Sofia, 30.05.2023

Health experts and representatives of the pharmaceutical industry united around the need for a sustainable and predictable environment, guaranteeing the sustainable development of the sector and the access of Bulgarian patients to medicinal treatment

"Economic and strategic contribution of pharmaceutical sector in Bulgaria" — Study for ARPharM, BGPharmA and BATEL

The total contribution that the pharmaceutical industry has provided for the Bulgarian economy in 2021 is estimated at approximately BGN 2.8 billion or 2.2% of the country's gross domestic product (GDP), which is in line with the average level for Europe. These and other data were presented for the first time by Mr. Luka Chichov, Executive Director of IQVIA for Central and Eastern Europe, in a report delivered on May 30, 2023 during an expert meeting "Economic and strategic contribution of pharmaceutical sector in Bulgaria".

The meeting is organized by the representative organizations of the pharmaceutical industry in Bulgaria - the Association of Research-based Pharmaceutical Manufacturers in Bulgaria (ARPharM), the Bulgarian Generic Pharmaceutical Association (BGPharmA) and the Bulgarian Association of Wholesalers of Medicines (BATEL), with the support of the Confederation of Employers and Industrialists in Bulgaria (KRIB), and in partnership with the American Chamber of Commerce in Bulgaria.

The presented report (you can find it here) outlines the essential importance of the pharmaceutical sector for the Bulgarian health care and economy, and the contribution of innovative and generic pharmaceutical companies, wholesalers, retailers and clinical trial companies.

Summary data from the report "Economic and strategic contribution of the pharmaceutical sector in Bulgaria"

For 2021, the total economic contribution was calculated based on the value of labour remuneration in the sector (almost BGN 1.1 billion), the discounts provided to the NHIF and taxes (BGN 914 million), the value of the goods produced by the companies in Bulgaria (426 million BGN), the investments in clinical trials (178 million BGN), the value of the saved costs through the introduction of generic medicines (113 million BGN), as well as the added value in the form of the realized training campaigns for patients, doctors and other experts in the area (BGN 38 million).

For 2022, the direct contribution of the pharmaceutical sector to the state budget is also estimated at over BGN 1 billion. At producers’ prices, which are among the lowest in Europe, the pharmaceutical companies have provided the NHIF with 409 million BGN of additional discounts and compensations, which is equal to 27.6% of the NHIF’s budget for medicines.

In 2021, the pharmaceutical sector paid over a billion BGN in remuneration, of which BGN 384 million went to the state budget in the form of taxes and insurance. Almost 28,000 people are directly employed in the pharmaceutical sector in Bulgaria, creating induced effects on another almost 16,000 people, with wages 1.8 times higher than the national average.

Pharmaceutical production in Bulgaria is a key factor to maintaining a sustainable supply of medicines. The medicines produced by Bulgarian manufacturers in 2021 is BGN 426 million or 1.2% of the total production in the country (over 10 billion tablets and capsules and over 164 million liquid medicinal forms). At the same time, a significant role and contribution are also played by wholesalers, who grant financial credits to their clients - pharmacies and hospital for a total value of over half a billion BGN, with a time value of money of almost BGN 7 million.

An important element of the report is the analysis of the contribution of generic and biosimilar medicinal products, which saved patients and the state over BGN 207 million in 2022, which in turn frees up resources for the introduction of non-alternative therapies for unmet patient needs.

In recent years, Bulgaria has become a regional centre for clinical trials and ranks 4th in Europe per capita, according to the report. This is due to the good regulatory environment, infrastructure, patient recruitment and cost effectiveness, and the market is estimated at approximately BGN 178 million by 2021. However, there is a lack of digitalization in the system, which presents this market with serious challenges to realize to its potential.

Last but not least is the contribution of the pharmaceutical sector in providing additional services and care to the users of the health system. In 2021, the sector spent BGN 38 million on professional and educational campaigns for training and awareness, including experts, patients and doctors, as well as another BGN 3 million on support programs by providing access to highly specialized diagnostics for oncological diseases.

The report outlines the significant role that the pharmaceutical sector has for the Bulgarian economy and healthcare and makes several recommendations with a view to its sustainable development: recognition of the strategic contribution that the sector has to the Bulgarian economy also for the budget as a whole and placing it as a priority; attracting investment for production, development and clinical research, while reducing the financial and tax burden on them; ensuring a sustainable budget of the NHIF and an acceptable amount of discounts, which will create a favourable environment for investments in the sector; facilitating access to innovative treatments by simplifying the administrative process; simplification of the administrative burden in the introduction of generic drugs; revaluation of VAT on medicines, etc.

On the basis of the IQVIA report presented for the first time, a discussion was held on the prospects of the pharmaceutical sector and its importance for ensuring the access of Bulgarian citizens to modern treatment, in which Mr. Deyan Denev, Executive director of ARPharM, Mr. Nikolay Hadjidonchev, Chairman of the Board of BGPharmA, Mr. Nikolay Kolev, Chairman of the Board of BATEL, and Mr. Luka Chichov, Executive Director of IQVIA for Central and Eastern Europe.

According to Mr. Denev, such a comprehensive assessment of the economic contribution of the pharmaceutical sector in Bulgaria is being done for the first time. He emphasized that it is extremely important that this sector is vibrant because there are high expectations for it, given the aging population and the growing need for drug treatment. Pharmaceutical innovation is valuable and necessary, it is the key to providing therapies for unmet medical needs, for example to tackle currently incurable diseases. However, he emphasized that this innovation only makes sense when it reaches patients. In conditions of deferred budgets, the unpredictability and uncertainty of the environment deepens with each subsequent year and the producers of innovative therapies are faced with significant difficulties to satisfy the growing needs of the Bulgarian citizens. In mid-2023, it is still unclear what the year's drug funding will be.

Mr. Denev agreed that the contribution of the pharmaceutical sector to the Bulgarian economy as a whole is very large, but shared that the challenges are very serious. Currently, pharmaceutical companies provide drugs at some of the lowest prices in Europe, but also provide additional discounts and compensations to the NHIF. With each passing year, the amount of these compensations increases, the unpredictability increases, and with it the risk that more and more companies will refuse to invest in Bulgaria and withdraw from the Bulgarian market. This is a threat to the health of Bulgarian citizens. That is why it is important to guarantee the sustainability and predictability of the system, limiting the risk for pharmaceutical companies resulting from the assumption of obligations for discounts to the NHIF. There is no way companies should sign a "blank check" to the NHIF every year. According to him, the Bulgarian legislative framework must be developed, it must be changed to meet the improved access to innovative drug treatment resulting from the upcoming changes in the European pharmaceutical legislation, because otherwise it will soon not be able to function. This change must be the result of the joint efforts of experts and politicians, drawing on the good experience of other countries. Bulgarian citizens, as equal European citizens, must have access to state-of-the-art therapies, of course under conditions that guarantee the financial sustainability and stability of the system.

According to Mr. Nikolay Hadjidonchev, Chairman of the Board of BGPharmA, the generic industry provides an opportunity to provide affordable treatment for the public, which is clearly shown by the contribution of generic and biosimilar medicines to the saving of state funds. That is why the generic sector is and will continue to be key not only on the basis of local production, but also through European and global producers. In order for this to happen, however, it is necessary to invest in the personnel that will secure this production and guarantee that Bulgaria will continue to be among the leading countries in this field. Mr. Hadjidonchev emphasized as one of the problems in Bulgaria the lack of a favourable environment stimulating the application of biosimilar medicines on the Bulgarian market. Another serious problem is that many established generic drugs are currently being withdrawn from the market due to price pressures and increasing additional financial burdens. These problems, according to him, can be solved through joint efforts that will lead to the creation of a common European regulatory framework, guaranteeing continuous access to modern, quality and safe treatment for patients.

The Chairman of the Board of the Bulgarian Association of Wholesalers of Medicines, Mr. Nikolay Kolev, emphasized that the worst thing is to have an outflow of medicinal products. Everyone in the pharmaceutical sector is part of a chain and interconnected through their contribution. That is exactly why the shortage of personnel is really a serious problem and work must be done in the direction of limiting the melting of personnel.

As it became evident from the above in the face of the COVID-19 pandemic, the role of wholesalers and pharmacies is key to the reliable and timely supply of medicines. At the same time, our members (TE) operate at a 2% markup, while in other EU countries it is an average of 5%, and at the same time, they are the ones who provide a long payment period in the hospital market in our country and are forced to months to collect arrears. For the period 2019–2021, wholesalers have financed the hospital and pharmacy market with over half a billion leva with their own resources.

In his speech, he distinguished the most urgent priorities for the three organizations, among which are: the introduction of uniform standards, synchronized with the European ones; digitization of the sector, allowing the fastest resolution of the problems with the shortage of personnel and resources; ensuring transparency and predictability in the sector by creating a short-term and long-term strategy guaranteeing the interest of all participants and seeking added value for each patient. He emphasized that Bulgaria is still perceived as the right place for the production of medicines and it is important to maintain this position in the increasingly competitive global environment. This can be achieved precisely through work and dialogue between all interested parties.

According to Luka Chichov, Executive director of IQVIA for Central and Eastern Europe, it is important to change the perception that society has of the pharmaceutical sector as a user of a public resource and to start seeing it as a strategic partner for the economy and for the state as whole. This will contribute to the increase of investments in the sector and the creation of new jobs. Due to the fact that the Bulgarian market is small and limited, there is a risk for investors. That is why it is important to ensure the sustainability and predictability of the sector. According to Mr. Chichov, the development of the sector can be achieved through the models of public-private partnership, and for this development it is key to achieve an open dialogue generating ideas and effective proposals at the expert level. In this regard, it is important to apply a pragmatic approach, to give concrete examples of good practices from other countries, which will ensure success in ensuring patient access to new therapies.

More information

The expert event "Economic and strategic contribution of the pharmaceutical sector in Bulgaria" gathered in one place over 50 representatives of the pharmaceutical industry, representatives of the 49th National Assembly, chairmen of professional organizations, chambers of commerce in Bulgaria, etc.

"Economic and strategic contribution of pharmaceutical sector in Bulgaria" — Study for ARPharM, BGPharmA and BATEL