Interview with Adrian Grecu, General Manager, Abbott Romania.
Your professional training in the pharma world debuted in year 2000 with Eli Lilly as Financial Analyst, and in 2003 you began the experience with the American company Abbott…
Indeed, one may say that my 14-year expertise in this sector was rather fluent and I learned from Abbott many things about the pharmaceutical industry, not only in Eastern Europe, but also in large countries like India or China, and then returning to Europe, going to Russia and in the recent years at home, in Romania.
Compared to foreign markets, where does the local pharmaceutical market stand?
The pharmaceutical markets of Russia, India, China are different enough with each other and also compared to ours. I can say that the Russian market is somehow similar to that of Romania, because there is a component that is rewarded by Russian authorities, but there is also a big “out of pocket” component paid by patients, with a well-developed medical system and free treatment in hospital. At the opposite end is the Indian market, which is almost integrally “out of pocket”, but with many private hospitals and clinics. Except for those who work in the railway and administrative sectors, everybody else must integrally pay the treatment – hospitalisation and medicines. In China, hospitals buy medicines from pharmaceutical companies and sell them to patients. In other words, hospitals act like a different kind of pharmacy, most costs being self-financed. Approximately 15 pc of the cost of services provided by a hospital are covered by the state, while the remaining 85 pc is self-financing.
Every market has its challenges, there is no perfect market. There is always something that misses, there is a challenge. Personally, I consider that it is not the problem that matters, but the way it is approached and eventually solved. There is no strategy 100 pc applicable from one country to another.
Now, for over 2 years, you have been the General Manager of the Abbott Romania group. What projects did you begin with, in this position, and how are they evolving now?
What I wished most, when I joined the organisation, was to build a united team. I believe very much in collaboration. To me, as GM, the relation with my colleagues and the interaction between them is like that of an orchestra where all instruments play at unison, in harmony. At the present moment, the team is formed of 160-180 employees. In terms of business, I consider this as a differentiating factor – an aligned team, oriented in the same direction. This was my top priority. The other target was obviously related to the performance of the company. When I came here, I thought that the difficult time was over and that I came at the right moment, but things went differently, the challenges were as high as at the beginning of the economic crisis. Everything was uncertain. But, to answer you in brief, we met our targets with this regard as well.
Concretely, how did year 2013 end for Abbott Romania?
Unfortunately, the market did not evolve as we wished. I must explain that we are a marketing unit, we provide services to the corporation, the products are sold directly from Netherlands, Switzerland, by distributors. According to Cegedim, Abbott Romania had sales of RON 160 M in producer’s prices, an increase of 2-3 pc, slightly above the market level. Generally, this is also the objective for this year – to grow at least with the level of the market, or even slightly above it, but of a sustainable manner. We are realistic and also take into consideration the portfolio we have. Presently, we control a share of nearly 1.5 pc of the total market and occupy the 21st place in a top of pharma players.
Cegedim recently predicted a decline of the local pharmaceutical market in 2014and a return to growth starting with 2015…
Cegedim forecasts made last year for 2014 spoke of a 2.7 pc growth of the market, especially following the introduction of new molecules (innovative molecules that include a new, original molecule whose therapeutic effect was tested and demonstrated by clinical studies, protected under an invention patent that grants to the owner the exclusive right of selling the respective medicine for a 12-year period), the value of the local market amounting to about RON 11 bn. Later, Cegedim revised its estimations and predicted a decrease of -0.3 pc in RON, because of the delay in updating the list of compensated medicines. In my turn, I endorse these data. Without new molecules, the market stagnates, not only from limited financing, but also because an important number of generic medicines enters the market. Romanian patients are entitled to state-of-the-art medicines. Authorities, together with producers, must find optimal solutions to finance these medicines and make sure that funds are justly and correctly allocated to all the players in the market. The evolution of the local pharma market largely depends on the sustainable programmes aimed at financing the medical system and implicitly the medicines, as well as on the adoption of new molecules.
The clawback tax was conceived as a measure in support of the patient, but it turned from a budgetary control measure into a fiscal burden. How could this issue be solved, in your opinion?
The clawback tax was enforced by authorities as a temporary tax aimed at covering a deficit of financing. It is paid by producers proportionally with their market share in the budget of compensated medicines, and what is effectively paid is the difference between actual consumption and the quarterly budget of RON 1,515 M, VAT exclusive. At present, this tax stands around 20 pc, which means that the budget is 20 pc smaller than the sum necessary to cover the medicines needs of patients. In other words, we can say that pharmaceutical producers pay for the treatment of 1 in 5 patients in Romania. Another challenge we face is the fact that this tax has unpredictable evolutions, sometimes unrelated to the evolution of the market, which makes very difficult the process of constructing a budget that is credible at the upper management levels of companies. I consider that there are also other ways to control consumption. We thus return to the idea of introducing new molecules, a matter that should be discussed separately in terms of financing, outside the current budget. Authorities can reach ‘price-volume-effectiveness’ type agreements with producers, as is the case in some countries of Western Europe.
Few days ago, Abbott took over the pharmaceutical company CFR Pharmaceuticals of Chile, with a vast portfolio. Incomparably, but recently you said in the press that there is interest from Abbott Products Romania to develop partnerships with local producers. How are you pushing forward this idea?
In Romania, Abbott is present with several divisions: Diagnostics (ADD), Diabetes Care (ADC), Vascular (AVD), Medical Optics (AMO), Molecular (AMD) and Established Pharmaceuticals (EPD). The vision of our group CEO, communicated some time ago, is to turn Abbott into “The Healthcare Company of the 21st Century”. A direction that is taking shape in the medical sector is what is called “integrated medicine.” With this regard, for such a business model, on each therapeutic area we cover, we must complete the portfolio and come with a diversified range of proposals to physicians and to our partners. The strategy of our division is to make targeted local acquisitions, where this is possible and where the environment is stable and predictable. No such opportunity has materialised so far, but Abbott Romania takes into consideration even the local production of medicines under partnership, or taking over brands from other companies. Locally, we are at the level of talks with 2-3 companies and strictly target partnerships, not acquisitions.