Biotest prepared to exit Greece for non-payment

Biotest may be a small player in Greece, but the question is whether the drugmaker's decision to exit the market next month for non-payment will be the hole in the dike that precipitates a flood.

The company in April warned Greece that if it didn't receive payment on the $8.8 million it is owed for 2011, it would stop shipping its products and it expects it will, Reuters reports, citing an interview with Biotest's CFO Michael Ramroth in the German newspaper, Boersen-Zeitung

Even with an election last weekend that seems to support the terms of a European bailout plan, Greece's economy remains brittle and European authorities can imagine a health catastrophe if it fails. Last month, Reuters reported that some of the biggest drugmakers are working with European agencies to avoid a crisis, studying the 2002 default in Argentina as a blueprint.

Because its market is so small for the largest drugmakers, it is believed they can work with the country. Bayer, Merck KGaA and Fresenius already have indicated their willingness to do so. And the firestorm that erupted when Novo Nordisk ($NVO) last year withheld insulin from the market for a month serves as a warning to those who might be thinking of following Biotest, although the move reportedly got Novo some money.

Biotest is not a large drugmaker. It already declined to accept Greek bonds for payment saying that by the time it was to receive them, their value had already tanked by two-thirds of their value. So the end of its relationship appears near. "We told the Greek health ministry in April that we would exit the market within three months if no payments were made," Ramroth says in the interview. "And I don't believe that manna will fall from heaven in June."

- read the Reuters story