Established in 1980, PEIFASYN Group has grown to become a leading player in Greece’s pharmaceutical industry, with 540 shareholding pharmacists and 850 affiliated pharmacies. With a long history as a pioneer, PEIFASYN was one of the first firms in Greece to install robotics at its warehouse facilities in the 1990s, and today is exploring the implementation of Big Data and AI in pharmaceutical industry operations, says General Manager Thanasis Mouchtis. Mr. Mouchtis also gives his unique insight into the evolving landscape of the industry in Greece and opportunities for German investors to develop strategic partnerships with PEIFASYN, which, he says, is ideally positioned “to promote German generic medicinal products in its 850 pharmacies
Can you give us an overview of the pharmaceutical sector and the role and presence of the PEIFASYN Group within the sector?
Today there are several issues concerning the pharmaceutical market in Greece. The first one is in regards to the big number of medicine shortages. The second issue is regarding the huge amounts of money paid to the state by pharmaceutical companies in the form of CLAWBACK and REBATE. Additionally, the year-to-year reduction in medicine prices has also a negative impact on supplies.
Another element is the saturation and the fragmentation of the Greek pharmaceutical market both on a wholesale and a retail level. There are 10,500 pharmacies and 150 wholesale distributors. The ratio of Greek pharmacies to the population is the highest in Europe. The role of PEIFASYN is supporting and strengthening the operation of the pharmacies, as well as helping and enhancing the scientific role of the pharmacists, something that constitutes their competitive advantage especially after liberalization in the pharmacy sector.
What experience was gained during the crisis decade in Greece? And considering the recent recovery signs in the economy, what are the opportunities and challenges emerging for PEIFASYN?
Since 2009, a great number of consecutive price reductions in medicines, combined with a 61% funding reduction for the public pharmaceutical expenses, as well as a doubling in the private participation percentage of insured people, dropped the sales of pharmaceutical products by 40%. The reduction of purchasing power also harmed the pharmacies’ consumer product sales. Moreover, ten years after that, the sales in the pharmaceutical sector have not yet reached pre-crisis levels. The pharmaceutical sales of the wholesale distributors followed the same course over time, as did PEIFASYN.
Gross profit margins for wholesales decreased by 40% in the same period, thus following the same declining path. As I mentioned, the market seems saturated but I estimate that the number of pharmacies and wholesale distributors will decrease in the future. This is an opportunity for us to significantly increase our market share.
What have been the main milestones of PEIFASYN Group over the years?
PEIFASYN Group has a history spanning four decades. We started in 1980 with 30 shareholding pharmacists and today that number has increased to 540, while the total number of affiliated pharmacies is 850. We started with a distribution center in Piraeus and now PEIFASYN has four such centers with 190 employees. Back in 1982, PEIFASYN was the first pharmaceutical wholesale distributor that operated in a fully computerized environment. In 1994 PEIFASYN was the first Greek distributor that invested in the establishment of its private building facilities while in 1998 we were among the top companies in the logistics sector that invested in robotics technology for warehouse facilities.
In 2005, PEIFASYN established a services provider company to support and strengthen the development of its affiliated pharmacy members. The range of services provided include IT services and equipment material, high-skilled staff for cosmetics promotion, merchandising, marketing support, events organization, distribution of a health magazine, consulting services regarding pharmacy financial management, etc.
PEIFASYN established its fourth pharmaceutical warehouse on the island of Samos back in 2009, to meet fully the needs of our pharmacies in the area. We also had our building facilities expanded in Piraeus in 2016, thus reaching 6,500 square meters for the total buildings of the Group. In 2018 we upgraded and expanded the warehouse automation system.
The result of all this is that today, PEIFASYN can perform 3,000 orders daily with 70,000 invoice line items. Around 75% of the orders sent by the pharmacies are online while picking takes place automatically by the robotic system of the warehouse. Our philosophy behind all these development steps is to have and maintain a robust basis for smooth operation, development and evolution of our pharmacies in the coming years, acting in parallel as a protective umbrella for all those within the Group.
Can you comment on the operational and financial performance of PEIFASYN during 2018-2019, as well as future development goals and strategy for maintaining sustainable development and supporting the sector?
During the last two years, PEIFASYN enjoyed the best growth rate within our sector, achieving a sales increase of 14%; we expect to reach 200 million euros by the end of the year. This growth is due to our market share increase, existing pharmacy co-operation and expansions to new geographical areas. During 2018, PEIFASYN completed a four-million-euro investment in building facilities and robotics equipment. At the same time, we implemented a major restructuring in the Organization Chart of the Group by offering intensive training for all Group employees.
Over the last five years, the Group has been able to keep its profitability at the same level, although we have offered large discounts to our pharmacies, more than doubling their profit rate, thus passing on to our members millions in profits.
What are the biggest challenges that PEIFASYN and the overall sector are currently facing?
One of the issues that wholesale distributors and pharmacies have to face today is their participation in the trafficking of special handling medication. The percentage of this medication type is expected to increase gradually. The operation of electronic pharmacies in para-pharmaceutical products affects the sector adversely.
As regards to the coming years, the model of a pharmacy shop will certainly change to be adaptable to the new needs of the health system. Given the digital competitiveness in the commercial aspect of a pharmacy, enhancing the pharmacist’s scientific role becomes a one-way path. The pharmacy should evolve to a place providing primary healthcare by contributing to prevention and by monitoring the treatment of patients. An important opportunity that is emerging for Greek pharmacies, and us as well, is the implementation of the Pan-European Prescription System in Greece. If you put that together with the significant tourist growth that exists, very positive results are expected.
With the digital transformation at the forefront of Greece’s economic future, what are the factors that will lead to the future development of PEIFASYN?
Big Data and artificial intelligence will dominate. The pharmaceutical industry will need to have consecutive feedbacks with statistical data regarding patient treatment results to prove systematically the effectiveness of the medicines approved. For a long time, PEIFASYN has been showing great importance to our preparation and adaptation to the upcoming new environment. Such preparation does not only concern the PEIFASYN transformation per se but the transformation of the pharmacies as well. This is the reason that three years ago we established the Pan-Hellenic Annual Conference for the future of the pharmacies.
PEIFASYN is driving the joining of Greek pharmacies so that they become bigger and more competitive units that can operate as small health centers as they currently operate in major Western countries. The latest investments of PEIFASYN concern that project; online co-operation with the pharmacies, platform development for the commercial operation of the pharmacies, distant/e-learning for training, development of pharmacist’s scientific role. These activities are designed and routed through the virtual network of the pharmacies belonging to the pharmacists/shareholders.
What is PEIFASYN’s commitment to Greece and how do you contribute to the socio-economic development of the country?
PEIFASYN is included in the list of the top 50 commercial companies of all sectors. Consequently, besides being an economic unit, we are also an entity with responsibilities for the social environment in which we operate. This is expressed through the actions of our Corporate Social Responsibility, through various organizations, schools, and NGOs, vulnerable groups, but also through job offerings and investments that we continuously make and our country has so many needs in that sense. PIEFASYN also plans to collaborate with the Federation of Patient Associations in Greece to adapt the organization to the new pharmacy model according to the needs of the patients.
Why should foreign investors invest in Greece and what initiatives must be taken to attract more foreign direct investment?
For quite some time now, uncertainty about the future of the Greek economy is being removed, confidence is growing and the economy is returning to a stable growth path. Greece has a very large untapped market. There is a great potential pool of human resources with high-level scientific training in various sectors, who at this stage have migrated abroad but are willing to come back here for jobs in new companies that will come and invest in Greece. According to the report on global competitiveness in 2018, Greece holds a high rank in terms of human resources skills: 39th position out of 140.
Greece has a very important geopolitical position being at the crossroads of three continents as a transport and energy hub. There are investment opportunities in the energy sector related to renewables. There are also possibilities for utilizing public property. Greece is a significant tourist destination that is constantly strengthened and there is also a need for upgrading the tourist infrastructure.
What potential opportunities are there for German investment in Greece and through potential strategic partnerships with PEIFASYN?
Given the fact that PEIFASYN is active in the area of pre-wholesaling (distributing pharmaceutical and para-pharmaceutical products to the Greek wholesale distributors), we would be able to distribute German pharmaceutical products in the Greek market. Also, PEIFASYN could promote German generic medicinal products in its 850 pharmacies. Through our network of 850 pharmacies, PEIFASYN could develop (in co-operation with German companies) a platform for utilizing Big Data, which could also assess the results of their medicines on our patients’ treatments.