Arithmetic vs. tablet blogger, or numbers don't lie
Kyiv • UNN
Kateryna Zahoriy, head of the Board of Directors of "Darnytsia", stated that her company's drugs are inferior in price to other manufacturers, but accused pharmacies of reducing sales. She compared prices for xylometazoline, where "Rinazal" from "Darnytsia" is more expensive than "Evkazolin aqua" from "Farmak" and American "Tizin".
Kateryna Zahoriy, Head of the Board of Directors of "Darnytsia" company, confirmed that Darnytsia's drugs are inferior in price to other manufacturers. Despite this, she continued to accuse pharmacies of declining sales of "Darnytsia" products instead of paying attention to consumer demand, writes UNN.
In her post, Kateryna Zahoriy decided to "put everything in its place" using the example of a popular nasal congestion drug with the active ingredient xylometazoline and explain why pharmacies are evil. However, something went wrong.
According to her, the cheapest drug is "Evkazolin aqua" produced by "Farmak" company. This drug is the market leader in xylometazolines in the country and can be purchased, for example, in Kyiv at a price ranging from 92.00 to 173.30 hryvnias.
At the same time, according to Zahoriy, the American analogue "Tizin" from Johnson & Johnson costs from 109.00 to 175.00 hryvnias in Kyiv.
Meanwhile, according to her, "Rinazal" produced by the "Darnytsia" plant in their branded pharmacy in Kyiv, which, according to Zahoriy, offers the cheapest prices, costs 116.10 hryvnias, and a little more in other pharmacies.
The Swiss analogue "Otrivin" produced by Haleon UK Trading Ltd will cost Kyiv residents from 126.33 to 195.23 hryvnias.
Thus, this example makes it clear that consumers have a wide choice of similar drugs with different pricing policies. This has not reduced the availability of medicines in any way; on the contrary, a wide choice at affordable prices allows the patient to choose the necessary drug themselves.
In this context, several key things are worth noting. First, the manufacturer forms 72% of the cost of drugs. The rest is divided between the distributor and the pharmacy, as their markup is regulated by law. For distributors, it is 8%, and the average markup for pharmacies today, with current restrictions, is 18-22%. Neither the supplier nor pharmaceutical retail can set a higher price than provided by law, as they risk losing their license.
As rightly noted in the comments under Kateryna Zahoriy's post, drug manufacturers have the highest business profitability.
As a former director of a pharmacy business, I am on the side of pharmacies. If only because the EBITDA margin of manufacturers is 30-50%, distributors - 1-3%, pharmacy chains - 1-5%. And manufacturers have somewhat more flexibility in operational management (revenues and expenses).
Second, according to the new rules for regulating the pharmaceutical market, lobbied by representatives of "Darnytsia" themselves, pharmacies are obliged to have the cheapest drug with the active ingredient on the market in their assortment, and pharmacists must offer it to customers. So, obviously, out of 10 patients who come for xylometazoline, 9 will choose the drug from "Farmak" because it is the most affordable.
Third, after the ban on marketing agreements between pharmacies and manufacturers from March 1, when manufacturers paid for their drug to be offered first by pharmacists, the situation changed. Pharmacies are no longer obliged to promote certain drugs and are guided in their work exclusively by consumer demand, like any other retail.
However, this situation obviously does not suit the representatives of "Darnytsia", as their drugs are inferior to many other manufacturers in terms of price criteria. And now, it seems, they are trying to force pharmacies to work according to the old rules and promote Darnytsia's drugs through public pressure on pharmacy chains. It is obvious that some manufacturers need to focus more on building their own brand, reviewing price offers, instead of trying to force the market to work according to the rules of one player.