Portugal: austerity’s impact on distribution
Between Portugal’s two main distribution channels of hospitals and pharmacies, hospitals have suffered in particular. As the pharmaceutical industry’s largest customer, it has been critical for government to work with pharmaceutical companies to find solutions. Robin Turner, general manager of Roche Portugal, likens the relationship of the industry with the market to a marriage: “Sometimes they struggle because of money.” This struggle has been quite severe in some cases; public hospitals in Portugal owe more than EUR 1 billion (USD 1.3 billion) in debt to the pharmaceutical industry. As the largest hospital-based pharmaceutical company in Portugal, Roche was owed a colossal amount. As a consequence, Roche “reluctantly introduced a new commercial policy for the 25 percent of hospitals that had the longest outstanding payments,” recalls Turner. “These were hospitals that owed us between 500 and 1500 days. We insisted on cash payment until the historic debts were paid back. It was a resounding message to the marketplace to address the issue and promulgate change. Happily today, all the historic debt has been paid back to Roche. We therefore have a clean slate and the payment discipline of hospitals is at a stable and acceptable level.”
We need to at least maintain the current margins of pharmaceutical distribution and progressively increase the fixed part of it to cover the major part of operational costs.”Pharmacies have also endured their struggles as well. In 2008, the ambulatory market was valued at EUR 2.8 billion (USD 3.6 billion), while today its market size is the same as it was in 2002, representing a EUR 812 million (USD 1.06 billion) loss, or roughly 29 percent. Rui Carrington, CEO of local pharmaceutical distributor OCP Portugal, indicates that the model pharmacy shop as it is known today and patient accessibility to drugs have been affected as a consequence. “It is possible that punctual short-term market supply problems arise because of economic conditions or lack of financial capacity to support pharmaceutical distribution, shortage of bank credit and continuing reduction in market value,” says Carrington. In order to fix problems across the supply chain as a result of these factors, Carrington suggests increased collaboration between distributors and pharmacies as well as increased productivity among all players. “Reducing the actual level of credit from wholesalers to pharmacies would be a start. This would require banks to provide credit lines that allow both to restructure their debts,” recommends Carrington. “We need to at least maintain the current margins of pharmaceutical distribution and progressively increase the fixed part of it to cover the major part of operational costs. This is the best way to ensure compliance with GDP and the Statute of Medicines, and to preserve the model.”
“Transparency mechanisms are needed across the entire supply chain,” concludes Carrington. “Compensation measures to support operational costs across the supply chain can prevent and manage supply shortages. Transparency and reliable information about quantities available from manufacturers can also make a difference. Defining a ‘life-saving’ list of medicines that all players should commit to, granting Public Service Obligations (PSO) would also help. Transparency and exchange of reliable information about real needs, availability, quantities and deliveries should be the guiding principle.”
Transparency and exchange of reliable information about real needs, availability, quantities and deliveries should be the guiding principle.”In response to the crisis, the Portuguese affiliate of Spanish pharmaceutical group Almirall took a courageous decision to stop all commercial activity at the beginning of 2011 in response to a mature portfolio and strong erosion of sales. “Since 2011 we do not have any field force promoting products,” explains Rui Ferreira Santos, country manager of Almirall Portugal. “My small team here is focused on the access of new products we were expecting from our own R&D and licensing agreements. Thus, in response to the crisis, rather than work on mature products, we prepared the market and ground to bring new products.”
Ensuring a strong performance in clinical trials is also important for Portugal to recover. “The strategic value of clinical research for Portugal is now being recognized by the Portuguese Government and by INFARMED,” says Janssen’s Gisella Dante. “Recently, some important initiatives have been put in place such as the launch of the National Platform for Clinical Research and INFARMED and the Portuguese Central Ethics Committee are assuming a leading role within the EMA Voluntary Harmonization Procedure. On the other hand, there are a growing number of hospitals setting up clinical research units in order to increase their effectiveness in this field. In 2013, for the first time in years there was an inversion in the negative trend regarding the number of clinical trials approved annually. The signs are encouraging and Janssen has been fully engaged in this process.”
“Clinical trials are a way of ensuring early access to innovation, obtaining clinical expertise and are one way to attract investment to the country,” says Amgen Portugal country manager Ramón Palou de Comasema. “As a country, Portugal has significant potential to improve in terms of implementation of clinical trials. The expertise of clinicians in hospitals here is unprecedented. However, we need to improve processes. The most important part of this is to ensure that in the future, companies will continue to invest in Portugal.”
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