Each local pharmacy serves 2,350 people on average, which puts Romania on the fifth place in Europe ahead of countries like Germany, France and Italy that do not allow pharmacy chains, according to the calculations of the Association of Pharmaceutical Distributors and Retailers in Romania (ADRFR). Romania is behind countries like Greece, Bulgaria, Spain and Belgium, though.
The ADRFR data citing the Health Ministry show that the number of pharmacies, more than 8,000 is now almost double the 2005 level, when there were 4,861 in operation.
ADRFR members include Mediplus Exim, Farmexpert DCI and Farmexim (distributors) and Sensiblu, Farmaciile Dona and Help Net (pharmaceutical retail).
Drug retail, like the entire pharmaceutical sector, is highly regulated by the government, which ties the number of pharmacies that may operate in a specific city to population numbers by law. The demographic criterion stipulates that only one pharmacy per at least 3,000 people may operate in Bucharest, one per at least 3,500 people in county seats and one for at least 4,000 people in every other city. There are no limitations for rural areas.
Despite this regulation, the number of retail pharmacies has gone up in the past few years because of an exception to the demographic criterion, which said pharmacies might be opened in shopping centers of at least 3,000 square meters. It remained in force until 2010 and spurred the opening of more than 1,000 pharmacies or almost 13% of the total in operation in Romania.
Bucharest should have only 670 pharmacies, but actually the number is close to 1,000, or 44% more than there should be, according to ADRFR data.
All these pharmacies compete over the more than EUR3 billion sales of pharmaceuticals and dietary supplements, cosmetics, medical devices and other products. As the drug market remained flat and the number of pharmacies rose, sales per pharmacy dropped.
Europe is divided when it comes to enforcing the demographic criterion. Countries like UK, Ireland, Netherlands, Norway and Sweden have a deregulated pharmaceutical market, which means they no longer have any demographic, geographic or professional criteria to meet for opening a pharmacy, while the sector remains regulated in countries like Austria, Denmark, Finland and Spain.
On the other hand, some countries do not allow pharmacy chains, like Germany, France and Italy, while others do, like Poland, UK, Bulgaria, and Belgium.
The demographic criterion is up for debate again, since it is due to expire on December 31. The entire pharmaceutical retail sector called for keeping it in place indefinitely, but a law has not been issued yet to clear things up.
If the demographic criterion is dropped, the number of pharmacies will skyrocket but the effects will be negative, pharmacy officials believe.
After having been passed by the Parliament and forwarded to President Basescu to sign it, the bill was sent back to the Senate for reconsideration so it is unclear what will happen on the pharmaceutical market after January 1, 2015.
Pharmaceutical retail companies say the deregulation of the market will cause losses to all operations in the industry, bankruptcies in distribution and retail segments and make the personnel shortage in the sector worse. Once bankruptcies happen, the money for medicines will go to private hands and will no longer return into the system, disrupting the entire producer-distributor-pharmacy-patient chain.
“Continued supply of the drug market is a national security issue and every European country treats it as such. Nowhere in Europe has such an ill-advised and risky ‘deregulation’ been allowed in pharmaceutical retail, as long as the upstream part of the market, i.e. the marketing authorizations, prices, margins, personnel, space, temperatures, opening hours etc. is strictly regulated,” says Ovidiu Wencz, general manager of SIEPCOFAR, the company that operates Farmaciile Dona. Dona is one of the largest pharmacy chains in the country.
The demographic criterion is a EUR800 million stake for pharmacies, which is how much their licenses are worth that are currently trading for about EUR75,000 to EUR100,000.
President Traian Basescu explained his decision to send the law back to the Senate by saying that keeping the demographic criterion might be an obstacle for the market’s competitiveness, referring to an opinion of the Competition Council. He suggested maintaining the demographic criterion in place until September 30, 2015.
(English version by Loredana Fratila-Cristescu)