When considering different aspects, it is clear that the health and pharmacy field requires a strategic national vision in order to develop and grow – Juris Bundulis, the new Chairman of the Supervisory Council of JSC Olainfarm, tells Dienas Bizness in an interview.
You have recently become the new Chairman of the Supervisory Council of JSC Olainfarm, you have been the Chairman of the Board of JSC Grindeks, and the Director of the Department of Pharmacy and Deputy State Secretary at the Ministry of Health for many years. What is the overall scene of the pharmaceutical and health sector like today?
The perspective of both sides gives me certain advantages – I have seen the sector from both a public and a private business point of view. Personally, I believe that we can be proud of the Latvian pharmaceutical industry. Even during this critical time, when we had to deal with difficult situations caused by the Covid-19 pandemic, it was the private sector that was able to take responsibility and also financial risks, and that helped the country to deal with various complex situations. Even overnight, the necessary supplies and various logistical issues related to vaccines were resolved. It was not easy to do everything at once and in a short time, but it was done. In crisis situations, it is important that people do not panic, and one of the first ones to reassure people were pharmacists. I would like to point out that they, of course in collaboration with other professionals in the field, did a tremendous job.
The manufacturers of medicine and the pharmaceutical industry!?
Despite the strict requirements, the drug manufacturers have managed to adapt to them. Pharmaceuticals is one of the most heavily regulated sectors. It could even be said that Latvia’s pharmaceuticals have managed to survive in the long term — the only country to do so among the three Baltic states. We have companies with local capital, which is a lot when you look at our immediate neighbours. Those companies have not only survived but continue to thrive and compete successfully.
If we look at pharmacies, which are also a part of the industry, they are often compared to retail outlets. Do you think this perception is valid?
Absolutely not. Pharmacy and pharmaceutical care are an integral part of healthcare. It cannot be seen in the same way as a convenience or a beverage store! It carries responsibility for people’s health. It is recognised worldwide that medication therapy is one of the most cost-effective approaches to health care. Of course, we should not forget prevention practices, because it is best not to get sick in the first place. However, once diagnosed, this is one of the cheapest ways to help cure the disease, as treating hospital-acquired, delayed in treatment diseases is a much more complex and expensive process.
There is a lot of talk at the moment about how many, when and where people are affected by Covid-19. It appears as though other diseases do not exist, or have they forgotten about them?
The focus on Covid-19 has indeed led to a conclusion that there might not be any other diseases, but that is not true. An increasing number of experts point out that there is a growing problem of oncological and cardiological diseases that have not been treated in a timely manner, and other chronic diseases that are getting worse.
So, it seems that they have forgotten to consider the bigger picture?
A strategic vision of the whole health segment, its development and the future growth of the pharmaceutical sector is very important. Paragraph 139 of Latvia’s government declaration states that a strategy for the pharmaceutical sector should be developed.
So, there is an understanding that we have a strategically important segment of the economy, a strategically important field, but no solution yet?
We are doing poorly regarding the practical side. It is declarative and very clear, but it is one thing to declare and quite another to clearly define the priorities that emerge from a given strategy.
What is important?
It is my understanding, and I would say that the understanding of many professionals in the sector, that two things are important: access to services and their quality. Of course, all of this comes at a cost, so public funding for access to the service is both a critical and highly sensitive matter. For example, the Latvian compensation system as a whole has been checked by various tests, both in terms of time and in the assessment of different experts. Currently, it is clear that an approach based on the gradation of severity of illness is the right way to set levels of compensation. It just needs to be resourced. This is similar to the blood circulation process in the body — if there is not enough blood, nothing else will work well.
Are you talking about reimbursing the purchase of medicine?
Yes, and the obvious problem, as the figures show, is that the medicine reimbursement system is too underfunded. Perhaps this is why, in order not to solve the problem, attention is paid to the prices of medicine, to the regulations, when this is not the essence of the issue. In countries where all prescription medicine is covered by a higher or lower percentage of public funding, and patient co-financing is relatively low, these topics are not an issue.
Can we say that medicine costs the same everywhere, but here the state covers a much smaller part of the price?
In Latvia, a large proportion of medicines is paid by families, not the state. If you look at the prices of state reimbursable medicine in Latvia, according to the regulation they are available in all Latvian pharmacies and are among the cheapest in the European economic area. Many European countries look at Latvian medicine prices as reference prices. As we know, these are almost always the lowest prices. So we have less access to medicine because people are unable to buy them.
When you look at the amount of money that is being distributed to deal with various emergencies and consequences, and when you see the figures, you have to ask: is it not possible to allocate 15% of all this to reimbursable medicine? The situation would improve drastically!
At the same time, every now and then some legislation is opened and amended. Unsuccessfully?
The laws are so intertwined that it is dangerous to pick one apart without seeing the big picture. Pharmaceuticals have proven their viability and also contribute to the country in terms of jobs, taxes and economic development. These are also innovations! Pharmaceuticals is one of the most innovation-intensive sectors. Without a clear vision, trying to yank this huge mountain of regulations around one corner can bring down the house of cards. The ill-considered handling of such individual cases is a drag on the whole sector and inhibits development. For example, the regulations regarding the opening of new pharmacies, which is now being done for the second time and submitted to the government for consideration, looks like a failed joke, at the same time it is also upsetting all professionals in the sector. In the end, no one understands what is really going on, and who benefits here. Declaratory objectives are fine, but the reality is that there is a desire to redistribute the market in favour of a particular player, rather than to improve access to services that would benefit every citizen.
Is this about rural pharmacies and pharmacists?
Given the limited number of specialists, if there is a redistribution of the market to the cities, it will be the rural areas that will suffer. If there is a desire to solve access to medicine while reducing other risks, then during the Covid-19 pandemic a good solution has been found — home delivery. This option has now been extended until the end of the year. This is one way to bring medicine closer to where people live, in places where pharmacies are not available. It is a question of strategy, where professionals can come together and agree on what is best. Thanks to modern technology, it is also possible to provide high-quality remote pharmacist consultations. This can be done! The Cabinet of Ministers draft Regulations Project proposed by the Ministry of Health does not solve the problem, it only raises many questions and uncertainties.
If we talk about the pharmaceutical sector as strategically important one, we have no shortage of strategic procurements that could be linked to this sector in the last year and a half. How do you see this state action? To ask this question directly — is it not true that more could have been ordered from local companies taking strategic action?
I would like to stress that the pharmaceutical sector is also an element of national security. In all kinds of crisis situations, what is it that people need most? Food, medicinal products, safe housing, heat, electricity, etc. Of course, it is different in countries where there is a strong national pharmaceutical industry, where it accounts for 40% of the market instead of 4% like in Latvia. The benefit is that local producers can be held accountable. On the same issue of vaccine supply, companies in other countries can simply say that they will not be able to provide enough vaccine supplies immediately because they may have another order that is more important. A similar issue could arise with painkillers, which can be in short supply in times of disaster.
Could vaccines be produced in Latvia?
Certain elements or components certainly can be. In regard to vaccine production, it is not a simple process. The requirements are much more serious from the viewpoint of safety. Quite recently, thanks to the activities of the Minister for Economics in Latvia and the European Commission’s vision to ensure that vaccines are available, these activities to ensure that countries have the capacity to produce vaccines have been on the agenda.
Currently this process is ongoing, and no decision has been taken. If we are moving forward in this area, it is important that we talk about a certain range of products and future possibilities. If we are talking about the current Covid-19 vaccines, there is definitely a demand. The capacity to provide them is limited. We have great opportunities in this area — not only because we have strong pharmaceutical companies, but also because we have strong pharmaceutical science. We have the Latvian Institute of Organic Synthesis, which is very experienced and has original products, and we have the Latvian Biomedical Research and Study Centre, which works on new technologies in medicine. If the science is there, if the development capacity is there, and if the production capacity is there, then of course such niches and new product groups should be developed. But this process is also cost-intensive. Supporting research programmes and bringing them to production is a matter of investment. If we work together with determination, we can make this happen. The short-term solution is to buy a licence to produce vaccines, but then you are dependent on another manufacturer. A full production cycle is needed, then it is possible to address the essence of the issue.
If we talk about traditional medicine, what are the opportunities for our national producers?
Olainfarm, Grindeks and other manufacturers have proven that they can deliver. If you know how to do it, if it has already been done for a traditional product, you can do it for more complex processes as well.
If I understand correctly, there are also companies in the Olainfarm family that can produce, for example, protective equipment, quality masks, perhaps even respirators. Other companies can do this and that as well.
If we can do this, individually or in partnerships, then why are we importing masks from China when we have doubts regarding their compliance? We can manufacture masks ourselves! It would be much easier to control the local producer, and non-compliances, if any, could be corrected more quickly.
Most definitely. In emergency situations for which nobody is fully prepared, when there is a huge uproar around the world and products are bought up immediately, I know that Latvian businesses have been approached with requests to sell protective equipment so that it can be taken out of the country. Yes, it is true that it is possible to monitor local producers, it is possible to control them, and it is possible to ensure that what is needed stays here. However, launching any new product is already a complex process. Even masks have to comply with certain regulations. It is clear that the Covid-19 crisis has been a good lesson for us. It is possible to produce the necessary goods. But to do this, everyone needs to move in the same direction, in a coordinated and coherent way. On the one hand, there are strict state regulations, competitions that take time, which the state itself monitors, and on the other hand there are producers who do not want to break them. A quick approach is needed for fast action. We need to decide how we can do it faster right here. It is possible to quickly understand what products are of strategic importance. Crisis situations are already sudden, when everybody needs something, but what might be needed can also be foreseen; the products that factories should suddenly produce if there is a need can also be predicted. It is also a question of planning and strategy.
Does Olainfarm have a strategic plan?
Yes, absolutely. It should go hand in hand with the needs of the country, as only then does it work smoothly.
You have become the new Olainfarm’s Chairman of the Supervisory Council. Is Olainfarm one of the companies of strategic importance for the country?
I have written more than once in Dienas Bizness about Olainfarm shareholder disputes. What about now? Are you sure about the shareholders, their choice, is everything for sure?
I will not talk about legal issues, because there is a reason behind the saying that there is nothing more unstable than a perfectly stable situation. What I can tell you is that if I did not have confidence that the shareholders wanted the company to grow, I would not have taken the job. Shareholders are united in their vision to grow the company, and that is of utmost importance. A very difficult period has ended. Of course, there are legal nuances, but they do not apply to the company’s operations and its Supervisory Council. The lawyers will resolve the remaining disputes, and all proceedings will surely be concluded.
The most important thing for me is the shareholders’ vision and understanding that the value that has come into their hands cannot simply be jerked left and right, that it has to be developed purposefully and that all energy and resources have to be devoted to this task. There are opportunities for development — both new products and new markets. The company has an ambitious development strategy, and there are things that may still need to be fine-tuned, but there will be no fiddling and fidgeting. Half a year from now, we will assess how clearly we are moving in line with the objectives and principles set out in the strategy. We will determine whether there is room to do better, to do more. We must continue to work hard for a common goal.
Until now, Olainfarm did not have too many products of its own. Is this one of the areas for development?
Exactly. New products take time to develop and bring to market, but there are ways and opportunities to do it faster. In partnership, on a project-by-project basis. The second development direction is the registration of existing products in new markets. After all, it is important to load all production lines. The key word for development is staff. The company in Olaine has people who are loyal and committed to the company and have proven that, despite any fluctuations and crises, medicine is provided. There are positions where we need reinforcements, where we are looking for specialists. There are limited opportunities in Latvia, so we also look outside Latvia. These are the priorities to which the Olainfarm Supervisory Council will devote its attention and energy.
We have talked a lot about strategy and the industry as a whole, but what do you see as Olainfarm’s contribution to the country and what does the company need from the country; what do you expect? And specifically, for Olainfarm?
What we give to the country and to society, and can give even more of, is quality medicine that meets all European standards. This includes developing new medicine to meet national needs. If such wishes and needs exist. Market trends determine our choices, but we can and are also interested in participating in public procurements. We expect support from the state in science and innovation, which are very financially intensive issues. But if they can’t help us, they should at least not get in the way. This is, of course, not a good principle, because it is only by working together in a strategic sector that we can achieve what we want. We all have one main concern — people’s health. And it is also a national priority.
As a medicine manufacturer, people believe that pharmacists, both manufacturers and traders, only dream of selling more medicine. What about this business-related element?
Pharmaceutical professionals do their job with quality and professionalism. It is very important that people take their medicine correctly and responsibly — only then will the desired result be achieved. It is important that when people need medicine, they get it.
It is often pointed out that we have a lot of prescription medicine. Some people would like to buy medicine in supermarkets. Any comments?
In Europe, the market split — 70% prescription, 30% over-the-counter medicine — is very similar. In the case of prescription medicine, the prescribing doctor takes responsibility for what the patient is prescribed to take. In this way, in collaboration with the pharmacist, the patient is protected against overmedication, conflicting medicines, unjustified concomitant use of medicines with similar active substances and other risks.
In recent weeks, Latvia has been rejoicing over the allocation of funds from the European Union’s Recovery and Resilience Mechanism, and they are already being distributed. Even the healthcare field receives millions. We have borrowed substantial sums, almost a billion in half a year. This money has also paid for a lot of health care. How do you see this money being spent?
This money should be spent, as a caring leader should — in the interests of the people. It should not just be required, but also used economically. Latvia has borrowed half as much as the annual health budget. I remember how difficult it was to get additional funding from contingency funds when the need was 10 or 100 thousand. There was a real need, but it was very difficult to get the money. I do not fully understand this over-spending of money.
Original interview published in Latvian: “Dienas Bizness”, 06.07.2021.
Photo: Evija Trifanova/ LETA