Pliva’s CEO speaks about his company and the Croatian pharmaceutical industry.
Mihael Furjan, the CEO of Croatian pharmaceutical giant Pliva and president of the Pharmaceutical Manufacturers Association of the Croatian Employers Association, spoke in an interview about plans of his company, which include a production of a generic version of Viagra for the US market, reports Jutarnji List on December 16, 2017.
Teva, the Israeli company which owns Pliva, announced a restructuring plan this week and additional measures to improve business results, which include a cut in expenditures of three billion kunas by the end of 2019, a reduction of the workforce by 25 percent and a suspension of payment of dividends. Will there be changes in Pliva's business operations?
Teva announced changes two years ago while preparing for the acquisition of Actavis, and most of them are the consequence of aligning our business operations. Changes and different cycles are a regular occurrence in business. In Croatia, we are continuously working on organisational changes to remain competitive and to better respond to new needs on both domestic and export markets, so we employed 250 new professionals in the last year. We develop products for demanding markets, work on registration documentation for EU countries, support new IT processes, introducing quality control measures.
Last year, Pliva concluded an investment cycle worth about one billion kunas. Are you satisfied with the results of these investments?
For many years now, Pliva has been achieving business growth. It should be added that, in addition to new production facilities and modern equipment, we invest significant resources in continuous training of employees, especially those highly educated, which make up more than 50 percent of all our employees. We invest in equipment and plants as well; just in 2017, we spent almost 200 million kunas. Teva has announced the exclusive launch of the generic version of Viagra (sildenafil citrate) in the United States, and we are proud that it is being produced in our facilities.
What are the business results of Pliva in 2017?
Despite the challenges in different markets, we are satisfied with our achievements. Over the past year, we have increased revenues and exports by more than 25 percent. This year will be a record one for Pliva in both the quantities produced and the export value realised. We have never achieved such good export results in our history. We have continued investing in research and development and launched ten new products in the Croatian market alone.
Earlier this year, you said that Croatian healthcare system would be another Agrokor if it were not for a constructive attitude of drug producers who tolerate long delays in payments. In the meantime, the situation with the delays has deteriorated further.
The delays in payments will undoubtedly be reduced after the announced 800 million kunas for paying of overdue debt, but the system should be reformed since it is unsustainable in the long run. According to the European Union's forecasts, healthcare costs will continue to grow in absolute terms, but also as a share of GDP. Most of the reforms so far ended up with a significant reduction in drug prices, but they account for just one-fifth of total healthcare costs. We expect pressure to continue, and we must not forget that manufacturers, besides production costs, also have to bear the costs of registration, quality control, documentation renewal, serialisation of medicines, which reach up to 300,000 kunas per product per year. If we want to have a wide variety of drugs available in the market, we need to provide the funds. We often hear criticism that drugs are expensive, but in reality, the manufacturer's selling price for most pharmacy products is less than 20 kunas, so further pressure cannot provide significant savings. It is good that we have finally started talking about healthcare system reforms. If we compare the success of the treatment methods ten or twenty years ago, tremendous progress has been made. In Croatia, life expectancy has been prolonged by an average of five years, and the pharmaceutical industry has played an essential role in that.
According to government’s plans, the healthcare reform will not start until at least 2019. Do you feel there is enough political will to bring about the necessary legal and operational changes and in what direction should these changes be made?
Changes to the health system involve all citizens and, of course, there will always be different reactions and expectations. Processes in the healthcare system, especially in the administrative part, need to be modernised, focusing more on quality outcomes, not just on cost tracking. On the one hand, science offers better therapies, but with increasing treatment costs, and at the same time an increasing number of NGOs demand that the state pays for expensive experimental therapies. However, healthcare system cannot finance even the current expenses, and many say they are not ready for additional investments in the healthcare system. Croatia funds healthcare in a smaller percentage of GDP compared to developed EU countries or Slovenia, while at the same time a lot more health services are funded through the public purse. I believe it is in the interest of all citizens to have a stable health system, which will be difficult to achieve while the state does not pay its obligations and while there are non-economic prices of health services, so it is not strange that expenditures are growing faster than revenues.
Translated from Jutarnji List.
