Industry viability – Growth

Despite its major contribution to the national economy and its large share in GDP and value added, the pharmaceutical industry has been the target of asymmetric pressure since 2009 in the context of MoU interventions in the sector. SFEE has consistently called for a sustainable pharmaceutical care system that would ensure optimal use of public resources in the best interests of patients and of the social security system, while at the same time fostering growth, innovation and investment. Besides, the growth of the pharmaceutical industry is inextricably linked to the viability of the health system and is essential for universal and equal access to appropriate treatments. Medicines are a social good, not just a commodity. Only if both these aspects exist can the pharmaceutical industry grow in a healthy manner.

 

Current situation

  • Public sector arrears: Outstanding public sector debts to pharmaceutical companies have reached €1.4 billion, as payments have been delayed for over a year now, whereas other suppliers are paid within 3-4 months.
  • Liquidity shortage: Without any regular payment schedule for public sector arrears in sight and with a constantly increasing clawback and rebate burden, the industry faces severe liquidity constraints; coupled with the difficulties in obtaining bank financing, this hampers the functioning of the pharmaceutical supply chain as a whole. With great effort on the part of the industry, guided by a sense of responsibility for the sensitive good it has to manage, the risks to patient access to treatments have so far been averted.
  • Lack of growth incentives: A joining of forces between domestic and international enterprises is forming one powerful pharmaceutical industry with huge added value both in the area of healthcare and in the area of R&D. The fact that SFEE member multinational companies manufacture and pack up to 40% of their production volume in domestic plants illustrates how this cooperation, including production and export activity, could thrive in a stable and predictable business environment. Despite their growth potential as the second exporting sector of the country, pharmaceutical companies operate in a discouraging economic environment that causes disinvestment and brings companies and their staff close to breaking point.
It is obvious that under these difficult conditions pharmaceutical companies are at the limit of their strength.

 

Our proposals:

 

  • Establishing a schedule of regular payments of public sector debts to pharmaceutical companies in order to ensure unhindered access of Greek patients to necessary treatments.
  • Developing a framework of growth-inducing tax incentives: Improving the tax incentives for R&D expenditure and creating an institutional framework aimed to stimulate domestic investment and attract foreign direct investment, targeting high-tech and high added-value products.
  • Creating incentives for clinical research: eliminating red tape, streamlining clinical trial approval processes at central and regional level and establishing financial incentives.
  • Supporting extroversion and entrepreneurship: Extroversion and innovation management programmes through streamlined procedures enabling Greek pharmaceutical companies to further expand their international activities both in neighbouring markets and in other selected markets that offer concrete opportunities.
  • Creating Special Economic Zones (SEZ), similar to those set up in Poland, which will provide special incentives such as:
    • Corporate income tax exemptions for up to 100% of income derived by companies which invest in a SEZ up to the maximum permitted level of aid according to the Regional State Aid Map (applicable in Poland)
    • Possibility to hire young workers (first-time permanent job) and long-term unemployed under a contract of indefinite duration, with full exemption from social security contributions for up to 36 months (applicable in Portugal)
    • Special tax reliefs for (a) real estate (property transfer and ownership tax, levies, etc.); (b) sales of goods produced within the SEZ (exemption from VAT); (c) labour income tax for workers employed within the SEZ (applicable in Turkey)
  • Linking research to production: Actions to link research to production through joint projects. Encouraging commercialization of scientific knowledge in academic institutions and research centres. Supporting research and innovation, so that the sector can acquire the necessary quantitative and qualitative characteristics to cope with international competition.