Document of the Federation of Workers in Medicine Industry of Greece

The Wholesale On Medicines In Greece And the European Union

The pharmaceutical wholesalers (PW) are independent businesses that are responsible for the constant feeding of the pharmacies, while the supplying cooperatives come from the union of pharmacists and they do the distribution to their members.

As is defined by the law, PW has as an object the supply, the possession, the trading, distribution or exportation of medicines, pharmaceutical substances as well as the things that are allowed according to provisions of other laws to be available in pharmacies or PW (cosmetics, orthopedic items, infant food, infant milk, etc).

In the Greek market there are about 140 businesses and cooperatives that employ 3.000 workers and make 20.000 deliveries in daily bases. (ICAP 2012)

The 15% of the distribution in medicine in Greece becomes outside of the PW, obviously directly from the pharmaceutical companies to the pharmacies, a figure, which is one of the highest in Europe. (GIRP 2010)

It wouldn’t be a mistake to claim that the PW in Greece (companies and cooperatives) are active mostly in regional and not national field in comparison to the most European countries that is mostly the model of the national wholesaler.

The profit for the PW on the indemnified from the National Healthcare Organisation (EOPYY) medicines is defined at 4.9%, for the NonPrescription Medicines (MHSHFA) at 7.8%*, while the medicines on the negative list ( no compensation from EOPYY) are at 5.4%*. The medicines on serious conditions with ex factory price over 200€ the profit is defined on 2%*.

(Mixed profit)

From the data on 2011, the distribution of the Greek market on PW turns up like this:

            Sales of private companies            2,430,000,000€

            Sales of cooperatives                    1,945,000,000€

It needs to be noted that the point of concentration in the industry isn’t very high, maybe one of the lowest in Europe, because three (3), five (5) and ten (10) companies cover up respectively the 15.0%-15.5%, 23.0%-23.5% and35.0%-36.0% of the total market of PW for 2011.

According to the Foundation for Economic & Industrial Research (IOBE) for the year 2012 and in a sample of 55 private PW, comes up from the invoices that:

            45 where profitable

            14 raised their profits and 29 decreased their profits

            3 businesses went from damaging to profitable

Meanwhile

            10 where damaging

            6 with raise on their damages and 1 with less damage

            3 businesses from profitable went damaging

For what concerns the cooperatives for the year 2012, on sample of 21 invoices from the cooperatives PW turns up that:

            18 where profitable

            4 raised their profits and 14 decreased their profits

And

            3 where damaging, while the year before where profitable.

Summing up, let’s see which are concerned to be the most serious dangers/threats for the future of Greek PW:

1. delays on payments, precarity of pharmacies
2. shrinking the amount of profit on the PW
3. probable over stepping the PW from the pharmaceutical companies
4. Entering large multinational companies from the European market.

However, let’s see what happens in the European market, borrowing facts from GRIP (EUROPEAN ASSOCIATION OF FULL LINE WHOLESALERS) which represent 750 companies on medicine wholesales (full-line wholesalers) in 32 European countries and in Greece.

The model of distribution that dominates in Europe is the multi-channel where the PW work with all the pharmaceutical companies and only in Sweden and Finland we have the single-channel model where one pharmaceutical company distribute their medicine in only one PW.

Distribution and trading of medicine in Europe mostly goes throw:

1. Full-line wholesalers (like our companies or cooperatives) in national or regional level.
2. Short-line wholesalers, medicine wholesalers with limited range of products, mostly ones with high profit.
3. Through direct sales of medicines from the pharmaceutical companies to pharmacies, where the companies distribute their own medicine.
4. DTP (direct to pharmacies). It’s mostly common in United Kingdom and it was first brought by PHIZER in2007. In this model of distribution the pharmaceutical sales directly to the pharmacy and the delivery is instructed in to a logistic company or they choose the logistics of a full-line wholesaler.
5. Only in United Kingdom we meet the RWA (Reduce Wholesale Arrangement) where the pharmaceutical companies don’t cooperate with all the PW but just with a few.

We are going to deal mostly with the full-line wholesalers, not only because they are similar to our PW, but because they are the most important distributer of medicine in Europe.

According to the GIRP, in 2010 772 full-line wholesalers served 172,709 pharmacies I EU-25 (+Norway, Switzerland), with profits that went up to 136billion Euros.

These sales were by 93% in pharmacies, and follow hospital pharmacies and selling in to doctors (Dispensing Doctors), an institution which is mostly common in Switzerland, England, Austria and less in Holland and France. The Dispensing Doctor sales the medicine to the patients himself.

The amount of profit of PW in Europe it ranges between 4% and 8%.

The most important European markets in the industry of PW are France, Germany, Spain, Italy, Holland, United Kingdom, in which for the year 2010 there was the 67% of the wholesaling sales of the EU-25 (+Norway, Switzerland) from 176 companies with profits that went up to 91 billion euro.

Let’s examine some of the facts from the six countries above, always with data from GIRP.

• Germany has 13 PW and 20,770 pharmacies. Five companies practically control the industry of wholesaling medicine (Celesio, Phoenix, Pharma, Alliance, Healthcare, Privat Pharma, Sanacorp).
• France has 9 PW and 22,770 pharmacies, while four PW control the 98% of the market. That’s the OCP (Celesio), Alliance, Sante Healthcare, CERP, Phoenix Pharma.
• England has 9 PW with most important Celesio, Alliance, Healthcare, Phoenix Pharma, Mawdsley-Brooks and 14,249.
• In Spain with 51 PW and 21,500 pharmacies the most important wholesalers are the Cofares, Alliance Healthcare, Cecofar and Federacio.
• At last Holland has only five PW (with most important MEDIQ) and 2,000 pharmacies, while Italy is more alike in the level of PW with Greece, with 84 PW (only 2 are in national level) and has 18,039 pharmacies.

Note. Greece with 11,000,000 residents has 147 PW and 10,500 pharmacies.

MOST IMPORTANT FULL-LINE WHOLESALERS IN EUROPE

1. ALLIANCE HEALTHCARE (UK)

It belongs to ALLIANCE BOOTS and provides 180,000 pharmacies, doctors, hospitals in 20 countries. It has 4,600 retail stores in 11 countries from which 4,450 have pharmacies. The total work was 23.4 billion English pounds.

2. Celesio group (GER)

Provides 65,000 pharmacies in 14 countries and has 2,200 pharmacies in European Countries. It belongs to McKesson Corporation, the largest company on wholesaling medicine in the USA. For the year 2013 the total work was 21.4 billion euro.

3. Phoenix group (GER)

Provides 70,000 pharmacies in 23 countries and has 1,600 pharmacies in 12 countries. In Finland, Sweden and the Baltic we will meet her as TAMRO. For the year 2013 the total work was 21.7 billion euro.

4.MEDIQ (HOLLAND)

Is active in 15 countries and has 300 pharmacies in Holland. It has been bought off from Advent International and her input for the year 2012 was 2.61 euro.

5.ORIOLA KD

It has its base in Finland and is active in Finland, Sweden, Russia, Latvia, Estonia, and Lithuania. It has 530 pharmacies and the total work for the year 2013 was 2.6 euro.

SOME CONCLUSIONS

The level of concentration in the industry of PW in Europe is especially high and in most countries the distribution network is in mostly national level and not in regional like in Greece. With our experience in several parts of the Greek economy (retail, clothing, foods, etc), where today dominate the big chains (monopolies), we shouldn’t rule out the fact that something like that will also happen in the industry of PW. Besides something like that is consistent with researches and predictions from houses like Statbank, where they predict significant reduce of companies, which are active in the business of medicine wholesaling.

This may happen through the installation of European monopolistic groups in the Greek market, which they will either proceed in buying of companies with Greek interests, or they will create conditions where local businessmen – because of their clearly smaller companies – they will not be able to follow (e.g. better appropriations in the pharmacies) so they will close because of the competition.

We can’t, also, rule out the possibility of bigger merges between Greek companies, where they will create, bigger trusts, bigger cash flow, bigger distribution networks, creating finally larger partnerships.

The number of pharmacies in Greece in comparison with its population is already the highest in Europe. With the change in the law for the operation of pharmacies (expanding operation time, “opening” of closed professions), with the possibility for creating merchandisers and the European experience, where the biggest companies in the field of wholesales have also retail selling points, we are allowed to conclude that something similar will probably proceed over here. The result, of course, will be the drastic reduce on the number of pharmacies and the raise of the grade of gathering and in this industry.

Those who have nothing good to expect from these developments are the workers in both the PW and in the pharmacies. A potential raise in the grade of gathering in the industry will automatically mean hundredths of jobs lost. The experience where it already exists from this kind of developments and reconstructing this is what it shows. Already the workers are under pressure with the intensifying of work conditions, with the Collective Agreement of the industry not signed from the employers of medicine, the Collective contracts, the wage-cuts, with the attack against the right, which was conquered through the collective agreement of the branch, for five day-workweek from Monday to Friday. There are measures and demands from the employers, which are served and reinforced from the laws of the government but also and the level of local administration (decisions from mayors for the operation of PW on Saturdays). So it is established the course of capitalistic growth in the industry of medicine, that’s how it’s served in total the interests of the big capital, regardless of the small differences, disagreements and competitions which they unavoidable exist between capitalists – businessmen, because of the unevenness that characterizes the capitalistic system.

All these facts need to be known from the workers of the medicine branch, so they don’t misdirect their struggle for the defense of Collective Contract, of the conquered work hours etc. Our goal is to reinforce the basic criterion of the struggle, which always is the satisfaction of the contemporary needs and interests of the workers.