Law amendment introduces restrictions on pharmacies

Poland has approximately 15,000 pharmacies, of which nearly 5,500 are chain pharmacies. The pharmaceutical law amendment, called “pharmacies for pharmacists”, introduces restrictions on establishing new pharmacies.

According to the new restrictions set out in the amended Pharmaceutical Law of 25 June 2017, a professional pharmacist with the right to practice may operate up to four pharmacies. In addition, geographic and demographic restrictions will apply to opening new pharmacies. Namely, a permit to run a pharmacy will be granted only if the number of inhabitants in a voivodeship is at least 3,000 per pharmacy and the distance to the nearest pharmacy is at least 500 metres. The latter criterion will not apply if a new pharmacy is opened at least one kilometre away from an existing one. In addition, only a pharmacist will be permitted to acquire or inherit a pharmacy opened under the new legislation.

Natalia Adamek, Negotiator, Retail Agency, Cushman & Wakefield

The amended law is likely to slow down the growth rate of new pharmacies, largely due to the scarcity of pharmacists meeting the criteria set out in the legislation and having sufficient capital. It will be also more difficult to sell or hand down a pharmacy to a non-pharmacist, and to open new pharmacies in large cities due to distance restrictions.

Owners of retail schemes, however, have no reason for concern. Leases that are due to expire any time soon will be extended provided that tenants have valid permits to run a pharmacy. Such permits are issued for an indefinite term, hence the restrictions will apply only to new operators intending to open a pharmacy. The amended law is likely to benefit pharmacists already operating in shopping centres who will gain the upper hand during lease negotiations in particular.

Pharmacy chains will continue to expand because the ban on sale of companies has been abolished. According to the new legislation a company may be bought by another company. If an owner chooses not to merge companies formally, he won’t be obliged to apply for a new permit. It will be impossible, however, to sell pharmacies run by sole traders or civil partnerships, unless a civil partnership is transformed into a commercial law company, for example a limited liability company.

As the amended legislation will apply to new pharmacies only and the existing pharmacies will continue to operate according to previous regulations, no sudden price increases are expected. The statutory attempt to limit unhealthy competition generally makes sense, but it will restrict business growth and small-scale pharmacists who were to be protected by the new legislation are likely to be hit the hardest.

Report by Cushman & Wakefield.

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Written by: Natalia Adamek

Negotiator, Retail Agency, Cushman & Wakefield