Warburg Pincus, a private equity fund owning the Gemini pharmacy chain, wants Poland to ease rules that limit setting up new pharmacies or face arbitration that could order Warsaw to pay billions of dollars in compensation, the Polish newspaper Rzeczpospolita reported on April 26.

Poland limited the development of pharmacy chains in 2017, tightening the law further in 2023 to close loopholes in the law that companies exploited. Today, the law limits pharmacy ownership to pharmacists only, restricts opening of new pharmacies near existing ones, and sets a cap where one owner can only have four pharmacies nationwide.

Poland’s largest pharmacy chains are, in effect, franchise businesses. Since the latest tightening of the rules, it has become even more difficult to build a pharmacy network if one is not a pharmacist, which Warburg Pincus says – via Gemini – is discriminatory and anti-market.

Gemini demands either the repeal of the law or a compensation of reportedly $9bn – $25bn, according to Rzeczpospolita. “The latter amount is exaggerated, but the first is not,” a source familiar with the case told the newspaper. 

Poland’s pharmaceutical market was worth an estimated PLN50bn (€11.6bn) annually in 2023.

"The regulatory changes did not improve the quality of the healthcare system or increase competition,” Gemini said in a statement, according to the report.

“A glaring example of this is the decrease in the number of pharmacies in the market by over 2,000 pharmacies over five years and market consolidation in so-called partner networks, the largest of which encompasses nearly 40% of the market of all pharmacies and over 30% of the wholesale market,” the company also said.

Poland’s health ministry only told Rzeczpospolita that it is in contact with Warburg Pincus over a potential out-of-court settlement of the dispute but “commenting on the matter at this stage is not in the interest of the Republic of Poland”.

If the two sides fail to reach an agreement by the end of May, the matter will be referred to the International Court of Arbitration, Rzeczpospolita wrote.