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Ognian Donev: the prices of medicines is a sensitive issue which should not be speculated with

4 November 2013

Ognian Donev, chairman of the Board of Directors of Sopharma:

THE PRICE OF MEDICINES IS A SENSITIVE ISSUE WHICH SHOULD NOT BE SPECULATED WITH

A health reform is not possible when the most stable companies on the market are attacked with unfounded arguments

There are grounds for disputes in this sphere, but the attention has been diverted from the essence of the problem, namely the lack of an integral strategy in the health sector and most of all the utterly delayed health reform. Our country needs a general vision when it comes to healthcare, and don’t get me wrong, it is not about re-inventing the hot water. There is a number of excellent working systems from which we could learn. The price of medicines and its change concern a small part of the resource managed within the sphere of healthcare services. Optimisation of the positive list of medicines and improvement of pricing are really necessary, but good results won’t be achieved by harming the image of one or another pharmaceutical manufacturer. Pointing out the guilty ones has never been a good problem solving strategy, especially when the most stable market players are attacked with unfounded arguments.

Why does it look, at first sight, so easy to speculate in the public domain with the price of medicines and electricity, do you make any analogies?

These are very sensitive issues that affect the life quality of each Bulgarian citizen every day. When the aim is an immediate and vociferous response in society, the easiest way to do that is to choose an issue that affects everyone. Another fact speculated with is that people are not familiar at all with the fundamentals of these sectors, which is normal. There are problems, indeed, but society is not acquainted with the essential discussions that could, though slowly, solve the problems on a long-term basis.

Did you manage to achieve the required transparency regarding public payments for health and for medicines in particular? How do you explain the reaction of the institutions?

Regarding payments for medicines on behalf of the National Health Insurance Fund (NHIF), the required transparency is still missing. Let’s be clear that such transparency is actually not so important for its informational value, but as a corrective of the rationality of the pharmaceutical policy and its effectiveness. It is important for the manufacturers to know how the resources saved by the NHIF from the discounts they obtained are spent, whether in the interest of the greatest number of patients or whether they further support the “boutique” character of the system.

Last but not least, the transparency provides also predictability of the business because, after all, pharmacy is the only industry in Bulgaria that continues to develop, in which investments are constantly made and which is the basic structure-forming element of export.

What are the mechanisms for reducing public and personal payments for medical services and for medications in your opinion?

We could hardly talk about reduction of healthcare expenses and especially of medicines in the long run considering the fact that we are the country with the lowest GDP percent used for healthcare. Moreover, population age structure points in another direction – more and more will be the people using health services and medicines, compared to those who generate resources for their payment. Therefore, it is more adequate to talk about optimising and improving the effectiveness of the whole system. As regards medicines, probably the professional organisations and the institutions should do more to “educate” the patients about the generic medicines. This is the trend – pro-generic policy and proper balance between administrative regulation and market self-regulation of the pharmaceutical market. The money for healthcare and for medicines in particular is never enough; the question is to obtain maximum effect with available resources.

Were your company and its results hit by the tension around the public storms regarding drug prices?

We proved with numbers that our medicines are within the lowest price range on the Bulgarian market. I think the consumers protect their interests and base their choice on facts, and not on unfounded and sensational accusations. We managed to keep our position regardless of the fact that we were labeled by a narrow circle of opponents as almost the source of all problems of the Bulgarian patient.

What are the results of the company on the Bulgarian and on the foreign markets?

For the first nine months of this year we have growth of 6% on the Bulgarian market and decline in export by 3% due to the inclusion of the tablets Sedal M, one of our strongest products on the Russian market, in the list of medicines that require a special prescription because it contains minimum quantities of codeine. This measure affected a lot of products - you understand that no one would get into the trouble of obtaining such a prescription for a painkiller and flu remedy. We are now starting to compensate the lack of this product in our portfolio, but it’ll take time until we get back to the position we occupied before that.

How do stock exchange and institutional investors apprehend Sopharma and the companies from the group as an investment?

It is best to address this question to the investors. I can share my impressions from meetings with our current shareholders and potential investors, and they are that Sopharma remains a preferred investment with long-term potential. After the modernisation of all our production capacities has been completed, which we marked with the opening of our new high-technology plant for solid dosage forms in Sofia, we can boldly state that we begin another stage of development with an even larger potential. This stage will cover our product portfolio and will be aimed at making us an efficient generic manufacturer. The other direction of constant work for us is the promotion of our original products. They can help a lot of patients, but are still known only on our traditional markets. This potential for development is evaluated positively by the investment community.

How did the global crisis affect your company, since you opened your new plant during the crisis; what other investments do you plan and where?

The crisis reached our sector maybe a bit slower, but we were affected as well. Slower, because health is still a priority of both governments and households. It forced us to slow down the pace a little, but it did not make us give up our most important projects mentioned by you. Our plans for capital investments are modest from now on. I have already told you about the renewal of our product portfolio, and the other direction of work is the expansion of our activities throughout the region by partnerships and acquisitions.

What should we expect from your new minority shareholder?

Again, I think that the question should be addressed to Rompharm, if you are talking about them. We are glad to have been evaluated by the professionals as a good investment, and we definitely shall look for synergy between both companies. The first steps have already been made. I believe that this change in the shareholding structure is a good development for us. There was some tension on the market which vanished with the joining of Rompharm, first because their interest proved once more that we were headed in the right direction, after all they are in the same sector, and secondly, because it lead to a predictability of the shareholding structure in the long run.