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Chain pharmacies are facing a major change. Chain expansion is up in the air

Joanna Domoń-Kulas, radca prawny
Causa Finita Commercial Real Estate Law Firm

08 November 2016

Chain pharmacies are facing a major change. Chain expansion is up in the air

According to the amendment of the Polish Pharmaceutical Law drafted by members of the Polish Parliament, as early as next year, only pharmacists will be eligible for licenses to run pharmacies and, what is more, a pharmacist will be allowed to run not more than four pharmacies in a chain. What is more, the draft amendment assumes changes in a spatial distribution of pharmacies, with one pharmacy per 3,000 residents and the minimum distance between pharmacies or pharmaceutical points should not be shorter than 1km.

According to the draft, as soon as the Pharmaceutical Law is adopted, only pharmacists with the right to practice the profession and operate as sole traders, will be eligible for licenses to run pharmacies. Other eligible entities will also be some Polish civil law-based partnerships and, specifically: general partnership or professional partnership, whose sole business is running pharmacies and having only pharmacist with the right to practice the profession as partners, as well as limited partnership, whose sole business is running pharmacies and whose general partners are pharmacists holding the right to practice their profession only. For this reason, it is not going to be legally permitted to issue the license to run a pharmacy to a corporate structure. There is no doubt that this approach changes everything for pharmacies since, at the moment, the majority of pharma chains are owned by no one else but corporate companies.

What is more, the draft amendment includes some geographic and demographic restrictions on opening new pharmacies. A license to run a pharmacy will not be issued when, as of the day of issuing the license, the number of residents in a region per a pharmacy open to the general public is lower than 3,000. The restriction is not going to apply only when the distance from the planned location of a pharmacy to the nearest existing pharmacy, measured in a straight line, is at least 1,000m. As emphasised by Joanna Domoń-Kulas, it means that, in practice, not a single permit will be issued in the Mazovian Region, which now reports nearly 1,800 pharmacies for the population of 5.32 million.

If the Pharmaceutical Law is amended as described above, its consequences would severely affect developers of shopping centers. However, according to the draft, the amendment would apply to the newly established entities only and, for this reason, licenses issued to the existing chain pharmacies remain effective. Nevertheless, the chain could not open any new points of sale. What is more, according to the Pharmaceutical Law, some licenses may be issued for a defined period. What is going to happen when a license issued to a pharmacy operating in a shopping mall expires?

There are more than 390 pharma chains with 5 or more pharmacies operating on the Polish market, representing 38% of all units operating on the market.

The draft amendment is now being discussed and agreed between different ministries and has been already presented at the meeting of the Parliamentary Team for Pharma Market Regulation. Considering high legislative efficiency of the current authorities in Poland, it should be expected that the amended Pharmaceutical Law will be soon enacted. You may find it interesting that, in Europe, the "pharmacy for pharmacists only" concept is nothing new since, at present, similar laws are in force in 12 out of 28 UE states. However, recently, UE states tend to withdraw from such solutions and restorea free and open pharma market. That was the case in Portugal, the Netherlands, Norway, Iceland, Lithuania and Bulgaria. Hungary is the only country which has recently introduced solutions similar to those in the pipeline in Poland.

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