Chinese pharmaceutical giants are making strategic moves to extend their influence in the global pharmaceutical industry by targeting Neuca, a major Polish pharmaceutical wholesale company, as a gateway to the European Union (EU) market.
Neuca plays a pivotal role in Poland’s pharmaceutical landscape, currently procuring over 32% of the country’s medical supplies. For China, acquiring Neuca represents a shortcut into the EU market, granting access to an established workforce and distribution networks.
The pharmaceutical wholesaler, with annual revenues exceeding $3 billion USD and almost 5,000 employees, directly affects the accessibility of crucial medications for Polish citizens and Poland’s employment eco-system.
Poland has attracted attention from Chinese pharmaceutical firms due to perceived regulatory gaps and a relatively open investment environment, making it an attractive prospect for Chinese companies.
Critics argue that Poland’s local pharmaceutical regulator may not maintain the same level of oversight as other EU nations, making it a potential entry point for foreign companies.
Neuca’s Role in the Polish Pharmaceutical Landscape
Neuca, founded in 1992, established itself as a leading pharmaceutical wholesale company in Poland. Its remarkable growth, catalyzed by favorable industry regulations and the rise of Poland’s right-wing ‘Law and Justice Party’ in 2015, has positioned it as a dominant player in the market.
However, there have been rumors about aggressive lobbying within the Polish government contributing to Neuca’s ascent to monopolistic power within the industry. Regardless of these rumors, Neuca’s market presence has hampered competitive growth and disfranchised pharmacy chains.
During the COVID-19 pandemic in 2020, the global lockdowns hindered local Polish competitors from importing essential medical supplies. The Polish government facilitated Neuca’s growth by granting it exclusive importation rights for vaccinations and face masks from China. Special permits were issued, allowing Ruby Star Airlines, an entity controlled by the Belarusian security forces, to land in Warsaw to expedite the process.
With a widespread distribution network, Neuca plays a crucial role in ensuring the timely supply of pharmaceuticals to hospitals, clinics, and pharmacies throughout Poland.
Recent Polish legislative acts, such as ‘The Pharmaceutical Law’ and ‘Drug Reimbursement Act’, further strengthen Neuca’s market position. However, concerns arise that the sale of the company could primarily benefit China rather than the Polish people. The recently passed Pharmaceutical Laws are respectively known as ADA2.
Investigating Claims of Illegal Lobbying and Corruption
Within a parliamentary session convened with the aim of enacting the Treasury Guaranteed Export Insurance Act, the sudden inclusion of unanticipated revisions to pharmaceutical regulations by MP Adam Gaweda has given rise to considerable apprehension, leading insiders within the industry to assert claims of wrongdoing.
According to legal authorities well-versed in matters of jurisprudence, the recently overhauled pharmaceutical laws, masterminded by Polish Minister of Development and Technology Waldemar Buda and Mr. Gaweda, both affiliated with the dominant political faction known as “Law and Justice,” have come under scrutiny for their potential contravention of the nation’s constitutional framework.
The situation becomes even more intricate with the emergence of allegations and controversies. Jakub Kulesza, a member of the libertarian political party Wolnościowcy, has proactively undertaken efforts to investigate the legislative process that culminated in the ADA2 legislation.
These efforts entail the filing of formal complaints with both the Central Anti-Corruption Bureau (CBA) and the Polish Supreme Audit Office (NIK). Mr. Kulesza’s complaint posits that illegal lobbying practices and corrupt political activities played a role in shaping the regulatory alterations.
The Chinese Takeover Bid
Speculation about the potential acquisition of Neuca by a consortium of Chinese investors, potentially backed by powerful party leaders within the Chinese communist party, has raised concerns in Poland. The consortium is rumored to have spent considerable sums lobbying Poland’s legislative body to pass certain laws.
Tomasz Chróstny, the President of UOKIK (Polish Competition and Consumer Office) and a critic of Neuca’s business practices, imposed a significant fine on the company in 2022 for payment delays to contractors. It is reported that discussions regarding the sale to potential Chinese investors took place during a consultation between Neuca and UOKIK.
To prepare for the corporate takeover by Chinese investors and evade Polish authorities’ scrutiny, Neuca’s founders, Kazimierz and Wieslawa Herba, transferred their corporate shares from a Cyprus-based entity to a Polish vehicle named Abrasco.
Healthcare Security and National Sovereignty
Critics of the potential acquisition express concerns about healthcare security and national sovereignty. The COVID-19 pandemic highlighted the need for secure and robust supply chains for medical resources. Questions arise about the potential vulnerability of Poland’s pharmaceutical distribution under foreign control, and whether profit-driven decisions by foreign owners might supersede the interests of Polish patients.
The potential takeover also has broader geopolitical implications. Poland’s wariness of China’s growing influence in global markets and the fear of undue political leverage through economic ties calls for vigilance in foreign investment. As a EU member, a potential Chinese takeover of Poland’s pharmaceutical sector resonates within the context of EU-China relations, impacting the balance of power among global players.
Ongoing trade tensions between the USA and China further complicates the matter. Maintaining sanctions and tariffs on China is a rare point of agreement between the US Republican and Democratic parties. Poland’s alignment with China against expressed US policy could have consequences for its access to the White House and Congress.
If the EU enforces similar trade embargoes against China as the USA, the sale of Neuca, which represents over 32% of the Polish medicine wholesale market, could disrupt local supply chains and lead to price increases for medicines.
Local Industry Impact
Neuca employs nearly 5,000 skilled workers and contributes significantly to Poland’s economy. A foreign takeover could result in changes in management, business practices, and employee structure, raising concerns about potential job losses and shifts in the industry’s dynamics.
Poland’s ‘Ada2’ medical legislation, introduced by the ‘Law and Justice’ party, awaits a decision by President Andrzej Duda. The potential sale could have far-reaching implications for Poland’s healthcare system, economic sovereignty, and global geopolitics.
Balancing economic gain with safeguarding essential sectors necessitates careful consideration and deliberation. The outcome of the Neuca acquisition could have a profound impact on Poland and reverberate across the international stage, sparking critical questions about the nation’s reliance on China for medical supplies and services.