Unions protest against creation of Polish Pharmaceuticals Holding

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In July 2004, trade unions representing employees at the Polfa Warszawa pharmaceuticals producer called on the Polish government to scrap plans to merge the various state-owned entities in the sector into a Polish Pharmaceuticals Holding. Polfa Warszawa is the industry's most successful firm and its employees are concerned about the effects of its incorporation into a new holding structure.

When Poland’s political and economic reforms got underway in earnest after 1989, the country’s pharmaceuticals industry was widely regarded as being among the strongest in central Europe. The various facilities around the country comprising the Polfa group made up a consolidated sector, pooling its resources in areas such as distribution. Although the pharmaceuticals industry brought appreciable funds into the state budget, consecutive governments did not regard it as a strategic sector of the economy. The sector gradually settled into a pattern of decline, brought about by a number of factors. The 'transfer rouble' was supplanted by the 'hard dollar' in settlements with foreign markets to the east, leading to a precipitous drop in orders from the former Soviet Union. More significantly, Poland agreed in its association treaty with the European Union to allow the duty-free import of medicines from the 'old' EU Member States, opening the way for expansion into the Polish market by western pharmaceuticals producers. Polish producers that had been part of the old Polfa conglomerate found it hard to to compete, not least because their products were subjected to a regime of officially set, low prices enforced by the Polish government. Only in markets to Poland’s east did the now independent Polfa entities experience success, but only to a certain point; the financial crisis in Russia precipitated a fall in the sales of Polish firms which could not be reversed because of new Russian restrictions limiting the import of finished pharmaceuticals.

As a result, the Polish pharmaceuticals industry - contrary to the general trend towards the consolidation of companies prevailing in in the sector in developed economies - disintegrated, and the large number of small enterprises left in the field were ill placed to compete with large pharmaceuticals multinationals from the west.

One exception to the generally grim picture is the Warsaw-based Polfa Warszawa. It is the third-largest supplier of medicines to Poland’s domestic market, and every second vial used by Polish doctors and patients originates from its laboratories. Polfa Warszawa has been ranked among the 30 most efficient Polish companies. In stark difference to many other pharmaceuticals companies, it has not been scaling back employment and has indeed created some 500 new jobs in the past few years. Polfa Warszawa is also cited in arguments against the conventional wisdom that the private sector is always superior to the state-owned sector, as it consistently posts good results while remaining the property of the Polish state.

However, the generally dire condition of the pharmaceuticals industry as a whole has led the government to seek ways of propping up the struggling companies. The creation of a new Polish Pharmaceuticals Holding (Polskiego Holdingu Farmaceutycznego, PHF) has been proposed as a solution to the industry’s woes. This idea has met with strong opposition from Polfa Warszawa employees. In July 2004, they sent a written request to members of parliament, asking them to stop the consolidation of the pharmaceuticals industry. The trade unions have accused the Ministry of the State Treasury (Ministerstwu Skarbu Państwa, MSP) of not implementing a contract with the unions which would guarantee that Polfa Warszawa employees will receive company shares due to them (a major issue of concern for the workforce). Employee representatives are worried that Polfa Warszawa, by far the most financially sound of all the state-owned Polfa entities, will be relegated to the status of a mere production facility managed from elsewhere.

A few days later, several hundred members of the Independent and Self-Governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność) demonstrated in defence of Polfa Warszawa. While the unions have expressed guarded optimism over discussions held with the Ministry of the State Treasury to date, they adamantly maintain that they will not permit Polfa Warszawa and its employees to be marginalised and, by implication, to meet the bill for problems affecting most of Poland’s pharmaceuticals sector outside their own company. The director of Polfa Warszawa has endorsed the employees’ demands.