Roche is fed up with stringing along deadbeat hospitals. The company ($RHHBY) won't extend credit for hospitals in Spain and Portugal that are way behind on their bills, and it's thinking of doing the same in Italy, Bloomberg reports. No drugs until you pay down your bills, the Swiss company says.
Before you start lamenting the cold-heartedness of Big Pharma, consider this: The new policy in Spain applies only to hospitals that haven't paid their bills in 700 days. That's about a dozen facilities. Twenty-three Portuguese facilities, about one-fourth of the country's hospitals, face the tighter standards.
The amount of pharma debt in Spain alone is staggering; in all, drugmakers are owed more than €6 billion ($7.5 billion), El País reports. The newspaper points out that other Big Pharma companies floating past-due bills haven't tightened the screws on Spanish hospitals. GlaxoSmithKline ($GSK), Sanofi ($SNY) and Baxter ($BAX) all told the newspaper they would wait for the government's promised fixes.
But Roche is something of a special case, GSK and Bayer told El País. Because of its major presence in cancer drugs, Roche is more dependent on hospital sales than other major drugmakers are. The company says 80% of its Spanish revenue is sourced in hospitals, and it's now owed €500 million ($626 million).
"There are several [Spanish] hospitals that have not paid their bills for more than two years," Roche spokeswoman Silvia Dobry told the news service. Some of the Portuguese hospitals have been in arrears for more than 1,000 days (3 years, 8 months and 27 days to you and me).
In Italy, Roche is considering withholding credit to "a limited number" of Italian hospitals that haven't paid up in two or three years, Dobry said. The company switched to a COD payment system in Greece earlier this year.