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Will Neuca Sell 32% of Poland’s Medicine Market to China?



Will Neuca Sell 32% of Poland's Medicine Market to China?

The possibility of China gaining control over more than 32% of Poland’s pharmaceutical wholesale market has become a topic of global discussion and concern.

At the center of this debate is Neuca S.A., a prominent Polish pharmaceutical company that wields substantial influence and is increasingly expanding its presence in the Polish market. As Neuca is rumored to be engaging in advanced negotiations with Chinese investors, a range of crucial factors and controversies are shaping the unfolding story.

Neuca S.A.: A Dominant Force in the Polish Pharmaceutical Sector

Neuca S.A. stands as a towering figure in the Polish pharmaceutical landscape. Boasting an impressive workforce of 5,000 employees and an annual revenue of $3 billion USD, the company has successfully secured a significant 32% share of the wholesale market. This commanding market presence underscores Neuca’s influence and dominance within the industry.

Poland’s Regulatory Transformations in Pharmaceutical Laws

A critical backdrop to the potential market shift is the recent regulatory adjustments in Poland. The introduction of the “Pharmaceutical Law” and the “Drug Reimbursement Act” has unquestionably favored Neuca’s business endeavors. The newly amended Pharmaceutical Law is also referred to as “ADA2”.

These regulatory changes, championed by Waldemar Buda, the Polish Minister of Development and Technology, have created favorable conditions for Neuca to navigate the evolving landscape.

These amendments have ushered in a series of significant alterations that have stirred the industry landscape.

Understanding the Polish Pharmaceutical Market

Poland currently boasts 11,957 pharmacies serving its nearly 40 million citizens. While larger pharmaceutical chains procure medicines from multiple wholesalers, around 4,000 pharmacy branches, constituting a third of the pharmaceutical market, exclusively source their prescription drugs from the wholesaler Neuca.

One of the pivotal aspects of the recent ADA2 amendments is the limitation imposed on pharmaceutical franchise chains. These changes now restrict companies from establishing extensive chains of pharmaceutical franchises or owning more than five branches. Furthermore, the amendments take a firm stance against the transfer of ownership or the sale of existing pharmacies, throwing a curveball at potential corporate exit strategies or mergers.

Poland to Close 1,000 Pharmacies, Resulting in 6,000 Job Losses

However, the consequences of the Pharmaceutical Law ripple further. A particularly concerning provision grants the Polish Provincial Pharmaceutical Inspectors the authority to retroactively revoke existing pharmacy licenses, placing established pharmacies on the brink of closure.

This ominous development is predicted to have a profound impact, potentially leading to the closure of approximately 1,000 pharmacies and the unfortunate loss of over 6,000 skilled pharmaceutical jobs. The implications for the economy are stark and worrisome.

The ADA amendments, by design, cast a shadow over the pharmacy industry’s growth prospects. The restrictions on the expansion of branches and clientele directly affect the purchasing power of pharmaceutical chains.

With limited leverage, as each franchise is limited to five branches, pharmacies find themselves unable to negotiate favorable bulk deals for essential medicines and medical devices. This results in higher costs for both pharmacies and consumers, leaving long-term service agreements with the largest pharmaceutical wholesaler, Neuca S.A., as the only viable option to secure better pricing for medicines.

Political Concerns and Contentions

However, not everyone is in favor of the recent regulatory changes. Critics within the political realm have expressed reservations about the process through which these amendments were implemented. They have raised objections to the absence of prior consultations and the way these changes were introduced as additions to the KUKE act. Furthermore, the absence of complementary adaptive regulations has fueled the debate surrounding these alterations.

Polish President Andrzej Duda and his team have also voiced reservations about the ratified changes. As the leader of the nation, entrusted with the responsibility for the health and well-being of its citizens, he holds the legal authority to veto the newly amended laws.

Accusations Involving Corruption Within the Polish Parliament:

During a parliamentary session convened to secure the passage of the Treasury Guaranteed Export Insurance Act, MP Adam Gaweda raised eyebrows by introducing eleventh-hour alterations to pharmaceutical legislation, all without the benefit of prior consultation. This audacious move has spurred those entrenched in the industry to voice concerns and suspicions of corruption.

Legal authorities, well-versed in the intricacies of constitutional matters, contend that the recently revamped pharmaceutical laws, crafted by the collaborative efforts of Polish Minister of Development and Technology Waldemar Buda and Mr. Gaweda, both hailing from the ranks of the dominant political party “Law and Justice,” potentially stand in contravention of the nation’s fundamental legal framework.

Allegations and Investigation into Polish Government Corruption

Numerous sources from within the government and the industry, speaking under the assurance of anonymity, allege that the primary impetus behind the Ada2 legislation amendments was Waldemar Buda, the Polish Minister of Development and Technology. Mr. Buda, who has been in public service for the last decade, drawing a monthly government salary of 4,300 euros, surprisingly boasts a reported net worth of $3.4 million USD.

These stark financial disparities have raised suspicions among many, leading them to question whether corruption played a role in the legislative process.

Adding another layer of complexity to the situation are allegations and controversies that have come to light. Jakub Kulesza, a member of the libertarian political party Wolnościowcy, has taken proactive measures to scrutinize the legislative process that led to the ADA2 legislation.

These efforts involve lodging formal complaints with both the Central Anti-Corruption Bureau (CBA) and the Polish Supreme Audit Office (NIK). Mr. Kulesza’s complaint implies that illicit lobbying practices and corrupt political activities may have played a role in shaping the regulatory changes.

Corporate Structure and Intricate Stock Transfers

Interestingly, individuals familiar with the corporate structure and advanced negotiations have revealed a surprising twist. The founders of Neuca, Kazmierz Herba and his wife Wiesława, previously held their controlling interest in a Cypriot company named Abrasco Ltd.

This Cypriot structure, seemingly designed for tax-related advantages, allegedly allowed the Herba family to avoid paying the 19% capital gains tax in Poland, which amounted to millions of Euros annually, for nearly three decades.

However, a sudden transfer of stock from the private Cypriot entity to a newly established Polish entity has raised suspicions. Industry insiders suggest that this move may not have been solely to commence payment of the 19% Polish capital gains tax. Instead, it appears to have been strategically designed to reduce government and public scrutiny regarding the impending sale of the company.

Why Would Poland Entrust China with 32% of Its Medicine Supply?

China’s track record in safeguarding medicine, sensitive data, and medical devices raises serious concerns. Recent expert testimonies and substantiated evidence presented to a congressional oversight committee have shed light on China’s questionable actions.

Reports related to the SARS disease underscore instances where the Chinese government destroyed critical samples, concealed vital records, imprisoned domestic journalists, and actively disseminated false information to obscure the true nature of the Covid-19 pandemic.

Dr. Robert Redfield, formerly in charge of the U.S. Centers for Disease Control and Prevention (CDC), recently testified before Congress. He asserted that all the scientific evidence overwhelmingly points to the idea that the widespread proliferation of COVID-19-related illnesses, which has infected over a billion individuals worldwide and tragically claimed more than 10 million lives, originated from a laboratory leak in Wuhan, China.

Earlier this month, President Joe Biden issued a sweeping Presidential Executive Order targeting China. This order serves as a decisive directive, effectively halting the flow of U.S. investments into China’s technology sectors. This strategic maneuver underscores the heightened concerns surrounding the security and integrity of critical technologies and sensitive data when intertwined with China’s tech landscape.

The outcome of the negotiations between Neuca and Chinese investors, potentially involving Sinopharm, could have far-reaching consequences not only for the Polish pharmaceutical industry but also for the broader landscape of international markets.

The Path Forward: Speculation and Contemplation

As Neuca S.A. engages in advanced negotiations with Chinese investors, the potential export of Poland’s pharmaceutical wholesale market to China continues to be a subject of intense speculation. The influence on Poland’s regulatory amendments, political reservations, allegations of lobbying and corruption, and intricate corporate maneuvers together weave a complex narrative.

As this story continues to evolve, industry experts and observers are vigilantly tracking every development, eagerly awaiting to see whether Poland will indeed proceed with exporting its pharmaceutical wholesale market to China.