FRANKFURT/ATHENS (Reuters) - German pharmaceutical firm Biotest said it would stop shipments to Greece in July, becoming the first drugmaker to announce it would quit the debt-mired country’s market because its bills had not been paid.
Though a relatively small player in Greece, the company’s exit sets an unwelcome precedent for a country whose healthcare system is crumbling under the weight of economic crisis and administrative deadlock.
“We told the Greek health ministry in April that we would exit the market within three months if no payments were made,” Biotest’s Chief Financial Officer Michael Ramroth told German daily Boersen-Zeitung in an interview published on Saturday.
“And I don’t believe that manna will fall from heaven in June.”
Greece is in its fifth year of a deep recession and faces a cliffhanger election on Sunday that could result in the country being forced out of the euro.
Some drugmakers are working on emergency plans to keep medicines flowing into Greece should it crash out of the currency bloc, even though the country - which heavily depends on imported medical supplies - has left many bills sent to state-run hospitals unpaid.
Biotest’s Ramroth said Greece had paid all its outstanding bills for 2010 but still owed the company - which makes products from blood plasma to treat severe burns, hemophilia or tetanus - 7 million euros ($8.8 million) for 2011.
“Payments for the latest receivables have been extremely slow,” he said.
Greece’s health ministry was not immediately available for comment.
Executives at leading drug companies - particularly those with European headquarters - are under pressure to avert a health catastrophe in Greece, which could occur if the country’s imports were crippled by a massive devaluation of a newly issued drachma currency.
Already, Greece’s rundown state hospitals are cutting off vital drugs, limiting non-urgent operations and rationing even basic medical materials for exhausted doctors.
Major pharma companies such as Bayer, Merck KGaA and Fresenius have said they would continue to send supplies.
Biotest is small by comparison, with annual revenues of just over 420 million euros, but its departure from Greece could raise concern that others will follow suit.
Greek health officials said Biotest appeared to be the first drugmaker to officially announce it is leaving the country, although other companies have threatened to do so.
Two years ago, Denmark’s Novo Nordisk, the world’s largest supplier of insulin for diabetics, was hit by a storm of protest when it halted deliveries of certain insulins for around a month after Greece cut the price by more than a quarter. The cut-off ended when Athens agreed to somewhat smaller price cuts.
Biotest, meanwhile, has so far not run into trouble in other struggling euro zone countries, according to CFO Ramroth.
In Italy, an important market for Biotest generating annual revenues of more than 30 million euros, customers are not taking any longer to pay their bills than they used to.
“But we are prepared in Italy and could sell receivables, such contracts are already wrapped up with banks,” he said.
Biotest’s exposure to Spain is limited, though the company does not participate in public hospital tenders because it could take two years to receive any payment, Ramroth said.
Earlier this year, Biotest was the first private creditor to Greece to say it would not participate in a swap of sovereign bonds that was part of a huge restructuring of the country’s debt.
It had received bonds with a face value of 15.8 million euros when Athens paid some outstanding hospital bills with sovereign debt. At the time of the swap, Biotest said the bonds’ market value had shrunk to about 4.5 million euros.
($1 = 0.7921 euros)
Reporting by Maria Sheahan; Additional reporting by Renee Maltezou; Editing by John Stonestreet