In goood health

The retail pharmaceutical market in Poland is recording another year of solid growth. Research company PharmaExpert expects the market to grow by approximately 6.3 to seven percent this year from the current zł.17.5 billion. Growth predictions for 2006 are at a similar level.

Another research group, IMS Health, was forced to upgrade its annual growth rate prediction for the industry because of an 8.4 percent year-on-year market-value increase in the first three quarters of 2005. At the end of September, it changed its annual growth prediction to 7.2 percent from the previous 5.9 percent.

In October the monthly turnover of an average pharmacy increased year-on-year by 1.5 percent to zł.140,000. In 2004 the average monthly turnover amounted to zł.131,000. PharmaExpert believes that an average pharmacy will increase its turnover by around two percent in 2005.

Tight market

Paradoxically, these companies are flourishing despite the market for retail pharmaceutical sales in Poland being extremely tight. There are nearly 11,900 pharmacies in Poland - one for every 3,300 people. In the rest of northern Europe, the ratio is one to every 12,000.

Polska Grupa Farmaceutyczna (PGF) continues to lead the market with a roughly 20-percent slice of the pie. Farmacol is second  with approximately 16 percent, followed by Prosper (around 10 percent),  Torfarm (9.5 percent) and Orfe (around seven percent).

The market leader has high hopes. Although its net profit after three quarters of this year amounted to just zł.35.5 million - lower than the zł.40.9 million for the same period of 2004 -  the company maintains that it will reach its profit target of zł.50 million for 2005.

"The first and the fourth quarters are always the best," PGF president Jacek Szwajkowski said. Since PGF recorded profits of zł.10.11 million in the third quarter, Szwajkowski thinks the yearly target is realistic.

However, the competition is not far behind. Farmacol's revenue after three quarters of the year reached zł.2.22 billion - 10 percent higher than in the corresponding period of 2004. Net profits grew from zł.37.5 to zł. 42.3 million in the same time frame. The chief inspector at Farmacol, Kzysztof Gadzała, revealed that the company may even exceed its revenue plan for 2005, which predicts 10 percent growth in comparison to the 2004 result of zł.2.714 billion. The company is also talking optimistically about 2006. "We want to grow at a faster rate than the market," says Gadzała.

The little guys weigh in

Behind the big boys, the smaller players are looking to spoil the party. Torfarm's president, Kazimierz Herba, wants to catch up with the market leaders through consolidation.  "We will try to acquire other companies from the market," he said. The company boasted an eight-percent year-on-year increase in sales revenue after Q3 2005, while its net profit amounted to zł.3.17 million - double that for the same period in 2004.

In addition, Orfe acquired more than 40 pharmacies in the third quarter increasing the number in its portfolio to 168 - impressive, but still far behind the over 300 controlled by market leader PGF.