit of 1% of sales. The estimates do not include results of Cefarm Kraków, which will join PGF in 2003.
Farmacol's good sales results were due to its acquisition of Cefarm Kielce and Cefarm Wrocław in 2001 as well as Cefarm Warszawa in 2002. Following Farmacol's acquisition of Cefarm Szczecin, BRE Bank analysts now expect the company's market share to reach 17%. Farmacol's net profit jumped to €8.4 million (zł. 36.5 million) in 2002, up 288.2% compared with 2001. Analysts, however, are worried about a sharp increase in Farmacol's sales' costs incommensurable with its sales growth. Farmacol's fourth-quarter sales costs rose 24.4%, while its earnings increased by only 16%. Its full-year sales costs were 48% higher than in 2001. BRE Bank brokerage forecasts that Farmacol's earnings will be about €630 million (zł. 2.8 billion) this year with a €9.5 million (zł. 41.3 million) net profit. The company's management board is more optimistic, forecasting its sales earnings at €700 million (zł. 3.1 billion) this year and net profit at €11.5 million (zł. 50.1 million).
The good financial performances of PGF and Farmacol shrank the market share of Prosper, which lost 2% of the market. According to BRE Bank brokerage, Prosper's financial condition is difficult, despite it ending 2002 with a €663,615 (zł. 2.9 million) consolidated net profit, down from €1.4 million (zł. 6.1 million) in 2001. Analysts say that even though the company reported consolidated earnings of €336.4 million (zł. 1.5 billion), there is a chance that its income increased as a result of co-operation with unreliable receivers with whom other pharmaceutical distributors limited their collaboration. This could result in an increase of due bills and the necessity of creating large reserves this year. Tomasz Wesołowski, Prosper's president, said that his company is willing to merge with either PGF or Farmacol. However, both companies remain cautious about a possible merger.
Orfe, with a 7% market share, was the only pharmaceutical distributor to finish last year with a net loss, of €2.6 million (zł. 11.4 million), as a result of write-offs for reserves.
According to the World Bank, the domestic pharmaceutical market should grow 9% on average each year, and account for €3.7 billion ($4 billion) in 2005. BRE Bank analysts, however, are not so optimistic. They forecast 6% growth during the next few years, arguing that the volume of the market will rise faster than its value.
