“SOS: pharmaceutical company “Darnitsa” threatens to stop production for the third time this yearThe pharmaceutical company “Darnitsa” states that it may suspend production for the third time this year due to falling sales,
which previously led to nine weeks of downtime. What are the reasons for such statements?
”, — write: unn.ua
Save our sales
We stopped production twice. Most likely, we will stop for the third time.
It was previously revealed that the company was forced to halt production twice: first in March for three weeks, and then from June to August. In total, the downtime lasted nine weeks. The reason was a drop in sales. The company blames pharmacies for this, claiming they are unwilling to sell “Darnytsia” drugs, while trying to avoid other issues, such as the fact that the company increased the ex-factory price of its drugs by 120%, or that for many items, this manufacturer’s drugs are more expensive than analogues (and pharmacies, according to current regulations, are obliged to have and offer the cheapest analogues by active substance).
“We raised prices — to the level of inflation and for certain products due to rising raw material costs. Whether it was ‘the most’ — I wouldn’t claim: both Ukrainian and foreign manufacturers raised prices,” Kateryna Zahoriy stated at the same forum recently, although she previously did not deny that the cost increase over two years was 120% (with an annual inflation of 15%). And, notably, with a manufacturer’s margin that can reach up to 85% of the ex-factory price of the drug.
But times are changing: market regulation conditions have changed (Darnytsia, by the way, also contributed to the formation of these conditions), consumer sentiment has changed — Ukrainians have become more frugal. What seems to have remained unchanged is only the desire to call on the state to intervene in market relations and invariably take someone’s side.
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Darnytsia’s critical advantage?Pharmaceutical production is part of critical infrastructure that directly affects the health of citizens. This situation gives “Darnytsia” an undeniable trump card in the struggle for influence on the pharmaceutical market. If a pharmaceutical plant stops, it really seems like an alarming signal. And like any alarming signal, especially in times of instability, it requires attention. But are the reasons really what the manufacturer says – or are the reasons perhaps different? Are unsuccessful management decisions not hidden behind this? Or is it a desire to attract the attention of the state so that it, fearing a complete halt in production, would agree to all the manufacturer’s conditions? And these conditions have been voiced repeatedly and seem to be aimed exclusively at pharmacies – as if there are too many of them. Why is the manufacturer quite frankly annoyed by the number of pharmacies – so much so that it seems ready not only to turn the entire market upside down, but also to act to its own detriment? It looks like the goal is to create circumstances where the number of pharmacies will be reduced to one per district – they will have to agree to all the manufacturers’ conditions, because there will be no competition (as well as convenience for the consumer, a wide range of medicines, discounts and loyalty programs). But then those who are not satisfied with liberal regulation and healthy competition will feel like a fish in water: there will be no need to pay so much attention to demand, improve quality, compete on price – it will be enough to agree with the director of the central pharmacy so that you become the only competitive one in the entire district.
And for some, obviously, such a model seemed too attractive. After all, it seems that instead of market regulation of the situation and concessions from which not so much market participants as consumers benefit, some manufacturers are ready to resort to non-market methods of struggle. And it is not surprising that they involve the state in this, as the one who must deliver its verdict and invariably in favor of… the manufacturer.