Pfizer, currently the largest biopharmaceutical company in the world, first entered the Romanian market in 1992. Today, 25 years later, Pfizer Romania is the largest American investor in the local health industry, as well as the fourth largest pharma company in the country, a position that speaks volumes of its pledge to Romanian patients. In an exclusive interview, Mirela Iordan, Pfizer Romania Country Manager, speaks about the company’s commitment to the local society and patients, its ambitions and future plans, but also about the challenges that lie ahead and the local market’s spectacular opportunities for development.
Mrs. Iordan, you took over as Pfizer Romania’s Country Manager last November, after 20 years of experience in the pharmaceutical industry. What have been your challenges in this period and what are your objectives in this role?
I have spent 16 of these 20 years in pharma that you mention as part of the Pfizer team and one of the main reasons that convinced me to stay on for this long in a single company has been how closely I identify with the values that guide our work.
My personal objectives have always and continue to happily coincide with those of the company – namely to have a real and meaningful contribution to making Romanians healthier, as well as to the creation of a solid and healthy business environment. In my new role as Country Manager, the main change has been how closely I get to follow through on these objectives together with my team and the individual contribution and experience I bring to the table in helping us consolidate our commitment to the market.
It is not to say, of course, that it is an easy task. This objective has two dimensions – an internal one, that has to do with our company, our team and our products, and an external one, defined by the environment in which we work. I am encouraged by the experienced professionals I get to work alongside every day, people who are not only really good at what they do, but who also know how to work as a team to reach our objectives. In this regard, also from the perspective of my previous experience as HR Director, I can say that I was very happy to see Pfizer Romania being, for the third consecutive year, named Best Employer at the end of 2016.
This team and all of our combined efforts center around a very solid portfolio of innovative and established products and, perhaps even more importantly going forward, around a strong pipeline of drugs that could each have an significant positive impact on people’s health. Worldwide, every year, Pfizer allocates billions of dollars to R&D – 7.8 billion in 2016 – in search for revolutionary therapies that could potentially help people lead better, healthier lives or, in some cases, save them from death. Many of our ongoing plans for the year are built around such innovative products, which we are working constantly to bring to the Romanian patients who need them.
Starting last year, the healthcare market has been in turmoil, with many changes. How was 2016 for Pfizer?
Anywhere in the world, the healthcare industry is an extremely challenging market on which to operate, but perhaps nowhere quite as much as in Romania. For the past 27 years, the market has been marked by constant change and a lack of long term vision and strategy for building a solid public health system. Also, policy measures taken have not had a proper impact assessment. This is why, today, the health status of the population still lags behind EU averages. Romania is last in the European Union in terms preventable deaths, a Eurostat indicator that can provide insightful indications on the quality and performance of health care and public health policies in our country.
On the one hand, these unmet medical needs represent an opportunity for Pfizer. On the other, however, it also means our business pays the price of business growth for the lack of predictability and continuity in public policies. A very clear-cut example in this respect is the clawback tax – a temporary measure when it was first introduced, but which has now become a means by which the pharma industry effectively finances the State. In this respect, we welcome the current discussions around revising the clawback tax to introduce a sustainable and predictable contribution from the pharmaceutical industry, while ensuring speedy access to innovative medicine.
Going back to figures, our profit in 2016, following the numerous changes on the pharma market since 2015, as well as the high level of the clawback tax (which alone accounted for 10.5% of our turnover), diminished by half year over year, to 10 million lei. In the same year, Pfizer Romania reported a growing turnover of 644 million lei (approximately around 143 million euro), thanks to the good performance of our Established Products division, which is responsible for those products that have lost their patent protection. However, if we were to look in a consolidated manner at Pfizer’s entire activity in Romania and thus also consider our unit in Cluj Napoca, which is a separate legal entity, the cumulated turnover would increase to 708 million lei (157 million euro).
What is your financial outlook for this year?
So far, the outlook for the year is positive. According to the latest IMS sell-out estimates, our products account for 4.4% of the market (from a value standpoint), which makes Pfizer one of the top 5 pharma companies in the country. Providing that no major changes occur to affect the market this year, we envision we will be able to maintain this positioning and grow in sync with the market, by a single digit percentage. We are committed to enhancing our local portfolio with the latest, most innovative products, treatments that can make a real difference in patients’ lives.
One such product is a new drug for metastatic breast cancer which makes a real difference in extending patients’ life expectancy. It is the first product of its kind to be approved in Europe in the past 10 years and we are now in the midst of the process of ensuring that it is also introduced on the State’s list of compensated products so that it can be readily available to all those who need it.
Another new addition to our local portfolio is a drug that has shown spectacular results in keeping rheumatoid arthritis in check, a chronic auto-immune disease that affects around 200,000 Romanians.
The third product on our list is a more efficient vaccine against meningococcal group B diseases. Vaccines are one of the greatest public health advances, demonstrating control, elimination or near-elimination of numerous infections and preventable diseases, which is a strong reason for us to advocate for their being used.
Do you plan to extend your team this year?
One move with a major impact on our local business and footprint will be the opening of a new logistics services hub. Basically, we are talking about a center that will serve as an interface between the sales teams of all Pfizer offices across Europe and our 16 production units around the world, in an effort to increase the efficiency of our production and stock planning and make our business run more smoothly. We are now in the midst of an extensive recruiting process for 40 specialists that would, by next year, make up the team of this new center, and that will bring our total headcount to close to 400 people in Romania.
What were the reasons for selecting Romania for the development of this hub?
Selecting the headquarters for this important new element of our global organization was a long process, that analyzed in great detail a lot of locations and looked very carefully at all pros and cons. Yet, in the end, Romania was considered the best option for the company. It was a decision that made sense from a stability point of view, thanks to our steady economic growth over the years and our membership in the EU, but, very importantly, from the point of view of the workforce. The global project team responsible for putting the hub in place appreciated the great mix of skills we can find in Romania, the high quality tertiary education and, last, but by no means least, the excellent language skills.
Do you think Romania is still attractive for foreign investments?
Currently, when it comes to investments, we are strong believers that Romania continues to be attractive for FDI. The country has one of the highest investment ratios in the EU, reaching 24.8 % of GDP in 2015, well above the EU average of 19.7%, supported by low interest rates and stable investor confidence. The highly skilled and competitively priced labor market is, undoubtedly, a big pull for foreign investors, regardless of whether they are entering the market for the first time or are expanding their local footprint. This is also why we are and have been working with AmCham to promote Romania as an investment destination.
It must be recognized, however, that frequent changes in the country’s governance have a direct impact on both the activity of foreign players operating on the local market, as well as on the analysis that new companies make before deciding to invest in Romania. At this specific moment in time, we are looking at the changes announced in the new Government Program with caution. A hasty implementation of such measures, without prior consultation and clear impact assessments, can generate instability in the business climate and severely affect the confidence in the Romanian economy. The result, should the turmoil continue, is that Romania could stand to lose both new investments, as well as expansions in the activity and footprint of existing players. It is, naturally, a result we do not wish to see happening and we hope that the new Government, once it begins its activity, will seek to include the views of the business community in their plans going further.
There is still a lot of further potential for development in the health industry, and a lot of place for start-ups and disruptive business models that can combine the provision of high quality medical services with technology-based platforms to increase patient accessibility at national level. I think we all, as patients, have become more aware of the importance of prevention and more discerning about the health choices at our disposal, and this will certainly open up more avenues for investments in the coming years.
You mentioned earlier a Pfizer unit in Cluj Napoca. What is its importance and role within the company?
In December 2011, Pfizer acquired the Ferrosan production unit in Cluj Napoca, including it in its Pfizer Global Supply structure with a view to support European operations. Since then, its activity has been largely focused on packaging of drugs and food supplements produced in other units across Europe. The finished products are then exported to 35 countries across the globe, from Denmark and the UK to Russia, China, Finland, Sweden, Turkey, Mexico and Vietnam.
Seizing the opportunity for growth, in 2014, we implemented a 5.4 million dollars investment program meant to help finance the expansion of the unit’s storage space for raw materials, packaging materials and finished products. The objective is to continue to grow our production capability, from 3 million packages in 2013 to 11 million by next year. At the same time, if on-site activities are currently exclusively focused on external markets, our hope is that this local unit could, in time, grow to serve an ever larger share of the company’s supply for the local market.
How do you see the pharma and healthcare market today?
One of the key descriptors for the local market is the high unmet need for innovative medicine. While we are very encouraged by the progress made by the administration and the Health Ministry in particular in these first six months of the year, the truth remains that the update to the reimbursement list has been slow over the past years and very much lagging behind patient needs. For a company like Pfizer, with a large and established presence in the market, that means we can still expand our presence with our existing products, but introducing new medicines and delivering latest generation treatment options becomes ever more a priority. This is, after all, the core business of Pfizer so the main task at hand is to identify new methods to bring these treatments to market. We hope to constructively work with the authorities to ensure timely and predictable market access for innovation.
How would you rate the collaboration with the State in the context of the health industry?
We are encouraged by the fact that health has been elevated at the level of national priority and successive Governments have had the topic high on their agenda. Therefore, we expect policy measures aimed at increasing the health status of the population to be put in place. In a country like Romania, where financial resources are strained, putting more emphasis on prevention rather than treatment is key.
We are especially encouraged by the commitment, to implement a national program focused on the prevention of cardiovascular diseases, which are currently the main cause of mortality in Romania, as recognized by the National Health Strategy 2014-2020.
While it is true that the State has allocated substantial resources for emergency interventions on patients with cardiovascular issues in critical condition, until now, no structured effort has been made to increase prophylaxis, for example in order to lower the incidence of strokes. At the moment, cerebrovascular accidents are the second most frequent cause of death in Romania and, beyond that, they can place very heavy burdens even on surviving patients, who often remain partially or fully incapacitated and require near-constant care and companionship. A larger investment in new treatment options would play an immeasurable role in reducing the impact this disease on society and, for the State, decrease overall expenditure.
In the past year, a very encouraging step towards a healthier population was the progress made in tobacco control, since tobacco consumption is a known risk factor for health and for a high incidence of heart diseases. By adopting the indoor smoking ban legislation, Romania jumped 12 places in the Tobacco Control Scale reaching 7th ranking (from 19th in 2013). In a limited period of time, the positive impact was very visible: thus, in December 2016, the Ministry of Health announced a decrease in the number of hospital discharges in cases of smoking-related diseases in 2016 versus 2015, which translates into less tobacco-related severe illnesses. From March to August 2016 versus the same period in 2015, hospital discharge records showed a decrease of 5.4% (1,267 cases) in the number of adults admitted with coronary artery diseases and of 11.5% (88 cases) in the number of adults admitted with cerebrovascular accidents. We are very encouraged to see these palpable results and hope that the Ministry of Health will continue to invest in the smoking cessation program, ensuring access to smoking cessation treatment and counselling.
On the other hand, we also hope to see a paradigm shift from the statement that “we are too poor to afford the latest medical innovation” to “we value it but need to decide how much we pay for it”. There has been some progress in updating the reimbursement list in recent years, and the Ministry of Health committed to frequent updates. We hope to see a Ministry of Health leadership that will introduce all innovative medicine awaiting reimbursement, and call on us to propose mechanisms to ensure financial sustainability, taking the examples of other EU countries.
Do you have any recommendations for authorities?
In 2009, Romania was hit hard by the effects of the global economic turbulence. Nowadays, the country is the fastest growing economy in the EU. This economic recovery should be reflected in closing the gaps compared to the EU. And the need is greatest in terms of the health status of the population. The health indicators remain poor – Romania is last in the EU in terms of life expectancy and first in terms of infant mortality and incidence of chronic disease. Investing in reducing health inequalities contributes to social cohesion and breaks the vicious spiral of poor health contributing to, and resulting from, poverty and exclusion.
Thus, I truly think it is crucial that the Romanian healthcare sector is not perceived only as a “black hole” for public funding, but becomes an acknowledged contributor to economic growth. Health is a value in itself and also a precondition for economic prosperity. In order to create wealth, a society needs health. We cannot speak about a healthy business without a healthy community. Indeed, healthy people are more active, more productive and contribute more to the development of the economy and society.
Moreover, the health sector has great potential to create new jobs to reduce unemployment. Although IT&C has long been hailed as the only sector able to deliver constant and secure economic growth over the coming years, the pharmaceutical industry has all the elements needed to offer the same sort of knowledge-based jobs and pathways to scale the value chain as innovation industries such as IT currently being promoted by the Romanian state. The pharmaceutical industry spends a greater percentage of its revenue on research and development than any other industry (14.4% according to EFPIA Health and Growth Report). Pharma can be the same sort of catalyst to quality job creation that will enable the country to make technological gains and leapfrog its way to prosperity.
However, when all is said and done, the most important thing that the healthcare system in Romania lacks, yet urgently needs is a palpable vision for the future from the State and the stability needed to implement it. I believe that companies from all sectors of activity, but the healthcare industry in particular, need to see more actual measures implemented, in accordance with rule of law principles (transparency, predictability, real consultation and impact assessments), measures aimed at solving problems that have plagued the system for years and that need to take into consideration the voice of private players in conjunction with public ones.