Rising and essential: Central and Eastern Europe grows as a force in global healthcare

The healthcare industry in the European Union (EU) is robust, and it promises to continue adrenalizing the region's economy, employment, and balance of trade.

Rising and essential: Central and Eastern Europe grows as a force in global healthcare

A crescendo of factors – the global pandemic, astonishing scientific breakthroughs, ubiquitous technology, smart data and intelligent analytics, an empowered buying public, and a new focus on innovative (and preventative) medicines – is driving healthcare transformation to some degree in all 27 EU nations.

In its official Winter 2022 Economic Forecast, the European Commission wrote, "Following a strong recovery by 5.3% in 2021, the EU economy is now forecast to grow by 4.0% in 2022." Healthcare will be a substantial contributor. The commission's prediction comes despite global pandemic headwinds.

The quality of logistics will determine, to large degree, the ultimate health of the healthcare marketplace.

Until recently, logistics philosophy held that networks should be cost-efficient and as lean as possible. This thinking led to long, complex, and consolidated supply chains.

Now, with the pandemic and evolving government and consumer priorities, shorter supply chains and the resulting intra-regional and alternative sourcing opportunities present new benefits – and greater opportunity.

Already a hub for research, manufacturing, clinical infrastructure, and logistics, Central and Eastern Europe (CEE) is primed to take advantage of global evolutions.

The CEE has a highly trained workforce. It's strategically placed within Europe's stringent regulatory framework, and it claims a choice geographic location at a crossroads of European, Middle Eastern, Asian, and even some North African markets.

The CEE's assets, combined with the region's increasing consumer buying power and new investments, make healthcare expansion there an appealing consideration for firms seeking a footprint in a promising market.

Strong vital signs

Economic vectors in the CEE point a positive direction:

• CEE healthcare spending is on the rise. In several CEE countries, healthcare spend as a percentage of GDP has lagged that of wealthier EU nations. Some nations, notably Poland and the Czech Republic, now feel political pressure to increase healthcare investment.
• Healthcare investment is diversifying: The EU publication Sifted reported in November 2020 that Europe had 626 actively funded digital health companies... with 63 percent of them launched in the prior five years¹. Hungary and the Czech Republic are on record as planning greater digitization. In Poland, expanding access to healthcare is high on the national agenda.
• Consumer buying power and demand for innovative medicines climb.In April 2021, Euromonitor International reported, "While historically Eastern Europe has lagged behind more economically-developed regions, prior to the pandemic it was on a rising trajectory, gaining on the advanced economies of Western Europe"². As well, the number of private healthcare providers in CEE has boomed. These entities hope to differentiate services with innovative medicines and procedures not offered by traditional providers.
• CEE supplies EU's healthcare industry. The region still largely depends on imported medical devices, while domestic production of medicines is common, especially in Poland and Hungary. Even so, such products have an international aspect. The CEE's producers want to increase exports, many of which require globally sourced inputs like APIs (active pharmaceutical ingredients).
• Local sourcing of APIs appears imminent. Currently, the CEE relies on Asia and India for many APIs, but this may soon change. The COVID-19 pandemic revealed vulnerabilities in supply chains, and some healthcare stakeholders want more local sourcing. The CEE's infrastructure and education lend itself to API production at relatively lower cost, with easy subsequent transport to the rest of Europe... and beyond.
• Partnerships welcomed. The healthcare industry continues to explore partnership opportunities in CEE. Hungary, Czech Republic, and Poland have all added logistics muscle to support a range of partners, including contract manufacturing and batch customization firms.
• Clinical trials are open for business. Hungary and Poland, in particular, have created a solid infrastructure for clinical trials³. Trials will require reliable, high-quality transport of diagnostic lab specimens and clinical shipments.
• Biotech beckons. The nations of CEE are home to many smaller biotechnology innovators. In times of industry consolidation, or as a way to tap the region's talent pool, these companies become attractive candidates for acquisition.

Healthcare success will ride transportation networks

The healthcare market of today and tomorrow requires precise handling and tracking of medicines and equipment and, increasingly, specific temperature conditions for shipments.

Many of the top-selling drugs globally (Humira, Keytruda, COVID vaccines) are temperature-sensitive biologics – drugs made from living sources. More and more of these biologics and cold chain drugs are pouring out of facilities today as they prove newly effective against formidable diseases. To properly handle such valuable treatments, companies like UPS Healthcare have designed transportation products like UPS^® Premier, a fast-lane network with highly specialized handling, enhanced visibility, and close control.

UPS Healthcare has aggressively expanded in CEE, placing regulatory-compliant cold chain facilities in the region. Hungary has added operations. New strategically located state-of-the-art facilities are up and running in Poland and Czech Republic, and another facility expansion in Czech Republic comes online in September 2022. UPS Healthcare's first dedicated facility in Germany opens in early 2023.

All these investments will support the future of the pharmaceutical, medical device, and lab diagnostics industries, and ensure fast transportation domestically and across borders to connect EU and global networks.

In all, UPS Healthcare manages 125-plus cGMP- and GDP-compliant healthcare facilities in more than 30 nations.

European strategy means a CEE strategy

Healthcare companies should adopt a mixed approach to their involvement in CEE countries, remaining flexible as conditions change but staying poised to seize opportunities as they emerge.

Digitization, changes in market access, consumer preferences, and regulatory reform must be balanced in any risk/reward analysis. Whatever else, a market presence in the CEE today is central to a European business strategy.

¹https://sifted.eu/articles/europes-healthtech-industry-2020/

²https://www.euromonitor.com/article/global-consumer-trends-in-eastern-europe

³https://www.abpi.org.uk/facts-figures-and-industry-data/clinical-trials/global-rankings-number-of-clinical-trials-initiated-in-2020-by-country-by-phase/