Roche has increased shipments of its drugs to Greek pharmacies. However, it's not shipping to some Greek hospitals that are behind--way behind--on their payments, which means some patients have to pick up their IV drugs at the pharmacy and bring them back to the hospital for infusions, CEO Severin Schwan (photo) told the Wall Street Journal.
And Greece might not be alone. Roche may cut off in-arrears health facilities in Spain, which has been facing a debt crisis somewhat less severe than Greece's. And some government-funded hospitals in Portugal and Italy are now far behind on their payments to the company, Schwan said. Some of the delinquent hospitals "haven't paid their bills in three or four years," Schwan told the WSJ. "There comes a point where the business is not sustainable anymore."
Schwan's comments echo Nycomed CEO Hakan Bjoerklund's sentiments; he threatened in June to halt deliveries "[i]f the situation gets out of hand and we don't think we will get paid in the end." Novo Nordisk actually stopped shipping all but its low-end insulin products to Greece temporarily in a price dispute with the government.
The government started paying some of its bills earlier this year, but in government bonds rather than cash--which meant drugmakers took a sizable hit. Australia's CSL took a $26 million charge to account for its losses on payments made in bonds, mostly by Greek hospitals, but also facilities in other southern European countries. Roche was given bonds for part of its bill, and sold them at a 26% discount, CFO Alan Hippe told investors this summer. "We didn't have a choice," Schwan told the WSJ. "The question was, you got nothing or you got government bonds."
- read the WSJ piece