VOLUME 17, NUMBER 19 • MAY 16-22, 2011, 2011 . z∏.12.50 (VAT 8% included) . ISSN 1233 7889 INDEX-RUCH-332-127

SShhiiffttiinngg aalllleeggiiaanncceessCivic Platform’s seduction of a key Democratic

Left Alliance politician could be a game changer

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Since 1994 . Poland’s only business weekly in English

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Squeezed by

Poland wants to keep

the Nord Stream

pipeline from

strangling its hopes

for energy

independence

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RReebbeell ddiipplloommaaccyyRados∏aw Sikorski made a surprise visit

to Libya last week, meeting with the rebel

council 3

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The central bank caught

the market offguard with a

0.25 bps interest rate hike

Could France’s stance on

shale gas prove

problematic for Poland?

Pedestrians beware –

Poland's roads are the

bloodiest in the EU

News . . . . . . . . . . . . . . . . . . . . . . .2-4

Industry News . . . . . . . . . . . . . . . . .5

Business Environment . . . . . . . . . .6

Cover Story . . . . . . . . . . . . . . . . . .8-9

Opinion . . . . . . . . . . . . . . . . . . . . . .10

Pharmaceuticals supplement . .11-14

Lokale Immobilia . . . . . . . . . . .15-18

The List . . . . . . . . . . . . . . . . . . . . . .19

Markets . . . . . . . . . . . . . . . . . . . . . .20

Listed Firms . . . . . . . . . . . . . . . . . .21

Arts & Culture . . . . . . . . . . . . . . . .22

Last Word . . . . . . . . . . . . . . . . . . . .23

In this issue

REAL ESTATELokale Immobilia

• Okam interview

• Ursus controversy

15-18

A taste ofPolish medicinePoland’s

pharmaceuticals market

is large and healthy, but

big changes are afoot –

WBJ investigates

11-14

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A guide to Polish business and industry Przewodnik po polskim biznesie i gospodarce

Business consulting

companies

19

A GUIDE TOPOLISH EXPORT

i s A V A I L A B L E N O W !To order:Please contact us at +48 22 639 85 68 or kwilinski@valkea.com

Nord Stream

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MAY 16-22, 2011NNEEWWSS2 www.wbj.pl

IMF praises

Poland

The International

Monetary Fund (IMF) has

praised Poland’s fiscal

consolidation plans.

According to a report by

the IMF, Poland’s fiscal

deficit will fall to 5.6% of

GDP in 2011 and 3.6% in

2012, while GDP will

grow at 4% in 2011 and

3.8% in 2012.

Solidarity

inspires EU

logo

Poland has unveiled the

logo for its six-month

presidency of the EU

Council, which starts on

July 1. Comprising six

colored arrows and a

Polish flag, the logo is

reminiscent of the one

used by the Solidarity

labor union.

Z∏.22 billion

from

privatizationThe government has

announced that

revenues from

privatization projects in

2010 came to z∏.22.037

billion. In total, 487

privatization projects

were initiated, of which

230 were successfully

completed. The total

value of contracts

signed was the highest

in Polish history, as was

the volume of

transactions.

Dividends

worth z∏.16

billion?More Polish companies

than ever are planning

to share profits with

their shareholders,

Parkiet reports. The

combined amount

domestic companies

listed on the Warsaw

Stock Exchange will pay

out in dividends this

year could exceed

z∏.15.7 billion,

surpassing the record

z∏.13.3 seen in 2007.

Illegal soft-

ware woes

Software piracy remains

a significant problem in

Poland, as over 50% of

computer programs

used in the country are

illegal copies, according

to a report by the

Business Software

Alliance. The good news

is that the figure hasn’t

risen since last year. ●

Adgar Post´pu ..........................15

AGED ..........................................16

BASF SE/Wintershall Holding

GmbH ..........................................8

Bayer HealthCare ......................12

Brammo ....................................23

Carpathian PLC..........................17

Celtic Property Developments ..16

Chevron ........................................4

Colliers International ................18

ConocoPhillips ............................4

Cushman & Wakefield ..............18

Cyfrowy Polsat ..........................20

E.ON AG........................................8

Eli Lilly........................................14

Empik ........................................16

Epstein architectural studio ......16

ET Logistik ................................16

ExxonMobil ..................................4

Fasing ........................................20

Gazprom ..............................4, 8, 9

GDP Suez ....................................8

Getin Holding ............................20

Ghelamco ..................................18

GlaxoSmithKline ........................12

HB Reavis Group........................16

Hochtief Polska..........................15

IKEA............................................15

Ingeborg Investments................16

Internet Group............................20

Investcon Group ........................20

Irena ..........................................20

IZNS............................................20

Jastrz´bska Spó∏ka W´glowa......5

Kruk............................................21

Kulczyk Oil Ventures....................8

Lotos ............................................8

LUX MED ......................................7

MLP Group ................................16

New World Resources ..............20

NFI Krezus ................................20

NFI Midas ..................................20

Novartis ......................................12

Okam ..........................................17

Orlen ............................................3

Paged..........................................20

PBG ............................................20

Pfizer ..........................................14

PGE ........................................5, 20

PGNiG ................................4, 5, 20

PKOBP........................................20

Polimex-Mostostal ....................20

Polpharma ................................12

Polskie LNG ................................9

Poros Customs ..........................23

ProLogis ....................................17

PZU ........................................3, 20

Rabobank Group ........................18

RED Real Estate Development..15

RKW............................................15

Roche ........................................14

Rossmann ..................................16

RWE..............................................5

S+B Gruppe ................................16

Sandoz........................................12

Sanofi-Aventis ............................12

SPEC ............................................5

SwedeCenter..............................15

Tauron Polska Energia ..............20

TelForceOne ..............................20

TVN ............................................20

ZPC Ursus ..................................16

Google will soon begin filmingin Poland for Google StreetView, the service which addspanoramic, ground-level viewsto the firm’s map programs.Warsaw, Wroc∏aw, Poznaƒ,Gdaƒsk and Kraków have beenselected by the American inter-net giant for its controversialweb-based service.

The images are expected tocome online early next year.

In the meantime, Poles willbe able to pick specific land-marks and attractions they feeldeserve to be included. Themost interesting will then beselected following a publicvote.

Since its 2007 launch,Google Street View has drawnheavy criticism internationallyfrom those who see it as an

invasion of personal privacy. InJapan, for example, Googlewas forced to reshoot all itsphotos following complaintsthat the cameras on its vehicleshad been placed too high,allowing views into privateareas. And then came the reve-lation that the firm’s vehicleshad been “accidentally gather-ing data” from wifi networksaround the world for years.

In Poland the service hasalso aroused controversy. Orig-inally planned for 2009, Googleshelved its plans to launchStreet View in Poland afterInspector General for PersonalData Protection (GIODO)Wojciech Wiewiórowski raisedconcerns that the service mightinfringe on privacy rights.

Following protracted dis-

cussions the watchdog officerelented, but Mr Wiewiórowskitold Dziennik – Gazeta Prawnathat even though he had with-drawn his complaints, he stillintended to monitor the imple-mentation of the service.

And even if Google gets theservice online for Poland,there’s no guarantee it willremain that way.

Street View has alreadybeen discontinued in Australiaand Germany, and now Googleis threatening to cut it inSwitzerland, according to TheWall Street Journal. This followsa recent court decision thatrequires the firm to guarantee100 percent anonymity of facesand license plates in itsimagery.

DDaavviidd IInngghhaamm

12.6% was the unemployment rate in Poland in April,

according to Labor Ministry estimates. This is an

improvement over the 13.1% reported in March

3.6% of GDP is the IMF’s latest forecast for Poland’s fiscal

deficit in 2012

54% is the level of software piracy in Poland, much of

which takes place in small and medium-sized

companies

4.1% of GDPis the forecast value of Poland’s online economy in

2015, according to Boston Consulting Group

“An old political satyr has ravished a politicallyimmature nymph. In other words, Donald Tuskhas ravished Ar∏ukowicz with a minister’s seat”

Civic Platform exile Janusz Palikot offers some insight into the prime minister’s

recruitment of leftist politician Bartosz Ar∏ukowicz

Quote of the Week

A setback for Poles in Polish-Lithuanian “spelling row”

Having their names spelled on official documents usingPolish characters has been a major sticking point for thePolish minority in Lithuania. In a judgment issued lastweek, the European Court of Justice sided with Lithuania onthe issue. Log on to WBJ.pl to delve into this latest episodein this long-standing neighborly dispute.

On WBJ.pl

Numbers in the News

Company index

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MAY16-18 EUROPEAN ECONOMIC CONGRESSEvent: Most important economic event in Central

Europe. Location: Katowice.www.eec2011.eu

19 COIE CONFERENCEEvent: Inauguration of the Investor and Exporter

Service Center of the Âwi´tokrzyskie Voivod-ship Marshal’s Office. Location: “¸ysogóry”Hotel, Kielce. www.sejmik.kielce.pl

20-22 INTERNATIONAL MBA ALUMNI CONGRESSEvent: Aimed at the integration of MBA students

and alumni from all over the world. Location:Kraków. ksb.uek.krakow.pl

24-25 REAL VIENNAEvent: The Real Estate and Investment Fair focused

on Central & Eastern Europe.

Location: Vienna. www.realvienna.at

25-27 3RD ANNUAL BUILDING MATERIALS CONFERENCE

Event: The main theme of this year’s conferencewill concern honesty in the construction sec-tor. Location: Hotel Qubus, Kraków.www.dlabudownictwa.pl

26-27 EUROPEAN FINANCIAL CONGRESSEvent: A discussion platform for foremost experts

and eminent representatives of business,academic and political circles. Location:Sheraton, Sopot. www.efc2011.com

JUNE9 DR IRENA ERIS LADIES’ GOLF CUPEvent: The fourth edition of the Dr Irena Eris Ladies’

Golf Cup. Location: Naterki. www.drirenaerisgolf.pl/english

May/June

DATELINE

Google Street ViewIN THE SPOTLIGHT

Figures in focus

Living epidemic

Estimated number of people living with HIV (adults and children)

in selected EU countries, 2001 & 2009

Source: "UNAIDS Report on the Global AIDS Epidemic 2010"

MAY 16-22, 2011 NNEEWWSS www.wbj.pl 3

EU office in

BenghaziFollowing Foreign

Minister Rados∏aw

Sikorski’s visit to Libya

last week, EU foreign

relations head Catherine

Ashton said the EU would

open a diplomatic mission

in Benghazi, the

stronghold of the rebels

fighting to overthrow the

Gaddafi regime. “I intend

to open an office in

Benghazi so that we can

move forward on the

support we have

discussed with the

people, to support civil

society, to support the

interim national council,”

Ashton said.

Gay pride

confusion

Organizers of the gay

pride march in Warsaw

last week said that

citizens of Belarus, Russia

and Ukraine would be

able to attend without

paying the usual visa fees,

citing a new directive from

the Foreign Affairs

Ministry. To avoid paying

fees, citizens of these

nations would simply have

to state that their aim was

to attend the parade, they

explained. However, the

MFA later denied the

news, stating that

Schengen duties left no

doubt as to visa fees.

Orlen

‘best-managed’

Polish oil giant Orlen has

been named “Best

Managed Company in

Poland” in a ranking

published by British

financial monthly

Euromoney. The list was

prepared based on the

opinions of independent

experts in the areas of

finance and management.

Orlen was awarded first

place for the fourth time

in a row. Czech power

group CEZ was named

best managed in the CEE

region.

PZU layoffs

Polish insurance giant

PZU has announced it will

cut 1,212 jobs this year,

almost 10% of its

workforce. As part of the

firm’s restructuring plan,

another 2,104 people will

be forced to change their

place or type of work.

“This is a difficult but

necessary decision. The

goal of all the company’s

restructuring activities is

to continue to modernize

and improve its

competitive position,”

said Andrzej Klesyk, CEO

of PZU. ●

Polish-US relations

F-16s to be stationed in Poland?

President Obama willreportedly announcethe news later thismonth

During a visit scheduled forthis month, US PresidentBarack Obama will commit tostationing American F-16fighters in Poland, accordingto diplomatic sources quotedby Gazeta Wyborcza.

The planes, along with thenecessary support personnel,would be stationed on a rota-tional basis from 2013. MrObama is also expected to dis-cuss the stationing of SM-3interceptor missiles in thecountry as part of America’splanned missile defense shield.

If accurate, the news wouldbe well received in Poland.Opinion surveys have longshown a desire for a concrete

American military presence onPolish soil, and many peoplewere openly disappointed whenMr Obama scrapped his prede-cessor’s missile shield plan.

Russia, which had wel-comed plans to abandon theBush-era missile shield, wouldno doubt be less pleased.

Mr Obama’s trip to Polandis part of a European tourwhich will include visits to theUK, Ireland and France,where Mr Obama will attend aG8 Summit.

In Warsaw, the US presi-dent is expected to attend aMay 27-28 summit of the presi-dents of Central Europeanstates, hosted by Polish Presi-dent Bronis∏aw Komorowski.The official schedule for theevent, as well as the attendancelist, will be made public soon.

Other topics on the agenda

for the American president’svisit include economic cooper-ation (such as in shale gasexploration and mining) andthe construction of Poland’sfirst nuclear power plant.

The delicate matter of lift-ing tourist visas for Poles isalso expected to be discussed,although Gazeta Wyborcza’ssources stressed that it wouldnot be a central topic. MrObama has already expressedhis support for Poland’s entryinto the Visa Waiver Program.

President Obama is alsoexpected to pay his respects tolate President Lech Kaczyƒski.He was prevented fromattending last year’s statefuneral in Kraków due to vol-canic ash from Iceland, a phe-nomenon which disrupted airtraffic across Europe.

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F-16s in Poland? They may be on the horizon

The war in Libya

SSiikkoorrsskkii mmaakkeess

ssuurrpprriissee vviissiitt ttoo LLiibbyyaaPoland’s foreignminister met with therebels fightingGaddafi’s regime

Polish Foreign MinisterRados∏aw Sikorski last weekheaded to Benghazi, Libya, astronghold of the rebels whoare fighting to overthrow theregime of Muammar Gaddafi.

He was the first foreignminister from a member of theinternational Libya ContactGroup to personally visit therebel council since the out-break of the conflict. The tripwas agreed upon with theEU’s foreign policy chief,Catherine Ashton, as well asNATO allies, as a show of sup-port for the uprising.

Keeping with the positionof most EU members, FMSikorski did not officially rec-ognize the rebel council, say-ing instead that it was “thelegitimate interlocutor of theinternational community.”

“We wish the Libyan nationvictory in democratization,”Mr Sikorski told MustafaAbdul Jalil, chief of the rebel

Interim Transitional NationalCouncil. Mr Jalil, in turn, citedPoland’s own fight for democ-racy under communism.

According to KacperR´kawek, an expert at the Pol-ish Institute of InternationalAffairs (PISM), the visit was abold move and should beviewed in the context of theimminent Polish presidency ofthe EU. Poland has not beenvery enthusiastic regarding theNATO-led military mission inLibya, he explained, but thecountry will need to addressthe issue very seriously fromJuly onwards.

Poland’s expertise with theprocesses of democratizationwill be a trademark of the pres-idency, predicted Mr R´kawek,and last week’s visit may signala more important involvement

in the region in the aftermathof the Arab Spring.

Much secrecy surroundedMr Sikorski’s trip to Benghazi,with media attention alertedby a comment on the FM’sTwitter account saying, “TheCASA military plane is circlingabove Palermo. The sun iswarming from the south.We’re going where it is evenhotter. Twitter may not work.”

The minister’s plane land-ed in Benghazi on its secondattempt, after initial informa-tion suggesting the town mightbe under attack proved incor-rect.

“Not without adventures,but ‘mission accomplished.’ …The Hague is waiting forColonel Gaddafi,” tweeted MrSikorski on Wednesday night.

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FM Sikorski met with the rebels fighting Gaddafi

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The history won’t forget you either

Road safety

Poland deadliestfor pedestriansOver a fifth of all EUpedestrian deathshappen in Poland

More pedestrians are killedevery year in Poland than in anyother country in the EuropeanUnion, according to a reportjust published by the EuropeanRoad Safety Council.

From 2001 to 2009, over80,000 pedestrians were killedin the countries which nowcomprise the EU27 and 20.5percent of those fatalitiesoccurred in Poland. Look atthe period between 2005 –Poland’s first full year as an EUmember – and 2009, and thefigure rises to 21.59 percent.

In 2009 alone, 1,467 pedes-trians died on Poland’s roads,a figure 30 percent higher thanthe next-worst country, Roma-nia. In the same year, pedestri-an deaths as a percentage ofall road deaths totaled 34 per-cent in Poland, the third high-est in the EU27.

The annual change inpedestrian death totals overthe period 2001-2009 hasimproved year-by-year, but ata painfully slow rate. OnlyDenmark and Romania have,on average, showed slowerrates of improvement.

These figures are indicativeof the attitude of Polish roadusers, the government and thepolice towards road safety,

said Anna Zieliƒska, an expertat the Motor Transport Insti-tute.

“The police, governmentand drivers don’t think speedis a crucial reason for acci-dents,” she said.

“Just recently the govern-ment introduced a new lawwhich increased the speed limiton motorways to 140 km/h. Ithink this sends a message tothe public which tells them:‘you can go faster’. This is goingin the wrong direction,” shecontinued, adding that the atti-tude of Polish road usersalready left much to be desired.

Ms Zieliƒska emphasizedthat it is people’s awareness ofspeed-related risk, and notspeed limits, which needs to beincreased.

“This isn’t just for drivers –it also goes for those whodesign Poland’s roads. Thereare too few infrastructural fea-tures designed to slow traffic.City roads especially should bedesigned differently, so thatroads are safe for society – forunprotected road users,” shesaid.

Recent police data showedthat in the first quarter of thisyear the number of peoplekilled on Polish roadsincreased by 20 percent com-pared to the correspondingperiod of 2010.

GGaarreetthh PPrriiccee

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MAY 16-22, 2011NNEEWWSS4 www.wbj.pl

Shale gas

Could ‘non’ spell

trouble for Poland?France’s ban onhydraulic fracturinghas raised worriesthat the EU couldfollow suitPoland’s shale gas reserves,recently estimated at 5.3 trillionsquare meters – the largest inEurope – could make the coun-try independent from gasimports for hundreds of years.

With enthusiastic supportfrom its highest offices, Polandhas therefore opened the doorto a great exploration push,with over 70 drilling licensesalready issued to companiessuch as ExxonMobil, Cono-coPhillips and Chevron. Gasmonopolist PGNiG, who ownsthe majority of the licenses, hassaid it would spend z∏.100 mil-lion on exploration this year.

However, French MPs’decision last week to banhydraulic fracturing, a keymethod used in shale gasextraction, and to annul explo-rations rights already granted,has raised fears that the Euro-pean Union may create regula-tions that will put an end toPoland’s shale gas dreams.

Marek Karabula, PGNiG’svice-president for Oil Mining,says the decision should be an

individual one. “Let countriesdecide for themselves. This isan energy security issue,” hewas quoted by Reuters as say-ing.

In a long statement, HenrykJacek Jezierski, Poland’s chiefnational geologist and deputyminister of the environment,offered assurances that the Pol-ish government has no plans toimpose a moratorium.

“We have effective environ-mental legislation and efficientcontrol institutions, we are pre-pared to control this processand it can be safely implement-ed in Poland,” he stated.

Shale gas extraction hasbecome increasingly controver-sial following the release ofOscar-nominated Americandocumentary “Gasland” andtwo separate studies fromDuke and Cornell universities.All warn that hydraulic fractur-ing may damage health and theenvironment.

Others have noted thatFrance’s powerful nuclear sec-tor and Russian giant Gazpromboth stand to lose out if theshale gas industry grows. Theymay, it has been suggested, alsohave a hand in the push againstshale gas.

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The lawyers of allegedal-Qaeda terrorist Abdal-Rahim al-Nashiriclaim torture occurredon Polish soilThe Open Society Justice Ini-tiative, an advocacy group, hasfiled a case against Poland inthe European Court of HumanRights. The organization wantsthe ECHR to pressure Polandto conduct an effective investi-gation into the alleged tortureand illegal detention of Abd al-Rahim al-Nashiri.

The group says that Polandis guilty of enabling the deten-tion and torture of al-Nashiri ata secret CIA prison on its soilbetween 2002 and 2003. Theyalso claim Poland aided in theman’s extradition to the US.

Three years have passedsince Poland’s Public Prosecu-tor General initiated its investi-gation, which is still no closer toreaching an end, said al-Nashiri’s lawyer in Poland,Miko∏aj Pietrzak. Indeed, thePolish government has neveradmitted to having hosted anyCIA “black sites.”

Abd al-Rahim al-Nashiri is

the alleged mastermind of theUSS Cole bombing in 2000, asuicide attack for which al-Qaeda claimed responsibility.He was transferred to the USmilitary base at Guantanamo in2006 and is now undergoingtrial within what Open SocietyJustice Initiative calls, “a systemof US military commissions thatlack independence, impartialityand fair trial guarantees.”

In a press release, the organ-ization claims that al-Nashiri

was subjected to torture – suchas mock executions with apower drill as he stood nakedand hooded – at a military intel-ligence base in Stare Kiejkuty, innortheastern Poland. The grouphas called for swift action fromthe ECHR and from Poland, asan effective investigation couldinfluence the US military’s pro-ceedings against al-Nashiri.

The Convening Authorityfor the US Office of MilitaryCommissions will consider writ-

ten submissions against thedeath penalty until June 30,2011. After that point, a deci-sion will be made on whether ornot to approve capital chargesagainst al-Nashiri.

Mr Pietrzak explained thata ruling from the ECHR thatPoland had failed to investigateallegations of torture on its soilwould have a great influenceon current proceedings againstal-Nashiri in the US.

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Terrorism

Lawsuit filed against Poland over bomb suspect

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Abd al-Rahim al-Nashiri was transferred to Guantanamo Bay in 2006

Minister Pawlak hassigned a resolutionwhich should allow theminer to debut onschedule

Coal miner Jastrz´bska Spó∏kaW´glowa’s (JSW) initial publicoffering, scheduled for June30, looks to be back on track.Striking employees had raisedconcerns about the timetable,but Economy Minister Walde-mar Pawlak last week gave theprivatization his full support.

The minister had previous-ly stated he wouldn’t back thebourse debut plan before a fullagreement had been reachedwith unions at JSW. Neverthe-less, he signed a resolutionallowing it to go public lastThursday.

Mr Pawlak’s signaturemeans the company’s issueprospectus can now be submit-ted to the Financial Supervi-sion Authority for approval.

The decision came as a sur-

prise, given that the long-run-ning dispute between manage-ment and trade unionsremains largely unresolved.Union members, fearing theimpact of the IPO on job secu-rity, have held a series of dis-ruptive strikes in recent weeksaimed at extracting a numberof key demands.

“Starting the process ofgoing public was made possi-ble by a collective agreement,which [management andunions] managed to obtain onMay 5,” Mr Pawlak explainedat a news conference.

Over the course of negotia-tions held that day, unions andmanagement hammered out apartial deal giving workers jobsecurity for the next decade.

Among the unions’ still-unmet demands are a pay hikeof 10 percent and an agree-ment on how shares will bedistributed among workers.Another key demand, namelya promise from the Treasurythat it will retain a majority

stake in the miner followingthe debut, was still being nego-tiated as WBJ went to press.

The Treasury will, Parkietreports, sell some 34 percentof its holding to investors,retaining over 50 percent of itsstake in JSW. However, it stillhasn’t given a written agree-ment to this effect.

“This is the stock market,so everything is very transpar-

ent,” Prime Minister Tusk saidin response to reporters’ ques-tions regarding Mr Pawlak’sdecision.

“It is also for the people,”he said, adding that “JSWemployees will also benefitfrom this privatization.”

Analysts say JSW, Europe’slargest coking coal miner, isworth as much a $3.6 billion.

GGaarreetthh PPrriiccee

Coal

JSW IPO back on track

MAY 16-22, 2011 IINNDDUUSSTTRRYY NNEEWWSS www.wbj.pl 5

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A partial agreement has been reached with unions

Municipal heating

PGNiG and PGE join forces for SPEC bidThe firms havereportedly filed a jointinitial offer

PGE, Poland’s largest utility,has reportedly joined forceswith gas monopolist PGNiG ina bid to purchase a controllingstake in Warsaw’s heat distrib-utor, SPEC. Warsaw City Hallhas set a June 2 deadline forbinding offers for an 85 per-cent stake in SPEC, whichruns the largest municipalheating system in the EU.

Both PGE and PGNiG arecontrolled by the state Trea-

sury and have received theofficial go-ahead to make abid from Treasury MinisterAleksander Grad, Parkietreported, citing unnamedsources. The two have alreadysubmitted a joint initial offerand are currently conductingan analysis of the firm, thedaily wrote. If successful, thetwo behemoths would dividethe SPEC stake in half.

Both companies’ pressoffices declined to commenton the news.

Although the amount offi-cially expected from the privati-

zation is seen at z∏.750 million,some analysts say the transac-tion could fetch Warsaw z∏.1.5billion.

Market observers say thatPGNiG and PGE have a verygood chance of winning, aslong as they present an attrac-tive offer. Their chances wouldbe further improved if theyalso bid for assets being soldby Swedish utility Vattenfall.

This is because the SPECdeal is reportedly tied to thesale of Vattenfall’s Warsawassets, which are valued atabout €1.5 billion. Analysts say

that whoever purchases thesewould be favored to buy SPEC.PGE has already expressedinterest in the Swedish firm’sPolish holdings.

Other companies report-edly targeting SPEC includeinvestment funds Penta andEQT, French utility Dalkiaand Finnish energy companyFortum.

SPEC covers 80 percent ofWarsaw’s heating require-ments. It made a net profit ofz∏.36 million in 2009 on salesof close to z∏.1.3 billion.

GGaarreetthh PPrriiccee

Wind energy

Utilities to spend z∏.3

billion on wind power The money willprovide for a record500 megawatts ofextra wind-powercapacity this year

Construction of wind farmswith a combined capacity of 500megawatts (MW) will launch inPoland this year, according toforecasts from a local lobbygroup, the Polish Wind EnergyAssociation (PWEA).

According to PWEA data,it costs approximately €1.5million to install capacity ofone MW of onshore windpower, meaning 500 MW willcost €750 million, or just shy ofz∏.3 billion.

Capacity installed this yearwill amount to “about 50 per-cent” of all functional capacityinstalled in Poland at the endof 2010, said MagdalenaKlera, an environmental spe-cialist at PWEA. “We expectdynamic growth, based on theinvestment plans of individualcompanies,” she added.

Energy companies, theorganization says, are keen tolaunch renewable investmentsin order to meet EuropeanCommission greenhouse gas

emission regulations. Poland,which generates around 90percent of its energy fromcoal, has found the EC’s strin-gent environment criteriatough to meet.

“Poland’s energy sector ishighly dependent on coal andthe development of the renew-able energy sector, especiallywind and biomass, could be areasonable, cost effective andsustainable alternative to other[carbon] reduction options likecarbon capture and storage ornuclear power,” said Ms Klera.

The Polish governmentitself is pushing for 6.1gigawatts of installed windcapacity by 2020, an initiativesupported by a system of‘green certificates.’

Among companies res-ponding to the pressure ofgreen energy demands is utilityRWE, which plans to invest€500 million in developingwind energy in Poland. It is dueto open its third wind farm inTychowo this week. New windcapacity at that site and in Piec-ki will “more than double thecapacity of RWE’s wind farmsin Poland,” Filip Thon, presi-dent of RWE Poland, said in astatement. GGPP

0

500

1,000

1,500

2,000

2011*201020092008200720062005

*Estimate

Fans of green energy

Cumulative installed capacity (in MW) for wind-generated

power in Poland, 2005-2010

Source: Polish Wind Energy Association

The third edition of the European EconomicCongress was due to kick off on Monday.The three-day event brings luminaries fromthe realms of European politics, finance andbusiness together to debate the most signifi-cant social and economic issues of the day.

The main focus of this year’s Congress isthe competitiveness of the European econo-my in the face of the strength of Asia and theAmericas. Other major issues include newpolicy direction in post-crisis Europe, EUfunds for the 2014-2020 budget period, ener-gy and emissions strategies, and innovation.

Matters concerning Central Europe willalso be given a platform. The timing of theEuropean Economic Congress is rathersymbolic, as it falls at the end of Hun-gary’s presidency of the EU Council,shortly before Poland takes over.

Notable politicians scheduled to attendinclude European Parliament President JerzyBuzek, former President of Poland LechWa∏´sa, and the prime ministers of Poland,Hungary, Croatia, the Czech Republic and Slo-vakia. The list of businesspeople, meanwhile,is long and distinguished.

Below is an abridged schedule of some ofthe most interesting sessions taking placeover the three days of the European Econom-ic Congress 2011:

Monday, May 16Academy of Music Concert Hall

Opening ceremony and inauguration10 am-12 pm

“The competitive economy of Europe” and “The new order of the European Union”

12:30-2:30 pm “Central and Eastern Europe – a community of interests, challenges and problems”

3:00-4:30 pm

“EU energy policy” 5-7 pm

Qubus Hotel“Clusters – one solution for an economy’s innovative growth”

2-6:30 pm “China vs. Poland: opportunities vs. threats”

4:30-6:30 pm

Tuesday, May 17Monopol Hotel

“Public finances”9-11 am

Qubus Hotel“Knowledge and Innovation Community –a merger between science and business”

11:30 am-1:30 pm

Wednesday, May 18Monopol Hotel

“Privatisation” 9:00-11:00 am

“Capital market / Financial markets”11:30 am-1:30 pm

Qubus Hotel“Innovative economy of Europe”

9:00-11:00 am

Silesian Voivodship Office“Public-private partnership”

9:00-11:00 am

Novotel Katowice“Health care systems in Central and EasternEurope – challenges and priorities”

9:00-11:00 am

MAY 16-22, 2011BBUUSSIINNEESSSS EENNVVIIRROONNMMEENNTT6 www.wbj.pl

Contact: Miros∏aw Stefanik

ms@pnplaw.pl

Legal News

BROUGHT TO YOU BY PETER NIELSEN & PARTNERS LAW OFFICE

No sickness benefit duringchild-care leaveAccording to ZUS [Poland’s SocialInsurance Institution], a person cannot col-lect sickness benefit during child-careleave. This means that a person who fallsill during child-care leave receives no addi-tional benefits.

However, if the sickness, and conse-quently the inability to work, persists afterthe child-care leave has ended, then bene-fit or remuneration for the period of sick-ness is due.

Reduced fines for entrepre-neurs generating wasteA 2010 amendment to the Act on Wasteintroduced exorbitant fines for minorinfringements committed by entrepre-neurs. The most severe was a fine for thedelayed submission of the list detailingthe waste generated. Even the shortest ofdelays carried a possible penalty ofz∏.10,000.

Here the story gets interesting, as eventhe Ministry of Environment has failed tosubmit its detailed list on time, and it wasthe authority where the draft act originat-ed after all.

The Sejm has hastily started work on anew act which decreases the penalty to

z∏.500 and introduces other minorchanges to the penalty system. The draft,adopted by the Sejm on April 28, is nowset to be examined by the Senate.

Nevertheless, it is a pity the legislatorhas not gone to the trouble of analyzingwhether it is worth imposing the require-ment of such detailed reporting on com-panies, and on small firms in particular.

New law on international relationsOn May 16, the Private International LawAct came into force. The act plays a keyrole in deciding which law should be appli-cable in transborder cases where partieshave not chosen the applicable law.

The act is of less importance for civiland business relations between EU citi-zens and companies since in this respectEU law applies. However, the law is ofutmost importance for relations with enti-ties from outside the EU.

While numerous changes are intro-duced by the new act, some are particu-larly worth mentioning. These includethe possibility to choose the law ofinheritance in a last will and testament,or the ability to choose the law applica-ble for property relations of a husbandand wife. ●

Third European Economic Congress

looks in depth at competition

Media patronage

Inflation

Poland raises bench-mark interest rate The move caught themarket wrong-footed

Prompted by a continuing fearof inflation, Polish policy mak-ers surprised the market lastweek by hiking the headlineinterest rate by 0.25 percent-age points.

The country’s rate-settingMonetary Policy Council(RPP) increased the bench-mark rate to 4.25 percent,defying expectations it wouldleave things untouched.

The lombard, deposit andrediscount rates were alsohiked by a quarter of a per-centage point.

Prior to the rate hike, anagreement was reachedbetween the National Bank ofPoland and the governmentto combat inflation by period-ically selling euro to strength-en the z∏oty. This, alongsiderelatively dovish commentaryfrom central bankers, ledmost observers to concludethat the RPP wouldn’t contin-ue its monetary tighteningstrategy during this session.

It seems that the RPP, whichhad already raised the bench-mark rate twice this year, is stillconcerned about the prospectof inflation spiraling beyond

control. A number of key indi-cators suggest the economy iscontinuing to pick up steam,the body wrote in a documentexplaining its decision.

At the time the RPP madeits rate-hike decision, the con-sumer price index rate forApril was being forecast at 4.4percent y/y. In the end, theinflation figure was 4.5 per-cent, well above the centralbank’s target of 2.5 percent.

“In the opinion of theCouncil, in subsequent monthsCPI inflation will run at aheightened level, which islinked primarily with increasesin the prices of agriculturalcommodities and crude oil inthe global markets, which sofar have not been offset bychanges in the z∏oty exchange

rate,” the RPP wrote. The body also cited the

prospect of growing wage pres-sures and the threat to macro-economic stability posed by thestate of Poland’s publicfinances as two other key rea-sons behind its decision.

“In order to curb the risk ofinflation running above theinflation target in the mediumterm, the Council decided toincrease the NBP’s interestrates, continuing the cycle ofmonetary policy tightening,” itstated.

A number of analysts, how-ever, criticized the RPP’shawkish stance on monetarypolicy, saying the threat ofinflation in the medium termis overstated.

GGaarreetthh PPrriiccee

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2

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Mar 20

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10

Nov 20

10

Oct 2010

Sept 2

010

Aug 20

10

July 20

10

June 2

010

May 20

10

Apr 20

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Inflated expectations

Consumer price index (percentage change y/y),

Apr 2010 – Apr 2011

Source: National Bank of Poland

Value of online economygrowing at 14 percent annuallyPoland’s online economy wasworth z∏.35.7 billion in 2009, or2.7 percent of GDP, and it’sgrowing. Quickly.

That’s the conclusionreached by “Polska Interne-towa,” a new report from Bos-ton Consulting Group, createdat the behest of Google.

But just how quickly is theonline economy growing? At apace of 14 percent a year,according to the report. By2015 it will be worth approxi-mately z∏.92 billion, or 4.1 per-cent of GDP.

The online economyalready contributes more tooverall GDP than mining orthe hotels and restauranttrade. Not far ahead are ener-gy and financial services.

Online purchasing is on therise. According to the report,the value of online purchasesmade in 2009 amounted to z∏.1billion, with multimedia andbooks the most popular andfastest growing category, fol-lowed by electronics. There’sdefinitely room for moregrowth though.

“E-tailing in Poland stillhas a long road ahead before itreaches the level of develop-ment of an advanced onlineeconomy, such as the UnitedKingdom’s,” the report’sauthors point out.

“Yet Polish internet usersare already today very activelylooking for informationonline, including informationabout goods and services,”

they add, with a touch of opti-mism.

Perhaps the greatest chal-lenge to the online economy isstructural. Poland is the worstranked among 28 countries interms of internet infrastruc-ture, as well as in terms of thepercentage of entrepreneurswith internet connections of atleast 256 kb/s.

EE BBllaakkee BBeerrrryy

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DenmarkSwedenUK

7.26.6

5.8

3.6

2.72.2 1.9

Logged on and profiting

Value of online economy as percentage of 2009 GDP,

selected countries

Source: Boston Consulting Group, Google

MAY 16-22, 2011 www.wbj.pl 7

The hospital of many opportunities

Advertorial feature

The LUX MED Group Hospital opened inAugust 2010 and is located conveniently atPu∏awska 455, in the Warsaw UrsynówDistrict. The vicinity of transport hubsenables easy access to the facility from anyplace in the city.

Drawing on almost 20 years of experi-ence in providing private medical servic-es, the LUX MED Group has created atruly exceptional place, combining full-scope patient care, modern diagnosticequipment, comfortable conditions ofstay and the professionalism of top spe-cialists and auxiliary staff. Since the verystart of its operation, the Hospital hasbeen providing a dozen or so proceduresdaily on average, both under general andlocal anaesthesia, in a hospital and anoutpatient setting – there have been atotal of approx. 2,200 surgeries and7,500 consultations at the in-house clinicconducted so far. Since the first proce-dures performed in late-August 2010,the facility has been steadily increasingthe number of serviced patients andexpanding the scope of its services.

The operating suite comprises twoimpressively equipped operating roomsand a double recovery room, while themodern monitoring system, includingthe on-site analytical laboratory, enablesprecise control of the patient health con-dition. After the procedures, the patientsare ensured excellent care and recoveryin comfortable conditions at the stayward consisting of six spacious andfunctional rooms. The LUX MED GroupHospital offers surgical procedures ingeneral, urological, vascular, oncologi-cal, plastic and paediatric surgery, aswell as in orthopaedics, gynaecologyand laryngology.

The Hospital operations have beenorganised based on specialist therapeu-tic and diagnostic centres which facili-tate the whole hospitalisation process –from the qualification for the procedureto the recovery at the stay ward. Thehospital centres are not equivalent towards or departments, and they do notconstitute separate entities within thefacility, as all focus is on the patients and

their health problems. Currently, the fol-lowing units are operating within thehospital:

• Hernia Treatment Centre,• Vein Disease Treatment Centre,• Proctology Centre,• Plastic Surgery Centre,• Orthopaedic Surgery Centre,• and in future, there will be opened

further specialist centres.

In emergency cases: injury, sprain, dis-location or skin cut, care will be providedby specialists from the Emergency Depart-ment. The diagnostic part of the hospital isequipped with modern ultrasound, X-rayand computed tomography units of topclass, enabling the performance biopsyand ablation procedures, as well as lung,abdominal cavity, orthopaedic, vascularand urologic examinations.

The facility also operates the Gas-trointestinal Endoscopy Centre, fittedwith comfortable preparation rooms anda cosy space for patient recovery afterthe undergone endoscopy procedure.

Hospital’s medical personnel compris-es specialists with many-year experience

in their fields: surgeons, orthopaedists,gynaecologists, laryngologists, endocri-nologists – most of them associated withthe LUX MED Group for years. Thepatients are taken care of by experiencedanaesthesiologists and nurses. In addi-tion, the LUX MED Group hospital collab-orates with outstanding specialists fromWarsaw medical centres and hospitals.The substantive support is provided bythe LUX MED Group Scientific Board.

With the modern equipment of oper-ating rooms and the professional careoffered, we provide maximum medicalsafety of the performed procedures,subject to the same monitoring andmedical supervision procedures as allthe healthcare activities undertaken atthe LUX MED Group facilities.

www.luxmed.pl

BROUGHT TO YOU BY LUX MED GROUP

Nord Stream

Stormy watersahead

MAY 16-22, 20118 www.wbj.pl CCOOVVEERR SSTTOORRYY

Nuclear

project gets

z∏.20 million

Poland’s draft budget for

2012 has allocated z∏.20

million for the country’s

nuclear energy program,

Dziennik – Gazeta Prawna

reports. That’s slightly up

on the amount allocated

in 2011. The government

intends to approve plans

for the program by the

end of June this year, at

which point it will publish

a detailed schedule along

with a list of costs. A

number of multinationals

are bidding to supply the

nuclear technology.

Nuclear stress

tests delayed

As Poland continues

preparations for its own

nuclear program, other

EU members are having

trouble agreeing on safety

criteria for their existing

plants. An EU-wide stress

test for Europe’s 143

nuclear plants might be

delayed because some EU

members, including

Germany, Italy and

Sweden, want to include

terrorist attacks and

other man-made

disasters in the stress

tests. Others, including

France and UK, argue this

is unnecessary.

Lotos posts Q1

profit rise

Poland’s second-largest

oil refiner, Lotos, posted a

z∏.635.2 million net profit

for the first quarter of

2011. The result was

significantly higher than

the z∏.512.1 million

averaged from a poll of

analysts by Bloomberg.

Operating profit,

meanwhile, stood at

z∏.412.6 million, over

200% higher than the

same period of last year.

The most significant

factor behind the increase

was a continued rise in

crude oil prices, which

were up 38% y/y.

KOV in London

debut?

Kulczyk Oil Ventures

(KOV), a company

belonging to Polish

entrepreneur Jan

Kulczyk, is looking to

debut on the London

Stock Exchange,

Rzeczpospolita reports.

The firm is looking for

some z∏.400 million from

the share issue, which it

will use to fund ongoing

exploratory projects in

Syria and Brunei,

according to the daily. ●

Brendan Melck

Construction of thecontroversial NordStream pipelinecontinues, but Polandisn’t giving up on itsobjections

Nord Stream, the underseapipeline project linking Russiaand Germany via the BalticSea, is nearing the half-waymark. The first of its two paral-lel pipelines was laid in earlyMay, with joining work sched-uled for this summer. Gas is setto start flowing in Q4.

The news hasn’t elicitedcheers in Poland, where NordStream has been a source ofconcern since it was first moot-ed in the 1990s. The pipelinelooks to cut Poland out ofthe gas-transmission systembetween Russia and Ger-many, leaving Warsaw with nobargaining chips if Russia wereto turn off its gas supply. Forthis reason the pipeline hasbeen likened to the Molotov-Ribbentrop Pact – which secret-ly split Poland between NaziGermany and the Soviet Unionin 1939 – by several notables,most famously former DefenseMinister and current ForeignMinister Rados∏aw Sikorski.

Despite progress on thepipeline, Poland is still cryingfoul. Authorities in the countryhave submitted an appealagainst construction plans forNord Stream, claiming that itcould impede access to the Portof ÂwinoujÊcie, located near tothe Polish-German border. Thisis the basis of a challenge whichthe Szczecin and ÂwinoujÊcieSeaports Authority (ZMPSiÂ)has sent to an administrativecourt in Hamburg, followingthe rejection of a 2010 lawsuitagainst the German FederalMaritime and HydrographicAgency’s decision to allow theconstruction of Nord Stream.

This appeal, the latest stepin an ongoing legal challenge,has returned the pipeline proj-ect to the center of public andpolitical debate in Poland at atime when the country ispreparing to take over the pres-idency of the EU Council.

Establishing the status ofNord Stream in relation to theEU’s third energy package –which seeks to rein in statemonopolies through the sepa-ration of ownership of gas infra-structure from gas production

or trade – has been identified asa key priority for Poland’s pres-idency. At the same time, Russ-ian authorities are attemptingto ensure this package will notapply to its infrastructure assetsin the EU, including NordStream.

Trouble with the neighbors Polish opposition to NordStream centers on the factthat, because it is not buriedin the seabed, it could pre-vent the entry of large shipsto ÂwinoujÊcie Port, thusinterfering with trade.

Opposition to the pipelinemay not have prevented its real-ization, but the Polish govern-ment is hoping to salvage atleast a small concession fromthe consortium behind the proj-ect, and indeed from the Ger-man authorities, in the form ofa binding commitment toensure that access to the port isnot impeded.

ZMPSi had previouslyrequested that the section inquestion be buried under thesea floor in order to eradicatethe problem once and for all.After this proposal was reject-ed, the German authorities pro-posed a new shipping route for

boats coming into the portwhich would extend their jour-ney time by 30 minutes, butwould mean no issues with draftclearance.

This longer journey time isnot a problem, the CEO ofZMPSi has said, but thebureaucratic business of creat-ing a new official shipping routeis troubling.

“It’s going to be necessary toestablish the new shippingroute officially – this route isthrough German territorialwaters – and I don’t yet knowwho will take the initiative inestablishing the route and put-ting it in the international ship-

ping documents. This willtake a long time, and willalso be expensive,” MrSiergiej explained.

From the point of viewof ÂwinoujÊcie’s develop-ment as a port, Mr Siergiejsuggests that resolving thedifficulty posed by NordStream is essential. As

widely reported, the pipelinewill effectively make the currentshipping lane impassable toships whose drafts (the verticaldistance between the waterlineand the vessel’s keel) of morethan 13.5 meters.

“The Baltic is limited toships with a draft of approxi-mately 15 meters and fromwhat we observe, other Baltic

ports are getting ready toaccommodate such ships.Therefore with a view to thedevelopment of our port inÂwinoujÊcie, we must make itpossible for ships with suchdrafts to sail to it,” he under-lined.

The German port of Ros-tock is making such prepara-tions, meaning that a rivalBaltic port in Germany couldpotentially benefit from thestunting of ÂwinoujÊcie’s devel-opment plans. This is not onlyan economic issue, but also apolitical one for Poland. Thecountry’s politicians run the riskof looking weak in the face ofpressure from big powerfulneighbors unless they resolvethe problem quickly.

A history of controversyNord Stream began in 1997with a Russian-Finnish feasibil-ity study. The project got under-way in earnest in 2005, whenRussia’s OAO Gazprom estab-lished the North European GasPipeline together with BASFSE/Wintershall Holding GmbHand E.ON AG. In the interven-ing years, investors from theNetherlands (Gasunie) andFrance (GDP Suez) joined theconsortium.

Russian gas is alreadypumped to Germany throughthe Yamal pipeline, which runsoverland through Poland andBelarus, and Russia had previ-ously made a commitment toupgrade and significantlyincrease the capacity of thepipeline. However, Russianstate gas concern Gazpromlater threw its weight behindNord Stream, abandoning theYamal upgrade plan.

The cost of building anundersea pipeline, rather thanbending it over-land around theBaltic coast, is enormous. ButNord Stream will allow Russiato avoid certain transit coun-tries with which it has had diffi-culties in the past – namelyPoland, Belarus and Ukraine.At the same time, it will gain theability to shut off supplies totruculent neighbors withouthurting partners in WesternEurope.

The involvement of Russianand German politicians has alsobeen a source of concern. Ger-hard Schröder, for one, raisedeyebrows in 2005 when heaccepted the chairmanship ofNord Stream’s shareholders’

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Gerhard Schröder’s jump from German chancellor to chairman of Nord Stream’s

shareholders’ committee raised ethical questions

“The pipeline has beenlikened to the Molotov-

Ribbentrop Pact by severalPolish notables”

MAY 16-22, 2011 CCOOVVEERR SSTTOORRYY www.wbj.pl 9

Judith Gliniecki is a Partner with WierzbowskiEvershedsjudith.gliniecki@eversheds.pl

Under the sea

Legal Eye

The 1980s witnessed twoimportant events in sea lore.More widely celebrated wasDisney’s release of “The Lit-tle Mermaid” in 1989. Lessknown, but of greater geo-political significance, wasthe United Nations’ adop-tion of the Convention onthe Law of the Sea in 1982.

When it comes topipelines in the Baltic andaccess to Poland’s ports, wemust look to the Conven-tion. It doesn’t have anycatchy songs, but it doeshave a history filled withenough nautical archaismsto make a salty dog’s day.

Freedom of the seasThe Nord Stream pipelinefeud may leave you with theimpression that anythinggoes in the Baltic. Well,actually, your impression isnot far from the mark. Free-dom of the seas was prettymuch the state of the law upuntil mid-20th century.

While the general princi-ple was each country foritself on the high seas, cer-tain accepted customaryrules developed over thecenturies. With the rise ofnaval power, for example,came the “cannon-shotrule” from the 18th century.In other words, coastalcountries claimed rightsover that strip of the seathat was within a cannonshot to their coast. Appar-ently, this was one league(about three nautical miles).

On the basis of the rule,they could regulate the pas-sage of foreign shipsthrough this strip of land.Since then, numerous othercontentious issues have aris-en, including fishing rightsand the mining of mineralson the ocean floor.

The Law of the SeaThese earlier rules werebased on tradition. TheUnited Nations Conventionon the Law of Sea (1982),meanwhile, attempted tocreate rules for contempo-rary issues, such as pollu-tion, oil drilling, and (of par-ticular importance) the lay-ing of submarine pipelines.Both Poland and Germanyhave ratified this Conven-tion.

Pipeline rulesWhen it comes to pipelines,the Convention primarilyaffirms the rights of coun-

tries to put them on the seafloor. Specifically, everyoneis allowed to put pipelineson the floor of the high sea,subject to certain considera-tions, such as not endanger-ing existing pipelines orcables.

In the shallower areas ofcontinental shelves (wherecoastal states claim territo-ry), other countries mayalso lay down pipelines.There are a few moreexceptions to this rule. Mostimportantly, a coastal statemay set conditions for thepipelines on its continentalshelf, but it may not impedethe placement of another’spipeline except for concernsabout pollution or obstaclesto its own exploitation ofthe natural resources in thearea.

Based on my admittedlysketchy understanding ofmarine geography, itappears that the NordStream pipeline is lying onGermany’s continentalshelf, and not Poland’s.Thus, Poland cannot direct-ly place conditions on thepipeline placement; it canonly ask that Germany takeinto consideration its reser-vations. For this reason, itappears that Poland isappealing to another basictenet of the Convention.

Neighborly passage All coastal states, such asPoland and Germany, mustallow foreign ships to passthrough their territorialwaters for innocent purpos-es, such as commercial ship-ping traffic. This passage,however, may be restrictedto specified sea lanes. Fur-thermore, coastal countriesare supposed to be goodneighbors. One coastalcountry may not exercise itsrights in a manner thatinfringes or “unjustifiablyinterferes” with anothercountry’s rights.

Poland is arguing thatthe Nord Stream pipelinewill prevent larger shipsfrom reaching the ÂwinoujÊ-cie port through the currentsea lanes. Unfortunately forPoland, it appears that theGerman authorities are tak-ing the view that no unjusti-fied interference hasoccurred because regularships will be able to get tothe port and Germany couldcreate a new sea lane for thelarger ones. ●

committee less than a monthafter stepping down as chancel-lor of Germany. While in officehe had been instrumental innegotiations concerning thepipeline project.

Vladimir Putin, formerpresident and current primeminister of Russia, has alsobeen a tireless campaigner forNord Stream. And when theZMPSi filed its lawsuit lastyear, Mr. Putin told Russiandaily Kommersant of his “sur-prise” at the objection, eventhough Polish authorities’ con-cerns about the port beingblocked have been on recordsince at least 2007.

Growing concernsIt has been widely reportedthat Nord Stream will obstructthe passage of liquid naturalgas (LNG) tankers to an LNGterminal which is currentlyunder construction in Âwinou-jÊcie. The terminal, which ismanaged by Polskie LNG, is aflagship project in Poland’sstrategy to diversify its gas sup-ply sources and achieve greaterenergy security.

But concerns regardingLNG transport are somewhatoverblown, at least in the shortterm.

“Both the LNG terminal (inÂwinoujÊcie) and the port facili-ty connected with it aredesigned to accommodate oneof the largest LNG tankers everbuilt, Q-Flex tankers, with amaximum draft of 12.5 meters,”explained Zbigniew Rapciak,president of the managementboard of Polskie LNG.

“These vessels will be able todeliver LNG to ÂwinoujÊciefrom almost anywhere in theworld, regardless of the Nord

Stream pipeline,” he said. Looking to the future, how-

ever, it’s harder to say what thedrafts of future tankers will be.The same is true of overall mar-itime transport, as cargo shipscontinue to grow in size.

And the stakes are high inEuropean shipping. The sectorholds much promise and hasmoved up the strategic prioritylist for both Polish and Euro-pean Union authorities. Havingwitnessed a considerable dip in2009, shipping bounced backimpressively in 2010. The sectorsaw a 30 percent increase in thetranshipment of goods, year-on-year, and all Polish ports,including ÂwinoujÊcie, recordedimprovements in their operat-ing results.

Maritime transport is anessential part of the EU’s strat-egy for a more sustainabletransport mix, and considerableamounts of EU funds are beingspent to boost the infrastruc-ture of Poland’s ports. It is clearthat the development ofÂwinoujÊcie Port is not a subjectof indifference for the EU, butMr Siergiej said that attemptsto communicate with the Euro-pean Commission on this sub-ject have failed.

“Last year, we sent a letterto the European Commissionhighlighting the fact that NordStream may break two of the

four basic EU treaty freedoms –freedom of the movement ofgoods and freedom of themovement of services,” MrSiergiej said.

He added, “We still have notreceived any response from theCommission to our letter,which has been sent to variouscommittees, none of which hasresponded and this is despitethe fact that we sent anotherletter, urging the Commissionto look at our case.”

EU Council presidencyPoland’s six-month presidencyof the EU Council, starting inJuly, will give the Polish gov-ernment an opportunity tohighlight its opposition NordStream’s possible exemptionfrom the EU’s third energypackage. The package re-quires operators to observe ahigh degree of transparency interms of information regard-ing their activities.

Russia is keen to secure anexemption for the pipeline,allowing Gazprom to maintaincontrol over both the transmis-sion infrastructure (NordStream) and the productionand trade of gas which goesthrough the pipeline. However,a recent article in daily GazetaPrawna suggested that JoséManuel Barroso, the presidentof the European Commission,

is in favor of subjecting NordStream to the third energypackage’s directives.

Considering the history ofattempts to prevent or limitthe pipeline’s progress up tonow, Nord Stream’s oppo-nents have few reasons foroptimism. Marcin Libicki, amember of the European Par-liament from 2004-2009,authored a 2008 report on theproject which highlighted theenvironmental and politicaldangers involved. The reportwas adopted by the EuropeanParliament almost unanimous-ly; nevertheless, its warningsand cautions went unheeded.

“The investment [in theNord Stream pipeline] wentahead, and so far, the busi-ness-political machinerybehind it is managing to copewith the political will of thedemocratically chosen repre-sentatives of EU citizens,” MrLibicki told WBJ.

The futureLooking to the second half of2011, a major task facing thePolish government is to re-emphasize the importance ofenergy solidarity in the EU, aconcept which Polish politi-cians from all ideologicalwalks of life have called intoquestion concerning the NordStream pipeline. So far, saidMr Libicki, this solidarity hasbeen visibly lacking.

“The failure to act [inresponse to the report onNord Stream] on the part ofthe executive bodies of the EUshowed the weakness of Euro-pean solidarity in the field ofenergy,” he commented.

“The triumph of particularinterests in a particular groupof countries over community-oriented thinking on energysecurity is a serious impedi-ment to the continuingprocess of political and eco-nomic integration, particular-ly when it comes to commonsecurity,” Mr Libicki con-cluded. ●

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“The triumph ofparticular interests... over community-oriented thinking onenergy security is aserious impedimentto the continuingprocess of politicaland economicintegration”

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Source: Central Statistical Office

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P rime Minister Donald Tuskand his ruling Civic Platform(PO) party landed a heavy

blow on the Democratic LeftAlliance (SLD) last week with theannouncement that BartoszAr∏ukowicz, one of SLD’s brighteststars, was taking a job in the govern-ment.

Mr Ar∏ukowicz will now be thePM’s plenipotentiary for contact

with the “marginalized,” a positioncreated specially for him. Thismeans he is leaving SLD and willmost likely run as a PO candidate inthe parliamentary elections thisOctober.

It is a huge loss for SLD as MrAr∏ukowicz has something whichvery few of the leftist party’s politi-cians possess – charisma. He comesacross well on camera, is reasonablyattractive, intelligent, eloquent andarticulate. Mr Ar∏ukowicz firstgained nationwide recognitionthanks to his participation in theparliamentary committee set up toinvestigate corruption allegations inthe 2009 “Gambling Affair.”

The phantom allianceMr Tusk’s move is logical and in linewith his party’s recent strategy ofweakening SLD as much as possiblebefore this fall’s parliamentary elec-tions. One method has been torepeatedly suggest that SLD is plan-ning a coalition with the conservativeLaw and Justice (PiS) party after theelections, despite both parties’ consis-tent disavowal of the idea.

Surveys show that some PO voters(who are generally disinclined to votePiS) have drifted towards SLD in thelast few months. By suggesting thatSLD is “in cahoots” with PiS, POhopes to convince wayward voters tothe fold. And the party isn’t being par-ticularly coy about its new strategy.

“We are showing that in SLD thereis no place for people who want tofocus on social issues because [SLDleader] Grzegorz Napieralski is think-ing only of grabbing power togetherwith [PiS leader] Jaros∏aw Kaczyƒski,”Rafa∏ Grupiƒski, deputy leader ofPO’s parliamentary club, said recently.

In his first statement following hisdefection, Mr Ar∏ukowicz also toedthe party line. “For the past fewweeks, it has been demanded of meto vote arm-in-arm with Jaros∏awKaczyƒski. I can no longer lend cred-ibility to a project whose conse-quences I might not be able toexplain,” he stated.

A caring governmentAnother reason behind Mr Ar∏ukow-icz’s appointment as the PM’s

plenipotentiary for contact with themarginalized is to show PO’s sensitiveside before the elections. Inflation hasproven a major bugbear in recentmonths and voters have complainedbitterly about rocketing prices.

This gives opposition parties plen-ty of ammunition with which toattack PO. Preparing for theinevitable criticism from its rivals, POis desperate to show that it caresabout the “little guy.” Mr Ar∏ukow-icz’s leftist credentials will serve POwell, despite the party’s clearly liberaleconomic bent.

Potential for humiliationThe left is currently in poor shape,having been in the political wilder-ness for over six years. Thus it is notdifficult for PO to co-opt some of itsleading politicians and authority fig-ures, such as Tomasz Na∏´cz, an advi-sor to President Bronis∏awKomorowski, and Marek Belka, whonow heads the National Bank ofPoland. There are now suggestionsthat Ryszard Kalisz, another popularSLD politician, could be seduced byPO in the near future.

SLD is on the defensive and itsleader, Grzegorz Napieralski, isscrambling to convince potentialdefectors that they are better off stay-ing with him. This is naturally anunwelcome distraction at a timewhen the party should be focusing onbuilding its poll numbers.

Adding insult to injury, PM Tuskhas let it be known that Mr Ar∏ukow-

icz will probably top Civic Platform’scandidate list in Szczecin thisautumn. Szczecin is where MrNapieralski hails from and the seat ofhis power.

Given that PO candidates tookaround 49 percent of the vote in thenorthern city during the 2007 elec-tions, compared to SLD’s 17 percent,running Mr Ar∏ukowicz on the CivicPlatform ticket is almost guaranteedto humiliate Mr Napieralski. SLD’sleader could decide to run in Warsaw,but this would be seen as an act ofsurrender. Mr Napieralski is in anextremely difficult position.

Time to rally the troopsAt the same time, current opinion

polls show that even if PO wins theautumn vote, they will be unable toform a government without the helpof, that’s right, SLD. Mr Tusk natu-rally wants his coalition partner to beas pliant as possible, so he is doingeverything in his power to weaken theleftist party.

How much weaker SLDbecomes depends in large part onMr Napieralski. The 37-year-oldpolitician showed surprisingstrength during the 2010 presiden-tial campaign, but remains untestedas a leader during the broader bat-tleground of a parliamentary cam-paign. And, with the loss of MrAr∏ukowicz, he is in need of freshtroops. ●

At a meeting last Thursday, thedefense ministers of the VisegradFour (V4) – a loose regional group-ing of the Czech Republic, Hungary,Poland and Slovakia – decided to cre-ate a battle group. The decision is sig-nificant but not unexpected.

It’s significant because it showsthat the V4 states are willing toupgrade their loose alliance to thesecurity and military level. It’s expect-ed because Stratfor has long forecastthat they would be forced to takesecurity matters into their own handsby NATO’s lack of focus on the singu-lar issue that concerns them: Russianresurgence in the post-Soviet sphere.

Europe’s two major political andsecurity institutions are the EuropeanUnion and NATO, both born in theaftermath of World War II, whichdevastated Europe. They thenevolved in the shadow of a loomingconfrontation with the Soviet Union,which threatened to revisit such dev-astation. Approximating national

interests to form a common securitystrategy was not perfect during theCold War, but it was simple, especial-ly with Soviet armored divisionspoised for a strike at Western Europevia the North European Plain and theFulda Gap.

The Cold War and the memory ofWorld War II acted as bookendsholding European states on themetaphorical bookshelf. Once thetwo eroded in the 1990s, the booksdid not immediately come tumblingdown. Instead, the drive to expandNATO and the European Unionbecame an end to itself, giving bothorganizations a raison d’etre in the1990s. Inertia drove the entities.

The post-Cold War orderBut a number of factors since themid-2000s have shaken this unity,primarily the emergence of an inde-pendent-minded Germany and theresurgence of Russia as a regionalpower.

While Russia does not pose thesame threat it did during the ColdWar, Central Europeans continue tosee Moscow as a security threat andwould prefer for NATO to treat Rus-sia accordingly. Germany sees Russiaas a business opportunity and anexporter of cheap and clean energy.The two views collided most recentlyduring discussions for NATO’s NewStrategic Concept, producing a large-ly incomprehensible mission state-ment for the alliance.

There are other tremors. TheUnited States, the guarantor of Euro-pean security structures, has spentthe last 10 years obsessed with theMiddle East and has been unable toprevent the divergence of interests onthe European continent.

NATO has unsurprisingly becomeincapable of approximating nationalsecurity interests toward a commonmean, while the European Union hasfailed – spectacularly so in Libya – tocreate a coherent foreign policy.

Instead, European countries arediverging into regionally focusedgroupings.

Poland is keyThe two most prominent of theseare the Nordic states, which arecooperating closely with the Balticstates, and the V4. The blocs’ secu-rity concerns regarding Russianintentions are rooted in separategeographies. The Nordic and Balticstates’ focus is in the Baltic Searegion, while the V4 is concernedwith Moscow’s strength in the tradi-tional border states of Belarus,Ukraine and Moldova. The tworegional blocs remind us of primor-dial continental plates splitting offfrom Pangea. Europe’s tectonicplates, held together for 60 years bygeopolitical conditions, have begunto diverge.

Poland is key. It shares a BalticSea coast with Nordic neighbors tothe north, of which it perceives

Sweden as a strategic partner. Butits history is heavily rooted in thenorthern slopes of the Carpathians,a geographical feature it shareswith the other V4 members. It alsohappens to be the United States’most committed Central European

ally, as well as the region’s mostpopulous country and most dynam-ic economy.

Poland could therefore be pivotalin any divergence of the blocs fromthe European core and could hamperMoscow’s national security designs. ●

A tectonic shift in Central Europe isreprinted with permission of Stratfor

Defection: one of the left’s many woes

“Central Europeanscontinue to see Moscow

as a security threat”

“PO is desperate toshow that it caresabout the ‘little guy’”

A tectonic shift in Central Europe

^

PPOOLLAANNDD’’SS PPHHAARRMMAACCEEUUTTIICCAALL MMAARRKKEETTW a r s a w B u s i n e s s J o u r n a l ’s s p e c i a l s u p p l e m e n t o n t r e n d s i n t h e P o l i s h p h a r m a c e u t i c a l m a r k e t • MAY 16-22, 2011, 2011

Health-care reform

Shock therapy?

There’s a good reason whyhealth-care reform is so oftenreferred to as a “third-rail”issue – no matter how brave ornoble, the politicians whotouch it are usually in for ashock. With its new “health-care package,” the Civic Plat-form government could be thenext in line to learn this lesson.

Among the bills comprisingHealth Minister Ewa Kopacz’sproposed reforms, one in par-ticular is causing controversy –the Act for the Reimburse-ment of Medicines, FoodstuffsIntended for Particular Nutri-tional Purposes and MedicalDevices, often referred to sim-ply as the “ReimbursementAct” (Ustawa Refundacyjna).Among other things, the actproposes the introduction offixed official sales prices formedicines, which has led toprotests by members of thepharmaceutical industry.

In search of a cure The intention behind theReimbursement Act – whose

main provisions are expectedto come into force at the startof 2012 – is to shift some of theexpenditure growth away fromreimbursement costs andtowards other needy areas ofthe public health-care sector.

Many measures in the acthave been on the Tusk govern-ment’s health-care reformagenda for several years – forexample, fixed retail pricesand wholesale margins arebeing (and have been) trum-peted as the solution to the“mess” of the drug reimburse-ment system. However, olderproposals have been combinedwith a new set of plans, drawnup in response to the NFZ’sincreasing expenditure ondrug reimbursement.

First among the con-tentious measures is the intro-duction of a 17 percent ceilingon drug-reimbursementexpenditure as a total propor-tion of public health-careexpenditure, and a paybacksystem whereby drug produc-ers are required to cover

spending above this 17 percentthreshold.

Industry insiders and com-mentators agree that this willlead to a significant reductionin the level of reimbursementexpenditure. As a comparison,in 2009, reimbursementexpenditure reached 18.9 per-cent of health-care spending.

In addition, the plan tomake pharmaceuticals firmsresponsible for expensesabove the 17 percent thresholdhas been greeted with outrageby the industry, which haswarned of cuts to R&D spend-ing, as well as possible bank-ruptcies.

A salve from the SenateThe industry’s warningshave not gone entirelyunheeded. The PolishSenate has passed anamended version of theReimbursement Act, chang-ing this measure to makepharmaceuticals companiesresponsible for only 50 per-cent of the overspend.

“In this form, this meas-ure now becomes a real risk-sharing mechanism – and wehope the Sejm approves this

amendment,” said Pawe∏Sztwiertnia, the directorgeneral of the Employers’Union of Innovative Phar-maceutical Companies(Infarma).

The Senate has also with-

drawn a proposed three per-cent levy on the revenues ofpharmaceutical companiesfrom the sales of reimburseddrugs, another measurewhich had enraged theindustry.

Putting a (fixed) priceon medicineOn the other hand, theSenate left other con-tentious measuresuntouched. For example,

Continued on p. 12 ➡

11

WBJ examines the trends shaping Poland’s pharmaceuticalmarket and looks at how Polish companies fare both at

home and abroad

Fixed prices may adversely affect the elderly and poor

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Poland’s domestic pharma-ceutical industry is dominat-ed by producers of generics –unbranded versions of medi-cines developed by innova-tive pharmaceutical compa-nies, which are generallycheaper than their originatorequivalents.

Poland is a leader interms of the extent of gener-ics’ dominance in its domes-

tic market, compared withother Central Europeancountries. Generics accountfor around 60 percent ofPoland’s pharmaceuticalmarket, in value terms,according to IMS Healthdata from 2010, comparedwith 49 percent in the CzechRepublic, and 44 percent inSlovakia. This is thanks topharmaceutical regulators

favoring generics, seeingthem as a means of reducingreimbursement bills, in thecontext of a tight health-carebudget.

Competitive medicineThis environment has benefit-ed Polish pharmaceutical pro-ducers. The largest Poland-based producer, Polpharma,announced revenues of z∏.13billion in 2008 (the companyhas published no resultssince). The second-largestdomestic producer, Adamed,

has also flourished in recentyears, as evidenced by itsincreasing investment inresearch and development,and foreign expansion.

However, consumption oflocally produced medicine

Continued on p. 12 ➡

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Destined for foreign patients?

As competition grows on the generics market,Polish pharmaceuticals producers areredoubling their efforts to expand eastward

Polish pharmaceuticals producers

Treating the East

In thissupplementPharmaceuticals legislation . . . .11-12

Polish pharma . . . . . . . . . . . . . . . .11-12

Paying for modern treatments . . . .14

A controversial new bill governing thereimbursement of pharmaceuticals could provea bitter pill to swallow

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➡ Continued from p. 13(as a percentage of total con-sumption) is falling in Poland,according to experts, and thetrend can be seen in the reim-bursed drugs market. Pharma-ceutical market researchorganization IMS Health esti-mates that the proportion ofsuch medicines which wereproduced by Polish firms hasdeclined, in value terms, from30 percent in 2005, to 26 per-cent in 2010, while the propor-tion of imports has risen from70 percent to 74 percent.

Polish companies are fac-ing increased competitionfrom multinationals whichhave generics subsidiaries inboth the prescription andover-the-counter drug seg-ments. France’s Sanofi-Aven-tis – Poland’s number-onedrugs maker in terms of salesvalue – has its own genericsunit, Zentiva, while Swisspharma major Novartis has ageneric arm, Sandoz, whichhas made large inroads intothe Polish market. The compe-tition is set to get fiercer, too.

“The challenge for the nextfew years will be for Polish

companies to adapt to growingcompetition from cheapergenerics producers fromChina and India,” said Micha∏Pilkiewicz, country manager ofIMS Health Poland.

“New regulations cominginto effect will certainly favorcheaper suppliers,” he added.

New frontiersWhile this new trend pres-ents Polish drugs producerswith a challenge in theirhome market, it also meansthat they are focusing moreon Eastern markets, wheremany are already present.Another factor behind thistrend is the fact that the mar-kets of Russia and manycountries of the Common-wealth of Independent Statesare seeing dynamic growth,while in Poland growth issteady at best.

“Regarding the eastwardexpansion, in some cases wecan say that there are solidfoundations to establish Pol-ish corporate brands, andsome Polish medicinebrands,” Mr Pilkiewicz said.

“Polish companies have a

natural ability to developand expand their businessesin eastern markets,” headded.

Polpharma earns around20 percent of its revenuefrom exports, according to areport in daily Gazeta Praw-na, with over half of thiscoming from the Russianmarket. The company is alsorumored to be weighing abid for the Russian drugmaker Valenta Pharmaceuti-cals in order to furtherstrengthen its position onthis market.

State-owned Polfa War-szawa, which is currentlyundergoing privatization,has a strong, establishedpresence in Russia and cer-tain Central Asian coun-tries; it is also expected tolaunch its first product inChina this year. For its part,Warsaw Stock Exchange-list-ed Bioton has based its cur-rent international expansionon partnership agreementswith major multinationals –like GlaxoSmithKline inRussia and BayerHealthCare in China.

A wider perspectiveThis does not mean that Polishcompanies are dropping theirfocus on the domestic market,however.

“The increasing emphasisthat Polish pharmaceutical

companies are placing onexport is definitely not a signof the saturation of the Polishgenerics market,” MonikaStefaƒczyk, chief pharmaceu-tical market analyst at marketresearch group PMR said.

“It’s more a sign that Pol-ish companies have started tohave a wider perspective andto analyze other markets interms of growth potential,”she added.

BBrriiaann DDaavviieess

MAY 16-22, 2011PPOOLLAANNDD’’SS PPHHAARRMMAACCEEUUTTIICCAALL MMAARRKKEETT12 www.wbj.pl

Treating the East

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More foreign pharmacies may soon be stocking Polish-made medicines

➡ Continued from p. 11the Reimbursement Actwould require fixed, officialretail prices to be applied toreimbursed medicines follow-ing negotiations with phar-maceutical companies. Theproblem, according to theindustry, is that this process isto be completed within a rela-tively short time frame, leav-ing many to question its feasi-bility.

“It’s worth emphasizingthat the negotiations willinvolve more than 4,500reimbursed medicines, andthere’s a risk that the Min-istry of Health will have tocomplete the entire processin only a couple of months,”Mr Sztwiertnia warned.

“How the Ministry ofHealth intends to managethis process is unclear,because the regulations con-cerning negotiations withpharmaceutical companieswill come into effect [later]this year,” he said.

He added, “The NFZ’s

criticism of the implementa-tion of the ReimbursementAct is already known, andnow questions are arisingconcerning the Ministry ofHealth’s ability to implementthe new regulations, andwhether it has sufficient staffresources.”

Drugs makers wouldn’t bethe only ones affected by theprice negotiations – pharma-cies which sell reimbursedmedicines would also beobliged to sign contracts withthe NFZ, agreeing to sellmedicines at the official,fixed price. Violations wouldbe subject to fines. Incensedby the restrictions, pharma-cists’ groups have engaged inprotests.

Wholesalers would alsohave to accept fixed margins.However, amendments madeby the Senate would meanthat wholesalers’ marginswould be reduced gradually,starting at a fixed rate ofseven percent from the begin-ning of 2012, rather than

falling immediately to thefinal fixed rate of five per-cent.

Savings and costsBy doing this, the govern-ment aims to rationalizeexpenditure on reimbursedmedicines. Savings areexpected to be made in partthrough reducing waste –there are reports of peoplestockpiling medicines whenpharmacies offer large dis-counts – and by avoidingreimbursed drugs being soldto patients at prices below thereimbursement paid by theNFZ.

Competition betweenpharmacies is fierce, withinfamous “Leki za Grosz”(Drugs for a Penny) signshaving appeared outsidepharmacies across Poland inrecent years. Small, inde-pendent pharmacies, haveput pressure on policy mak-ers, who have in turn placedconsiderable emphasis on“cleaning up the mess” of

reimbursed drug sales.However, the new system

could mean that the elderlyand those on low incomeshave their access to treatmentrestricted, due to an inabilityto pay the new official prices.A study quoted by daily Gaze-ta Prawna suggested thatprices would rise by betweennine and 11 percent as aresult of the introduction offixed prices.

“For many patients –mainly those who have untilnow benefited from promo-tions in pharmacies – the costof reimbursed medicines willgo up,” commented AdamKozierkiewicz, an independ-ent health market expert.

“Whether they will bemore expensive on averagefor the whole population isunclear,” he added.

For its part, the Office ofCompetition and ConsumerProtection, Poland’s competi-tion watchdog, has said thatfixed prices and margins onreimbursed drugs violate free

market principles.

Possible side effects Taken together, the effect ofthe Reinbusement Act’smeasures on the market arehard to foresee.

“Even the most knowl-edgeable experts and marketobservers are not able tocompletely assess the likelyeffects of the ReimbursementAct, because of the largenumber of new elements itwill bring in at the same

time,” Mr Kozierkiewicz said. A poll taken in the first

half of April by pharmaceuti-cal market research companyIMS Health found that itsmain beneficiaries wereexpected to be the Ministry ofHealth and the NFZ. But ifprices rise beyond the reachof the poor and elderly, theseinstitutions – and the govern-ment itself – could find them-selves regretting they touchedthe third rail in the first place.

BBrriiaann DDaavviieess

Selected measures of the draft Pharmaceutical

Reimbursement Act, as of May 2011

•Introduction of fixed retail prices of reimbursed medicines, and fixed margins onwholesale of these medicines

•Price negotiations with pharmaceutical companies due to take place to establishfixed prices

•Introduction of a 17 percent fixed limit for expenditure on the reimbursement ofmedicines as a total of public health expenditure

•Introduction of a payback system, which, following an amendment by the Senate,envisages that 50 percent of expenditure on drug reimbursement exceeding the 17 percent limit will be met by pharmaceutical companies

•Extension of a system of reference-pricing for high-cost medicines used in hospi-tals, likely to compel producers to lower prices in order to ensure reimbursement

A tough market for medicine

Public expenditure on health care in Poland is relatively low, ataround 5.1 percent of GDP, compared with the OECD averageof 6.5 percent. As a result Poland has traditionally relied on itsdomestic generic pharmaceuticals medicines industry to sup-ply the majority of medicines, and has invested little in the reim-bursement of more modern, expensive and targeted treat-ments. In comparison, Poland’s southern neighbors, theCzech Republic, Slovakia, and Hungary, invest proportionatelymuch greater amounts in these types of treatments.

According to information from the Polish Association ofPharmaceutical Industry Employers (PZPPF), annual statepharmaceutical reimbursement per capita in Poland stands at

only $95, in comparison with $230 in the Czech Republic, $245in Hungary, and as much as $300 in Slovakia. Furthermore, thePZPPF reports that the proportion of overall medicine bills paidby Poles out of their own pockets, 62.5 percent, is considerablyhigher than the amount paid in Hungary (41.5 percent), in theCzech Republic (34 percent) and in Slovakia (30.8 percent).

Nevertheless, the last few years have seen a considerableincrease in Polish state expenditure on the reimbursement ofmedicines. Nowhere has this been more evident than in thecase of high-cost, innovative medicines used in hospitals, par-ticularly in the treatment of cancer.

The amount the National Health Fund (NFZ) dedicates to

the reimbursement of chemotherapy drugs – including mod-ern, innovative, targeted treatments – has risen dramatically inrecent years, culminating in a y/y increase in spending of 96.3percent in 2009, to z∏.1.36 billion.

That’s not the only area to see growth, either. In 2009 theNFZ’s expenditure on the reimbursement of outpatient medi-cines rose by 11.9 percent y/y to z∏.8.24 billion.

Good times for the pharmaceutical industry are expected tobe short-lived, however. Growth in the NFZ’s spending on thereimbursement of outpatient medicines – based on initial cal-culations – increased only slightly in 2010, edging up by 3.2percent y/y to z∏.8.5 billion. ●

Shock therapy?

MAY 16-22, 2011PPOOLLAANNDD’’SS PPHHAARRMMAACCEEUUTTIICCAALL MMAARRKKEETT14 www.wbj.pl

For multinational pharmaceu-tical companies, doing busi-ness in Poland can be chal-lenging due to the country’slow public expenditure onhealth care and limited fundsdedicated to drug reimburse-ment (see article, p. 11).

As a generics-dominatedmarket, with domestic compa-nies traditionally serving themajority of demand, foreigninnovators have come upagainst many barriers. Howev-er, as the sixth-largest pharma-ceutical market in Europe, it isone which no multinationalpharmaceutical company canafford to avoid.

Generic concernsThe challenges facing innova-tive pharmaceutical compa-nies in Poland are easily illus-trated with one example.

Around the time ofPoland’s EU accession, Polishauthorities allowed domesticcompanies to produce genericversions of blockbuster drugssuch as erectile dysfunctionpill Viagra and schizophreniadrug Zyprexa – developed byUS pharma giants Pfizer andEli Lilly respectively.

During this period, suchmedicines were still subject topatent protection and dataexclusivity regulations, butlegal cases against the genericsproducers were thrown out byPolish judges. In the case ofPoland’s generic Viagra, thiswas because it was registeredjust before accession, whendifferent rules applied; thecase against the genericZyprexa was thrown out on atechnicality.

The generics were then puton Poland’s drug reimburse-ment list, helping to save theNational Health Fund (NFZ)considerable sums of money.

Meanwhile, Polish authori-ties have a reputation forbeing very conservative whenit comes to putting new drugson the reimbursement list – inboth outpatient and inpatientsettings.

Catching up with EuropeSince 2007, however, invest-ment in the reimbursement ofnew, innovative drugs inPoland has been rising, partic-ularly in the case of cancerdrugs used in hospitals. Thisreflects a new attitude among

Polish health authorities tocancer as a disease area. As aresult, modern drugs pro-duced by multinational phar-maceutical companies such asSwitzerland’s Roche havebecome more readily availablein Poland’s oncology centers.

These modern medicinescan offer an enhanced level oftreatment to customers as theyoften have considerably fewerunpleasant and harmful sideeffects. In some cases they rep-resent the only available treat-ment option.

“Particularly in terms ofhospital and specialist treat-ment, there has been a realincrease in the number ofpatients covered by these pro-grams, and in access to mod-ern therapies,” Micha∏Pilkiewicz, country manager ofpharmaceutical marketresearch organisation IMSHealth Poland, said.

“You could say that in thissector at least, we’re slowlycatching up with Europe, and Ihope this trend is maintainedby the NFZ,” he added.

With the number of cancerpatients growing alongsideexpectations regarding thestandard of treatment, thispositive investment trendseems likely to continue.

Doctors’ bills?New legislation, meanwhile, isa cause for concern as well asoptimism.

First of all, there’s the“Reimbursement Act” (seearticle, p. 11) which is expect-ed to come into effect thisyear. A cap on reimbursementexpenditure and the inclusionof innovative hospital drugs toa price-referencing system arejust two of the measures whichcould hit the industry.

“Hospitals will be guidedby concerns on price whenthey come to buy new medi-cines, and not by their effec-tiveness,” said Pawe∏ Sztwiert-

nia, the director general of theEmployers’ Union of Innova-tive Pharmaceutical Compa-nies (Infarma). “As a conse-quence, patients will haverestricted access to innovativetherapies,” he predicted.

However, other measuresin the act could improveaccess.

“The act introduces assess-ment of the effectiveness ofmedicines, and also brings inclearer criteria for puttingnew medicines on the lists ofreimbursed medicines,” MrPilkiewicz explained. “Thismeans there is a chance ofintroducing a more effective

system of spending NFZfunds, and also might increaseaccess to innovative medi-cines,” he added.

Additionally, a change inPolish pharmaceutical lawapproved in March meansthat Poland’s data exclusivitylaws (which protect data onclinical trials, preventing thedevelopment of genericequivalents of innovativedrugs) have been brought intoline with those of the EU,which has more innovation-friendly data exclusivity regu-lations than Poland previouslyhad.

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Can modern, innovative drugs compete in thePolish market?

Innovative pharmaceuticals

The cost of modern medicine

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A guide to Polish business and industry Przewodnik po polskim biznesie i gospodarce

The 2011 edition of Bookof Lists is now available!

• Find key information about the dominant players in the market • Expand your portfolio of contacts• See who’s on top of your sector

To order:Please contact us at +48 22 639 85 68 or kwilinski@valkea.com

LLOOKKAALLEE IIMMMMOOBBIILLIIAAW a r s a w B u s i n e s s J o u r n a l ’s w e e k l y s u p p l e m e n t o n r e a l e s t a t e , c o n s t r u c t i o n a n d d e v e l o p m e n t • MAY 16-22, 2011, LI 16/19

RED Park

pre-sales

launched

RED Real Estate

Development has

launched pre-sales of

units in its RED Park

residential project in

Poznaƒ. The

development, which will

be located in the city’s

Diec neighborhood, will

comprise four 13-storey

buildings, underground

parking lots and retail

space. The first phase of

the project, construction

of which is expected to

launch in August, will

comprise 130

apartments. Prices start

at z∏.5,100 per sqm,

meaning all units qualify

for the government’s

“Family on its Own”

subsidized mortgage

program for first-time

homebuyers.

Adgar’s new

facade

Adgar Post´pu has begun

updating its Adgar

Business Center office

building at ul. Post´pu 15

in Warsaw’s Mokotów

district. The project

consists of a change in

the color of the building’s

exteriors and the

creation of a more

modern shape, which will

be achieved by

rearranging the structure

of the facade. The project

has been designed by

Katarzyna Uszok’s

architectural studio, with

work set to be completed

this summer. ●

Commercial space

BBrraammaa PPoorrttoowwaa ccoorrnneerrssttoonnee llaaiiddThe office-retaildevelopment will bedelivered in late 2012

A cornerstone-laying ceremo-ny was held last week at theconstruction site of the BramaPortowa office project inSzczecin. The investment,which is located at the inter-section of the city’s ul. StefanaWyszyƒskiego and Al. Nie-podleg∏oÊci, is being devel-oped by SwedeCenter, a com-pany from the Inter IKEAgroup.

“We are very glad that therealization of Brama Portowa– an investment being devel-oped in the very heart ofSzczecin – is proceedingsmoothly and we hope that wewill secure permanent tenantsfor the project in the nearfuture,” Roger Andersson,country manager SwedeCen-ter, said in a statement.

Brama Portowa will com-prise two buildings, one withover 4,500 sqm of space andthe other with more than 8,000sqm. Each will house officeand retail space. The struc-tures, which are to feature eco-logically friendly solutions thatwill allow the project to obtaina LEED certification, arebeing built by Hochtief Polska.Completion is scheduled forQ4 2012.

Active in the commercialproperty sector, SwedeCenterhas been present in the Polishmarket since the early 1990s.Completed projects in thecountry including N21 and Cra-covia Business Center in War-saw and Kraków, respectively.Apart from Brama Portowa,the developer is now involvedin projects such as the BusinessGarden office parks in Warsaw,Poznaƒ and Wroc∏aw.

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Mixed-use development

Old Town, new buildingWarsaw’s historicaldistrict is getting anew structure

The first investment indecades is set to be carried outin the vicinity of Warsaw’s his-toric Pl. Zamkowy, GazetaWyborcza has reported. Thedevelopment, which is expect-ed to comprise retail, officeand hotel space, will be locat-ed at the intersection of ul.Miodowa and ul. Senatorskaon a plot which until recentlyhosted a parking lot.

The land in question hasjust been handed over byCity Hall to MaciejMarcinkowski, a business-man who specializes in pur-chasing claims to national-ized properties from thelegal heirs of their formerowners. The plot on ul. Sena-torska previously belonged

to a Jewish family; resolvingownership matters concern-ing the property took MrMarcinkowski several years.

The design for the buildingis being provided by RKWRhode Kellermann Waw-rowsky, which secured a plan-ning decision for the plot onul. Senatorska back in August2009. The final design of thefive-storey building should beready by the end of the year;construction on the schemecould then launch in 2012.

The investment’s facadeswill be designed to comple-ment those of neighboring,historical buildings and War-saw’s historical architecturepreservation authorities havebeen consulted on the matter.A representative for theinvestor stressed that theRKW studio has previouslydesigned modern buildings

located in the historical areasof many European cities,

including Dresden, Dort-mund, Frankfurt and Munich

in Germany.AAddaamm ZZddrrooddoowwsskkii

Brama Portowa cornerstone . .15

The Old Town’s new building . .15

S+B Gruppe’s commercial

project . . . . . . . . . . . . . . . . . . . . . .16

Ursus controversy . . . . . . . . . . . .16

Konstruktorska

commercialization . . . . . . . . . . . .16

Property-related stocks . . . . . . .16

Okam interview . . . . . . . . . . . . . .17

Subway financing . . . . . . . . . . . .18

Senator cornerstone . . . . . . . . .18

In this issue

1617

Arie Koren, general director of

developer Okam, talks land

prices and new projects

Deputy Prime Minister

Waldemar Pawlak has

weighed in on the zoning

controversy in Ursus

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To subscribe: e-mail subscribe@wbj.pl or call +48 22 639 85 68, ext. 201 and sign up for free two-week no-obligation trial subscription

Warsaw Business Journal presents Real Estate weekly newsletter

• Know about the newest projects before they’re on the market• Keep up to date on the latest tenders and auctions• Learn the latest trends in Poland’s dynamic office, residential and retail sectors • Find out who’s who in Polish real estate

or

MAY 16-22, 2011LLOOKKAALLEE IIMMMMOOBBIILLIIAA –– RREEAALL EESSTTAATTEE16 www.wbj.pl

Dekada

commercia-

lization

Ingeborg Investments

has already leased over

70% of space in its new

shopping and

recreational center,

Dekada in Sieradz. The

list of its future tenants

has recently been

expanded to include

multimedia retailer

Empik and a Rossmann

beauty supply store. The

Dekada shopping and

recreational center is

being built on ul.

Saraƒska, in downtown

Sieradz. The opening of

the facility is planned for

Q4 2011. It will offer

some 10,000 sqm of

leasable space.

MLP tenants

extend leases

Developer MLP Group

has extended lease

agreements with two of

its tenants at Pruszków I

logistics park: logistics

operator ET Logistik and

importer of household

articles AGED. The

companies leased a total

of 7,793 sqm of

warehouse space in the

facility. It occupies a total

area of 43 ha. ●

Security Closing % change 52-week 52-week % change Total Marketprice (week) low high (year) shares value

on May 12 (z∏.mln)

BUDIMEX 103,00 -3.56 84.55 109.20 6.19 25,530,098 2†629,60

CELTIC 18,70 1.08 17.43 60.55 NA 34,068,252 637,08

DOMDEV 47,00 3.30 38.52 52.00 -22.89 24,560,222 1†154,33

ECHO 5,07 -1.74 4.10 5.40 18.74 420,000,000 2†129,40

ELBUDOWA 164,50 -2.08 150.00 188.40 -5.46 4,747,608 780,98

ENERGOPLD 3,98 0.76 3.57 4.31 -5.24 70,972,001 282,47

ERBUD 32,96 -11.40 32.96 61.00 -35.12 12,602,711 415,39

GANT 13,70 -0.72 12.98 23.60 -43.74 20,499,953 280,85

GTC 20,10 -2.90 19.58 24.98 -9.46 219,372,990 4†409,40

HBPOLSKA 2,08 -7.56 2.08 3.90 -41.41 210,558,445 437,96

JWCONSTR 15,30 -0.97 13.50 18.69 -5.44 54,073,280 827,32

LCCORP 1,52 -2.56 1.41 1.72 0.66 447,558,311 680,29

MARVIPOL 8,12 -4.13 8.12 17.26 -52.79 36,923,400 302,77

MIRBUD 4,07 0.49 2.79 4.75 37.97 75,000,000 305,25

MOSTALWAR 37,70 -8.05 37.70 72.55 -44.80 20,000,000 754,00

MOSTALZAB 2,58 -3.01 2.55 4.15 -44.03 149,130,538 384,76

ORCOGROUP 38,20 6.26 19.00 40.00 38.41 14,053,866 536,86

PBG 146,00 -8.92 146.00 252.00 -37.07 14,295,000 2†087,07

PLAZACNTR 4,98 0.61 3.70 5.59 -15.74 292,647,720 1†457,39

POLAQUA 18,25 -2.61 16.00 21.19 -13.10 27,500,100 501,88

POLIMEXMS 3,09 -7.21 3.09 4.84 -33.55 521,154,076 1†610,37

POLNORD 30,67 -3.22 30.50 40.50 -21.96 22,389,268 686,68

RANKPROGR 13,07 4.14 9.59 13.60 NA 37,145,050 485,49

ROBYG 2,05 -0.97 1.70 2.13 NA 257,390,000 517,35

RONSON 1,51 -4.43 1.36 1.82 -13.71 272,360,000 411,26

TRAKCJA 3,34 -4.02 3.32 4.97 -19.32 232,105,480 775,23

ULMA 87,00 0.00 70.00 88.00 8.75 5,255,632 451,98

UNIBEP 6,85 -2.84 6.85 10.30 -10.69 33,927,184 227,31

WARIMPEX 10,18 -1.83 7.64 10.89 20.19 54,000,000 549,72

ZUE 12,50 -1.88 12.15 15.14 NA 22,000,000 275,00

Property-related stocks

Development in Warsaw

Zoning controversygrowsThe argument overzoning in the capital’sUrsus district isattracting nationalattentionEconomy Minister and De-puty PM Waldemar Pawlakhas criticized Warsaw CityHall over its proposed zoningplan for the capital’s Ursusdistrict. According to MrPawlak, the plan discriminatesagainst the development ofindustrial activity in the area.

In a letter to Warsaw CityHall, Mr Pawlak offered hissupport to industrialists fromUrsus who oppose City Hall’sapproval of a plan to build ahousing estate on a site previ-ously occupied by tractor-maker ZPC Ursus. He claimsthe plan stands in violation ofthe law, as the changes havenot been presented for publicapproval and because CityHall disregarded the fact thatfactory owners possess perpet-ual usufruct rights to premiseslocated at the site.

Mr Pawlak’s entry into thefray was solicited by the Asso-

ciation for the Developmentof Ursus, which opposes theplans.

“I would like to suggesttaking action to re-define thearea of the former Ursus plantpremises back to an industrial-service development,” readsthe letter sent to the WarsawMayor Hanna Gronkiewicz-Waltz.

Mr Pawlak also noted thatthe current zoning plan dis-criminates against 100 entre-preneurs who employ over2,000 people.

The deputy PM’s interven-tion is not good news forinvestor and developer CelticProperty Developments, whichowns part of the land in ques-tion. The firm wants to build itsMiasteczko Ursus housingestate at the location, bringingaround 10,000 apartments tothe local housing market.

“We are forced to passivelywait and see how both partiesresolve the argument,” aspokesperson for Celtic Prop-erty Developments toldLokale Immobilia.

KKaattaarrzzyynnaa PPiiaasseecckkaa

Konstruktorska Business Center

commercialization underway

Developer HB Reavis Grouphas appointed CB RichardEllis the exclusive leasingagent for its KonstruktorskaBusiness Center project inWarsaw. Construction on thedevelopment, the company’sfirst venture in the Polish cap-ital, has already started and isscheduled to be completed inQ1 2013.

Designed by the Epsteinarchitectural studio and locat-ed on ul. Konstruktorska inWarsaw’s Mokotów district,Konstruktorska BusinessCenter will offer 48,000 sqm

of office and retail space onseven floors as well as anunderground parking lot formore than 1,000 cars. Thebuilding is currently undergo-ing a BREEAM environmen-tal certification process.

“We believe that our proj-ect offers spectacular spaceideal for a wide array of quali-ty users and it will be a greataddition to the existing busi-ness infrastructure [ofMokotów]. We are excitedabout our expansion into thePolish market and are current-ly looking into acquiring addi-

tional office and retail projectsacross Poland,” stated HBReavis Group spokesperson,Roman Karabelli.

Luxembourg-headquar-tered HB Reavis Group is aninternational commercialproperty development com-pany with regional offices inBratislava, Budapest, Prague,Warsaw and Zagreb. Foundedin 1993, the firm has to datedeveloped almost 500,000sqm of commercial space; itfocuses on office, retail andlogistics projects.

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The building will bring 48,000 sqm of office and retail space to the Warsaw market

S+B Gruppe announces

new Warsaw projectAustrian developer S+BGruppe has announced theacquisition of a mothballedproject in central Warsaw. Theunfinished 55 meter building,which stands in shell and corecondition, has been on holdsince spring 2009 due tofinancing problems.

Having satisfied more than90 creditors, S+B took overthe plot and partially built edi-fice, and is now in talks withlocal authorities concerning anew blueprint for the invest-ment. It wants to develophotel or office space in thebuilding, which is located onul. Wspólna near the capital’sCentral Station.

“City center locations canretain their value, or evenappreciate in times of eco-nomic uncertainty. This is par-ticularly true of Warsaw,” S+BGruppe CEOs Franz PaulBauer and Reinhard Schertlersaid in a statement.

S+B has earmarked €40million for the completion ofthe Wspólna 72 project. Theannouncement of the schemecomes just months after thecompany successfully complet-ed its 18,280 sqm Zebra Toweroffice project in the capital.The property was sold earlier

this year to German investmentfund Union Investment forabout €76 million.

S+B Gruppe has a propertyportfolio comprising assets inVienna, Prague, Bucharest and

Warsaw. The developer has todate developed some 850,000sqm of usable space in projectsworth a total of more than €2.5billion.

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MAY 16-22, 2011 LLOOKKAALLEE IIMMMMOOBBIILLIIAA –– RREEAALL EESSTTAATTEE www.wbj.pl 17

Promenada

sale completed

Carpathian PLC has

announced the

completion of its sale of

the Promenada

shopping center in

Warsaw to MD Poland I,

a subsidiary of Atrium

European Real Estate

Limited. The value of

the transaction, in which

the seller was advised

by Jones Lang LaSalle,

Salans and BNWW,

amounted to €169.5

million. Carpathian

acquired the property in

two parts in 2006 and

2009 from Savana

Torrido Investments and

Poldrim Torrido

Investments,

respectively, for a total

of €144.5 million.

Solid in

ProLogis Park

Industrial space

developer ProLogis has

leased a total of 35,500

sqm of space in two

buildings in its ProLogis

Park Teresin property in

central Poland, to

logistics services

provider Solid Logistics.

The tenant now occupies

a total of 63,000 sqm of

warehouse space at four

ProLogis distribution

parks in Poland. “A

lease expansion with a

customer within a single

park is already an

achievement, but when a

customer decides to

base the majority of its

operations in facilities

offered by a single

warehouse provider, it is

a great success.”

Dariusz Proniewicz,

leasing manager for

ProLogis Poland, said in

a statement. ●

Residential development

BBeelliieeff iinn tthhee mmaarrkkeett

Adam Zdrodowski: Yourecently bought a sizable pieceof land in Warsaw’s Wola dis-trict in order to develop alarge residential project. Fromyour perspective as a develop-er, is now a good time to buyland for investments inPoland? Are the prices attrac-tive at the moment?Arie Koren: We believe in thePolish real estate market. Wethink that in 2012 it will startgrowing again at a pre-crisispace. Plenty of businesses aremoving to Warsaw. We also seea tendency and philosophy ofyoung Poles to own, not torent, the flat they live in.Therefore we believe that it isa very good time to buy plots,as prices are still lower than[elsewhere] in Europe.

Prices are attractive nowbecause of many factors, butparticularly [because of] thelack of bank credit, which hasbeen depressing the market.But Polish banks are alsorecovering from the crisis andshow more willingness to pro-vide financing, which shouldrelieve the real estate market.That should help push marketprices higher again.

Your company has acquiredthe plot with a ready designand a building permit.Because of the problems whichsome developers had duringthe crisis, are there manyoffers of this kind in the mar-ket now?Buying plots without any doc-uments is risky and we don’twant to put our own capital atrisk. We look for plots with

building permits and viableprojects. We only take themover if they have a good valueproposition and we simplyimprove the quality of thebuilding materials. That suchoffers are in the market is theresult of an unprofessionalapproach by some developers.If you want to be professionalyou have to be prepared totake losses.

The InCity project will belocated in an area of Warsawin which a number of develop-

ers have recently announcednew residential and officeschemes. Why has this areabeen so popular with develop-ers of late? Are you not afraidof the competition?We like competition. Compe-tition makes the market. Italso forces developers toimprove the quality [of theirprojects]. We are very happythat Wola has become popular– that only proves we wereright to invest there.

First of all it is very close tothe city center, but still awayfrom the crowds and heavy traf-fic. Secondly, the new subwayline will stop just next to theplot. InCity offers a great loca-tion, easy transportation and

access to a vivid lifestyle, swim-ming pool, gym and restaurants.I would be afraid of Okam if itwas my competitor.

The InCity project arguablybelongs to the upper segmentof the market – what are theprospects for this sector?Many developers in Polandseem to have focused exclu-sively on small, cheap unitswhich are in demand now...By “upper standard” I under-stand good quality and anattractive location. Nowadaysthe difference between stan-dard and upper standard[apartments] isn’t significant.We don’t finish the flats, theowners do that. All we can give

is a very good standard of com-mon areas and we do our bestto deliver.

I believe that people whobought their first flat in thelower standard will sooner orlater move to the upper stan-dard. Therefore we areinvesting in two factors thatpromise success: quality and agood location.

What are your predictionsconcerning apartment pricesin Poland in the near future?Prices will grow unless there isan external shock again. I haveobserved that real estate mar-kets have three-year cycles.Therefore I believe that in2012 the market will startgrowing again. One of the fac-tors will be the Euro 2012championship. Another factoris the lack of good qualityapartments in Warsaw.

What are your plans for thefuture? Will there be moreresidential projects in Warsawand across Poland?We are now in three cities:Warsaw, ¸ódê and Katowice.In June we will start the con-struction of InCity at Sied-miogrodzka [in Warsaw] withabout 500 flats. In Katowicethis summer we will launchconstruction of luxuriousapartments in 3 Ponds Valley,one of the most beautiful plotsin Silesia, with about 254 apart-ments. And in ¸ódê we arebuilding a mixed-use office andresidential project which willchange the image of this city.

In our plans we have asmaller construction in Kon-stancin and also 34 flats andluxurious apartments in Kaz-imierz in Kraków. We will wel-come every opportunity for fur-ther investments in Warsaw. ●

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Arie Koren, co-founder and general director ofdeveloper Okam, talks to Lokale Immobilia aboutthe land market in Poland and the company’slatest projects

MAY 16-22, 2011LLOOKKAALLEE IIMMMMOOBBIILLIIAA –– RREEAALL EESSTTAATTEE18 www.wbj.pl

Warehouse

sector

improves

The first quarter of 2011

saw an increase in

leasing activity in the

warehouse market in

Poland – over 376,000

sqm was taken up in the

period, 14.7% more than

in Q4 2010, according to a

recent report by Colliers

International. “The

downward trend which

began in 2009 and

continued in 2010 has

visibly slowed. At the end

of Q1 2010, rents

stabilized in some

locations. In Q1 2011, that

trend continued in the

whole warehouse

market, with a slight

growth trend having

taken place in areas with

a shortage of space,”

stated Tomasz

Kasperowicz, a partner in

the warehouse and

industrial department at

Colliers International.

Lots of CE

property on

offerReal estate worth a total

of approximately €3.5

billion is currently for

sale in the core Central

European markets of

Poland, the Czech

Republic, Slovakia and

Hungary, a figure that

marks a small increase

upon the previous

quarter, according to

Cushman & Wakefield

data. When it comes to

the geographical

distribution of the

investment offers,

Poland continues to

dominate with its 58%

(€2.05 billion) share of

the total. ●

Transport infrastructure

Warsaw City Hall reallocating subway funds The move “won’tdelay” construction

Plans to reallocate funds desig-nated for the construction ofthe capital’s second subway linehave been revealed by WarsawCity Hall in an amendment tothe city’s 2011 budgetary bill.Funding worth some z∏.300 mil-lion is to be moved from the2011 budget to the budgets ofthe 2012-2014 period.

This does not mean thatthe completion of the centralsection of the second line willbe delayed, City Hall empha-sized in an official statement,following allegations fromboth the opposition and themedia that the project couldface major delays.

Construction on the centralstretch of the second metro linestarted on August 16, 2010. Ini-tially, it was planned to be com-

pleted in H1 2012 but, accord-ing to the most recent schedule,work is planned to be finishedin autumn 2013 and the line isexpected to welcome its firstpassengers in spring 2014.

“It looks like we will meetthe deadline,” City Hallspokesperson Bartek Mil-czarczyk told Lokale Immobil-ia. “We are changing the stagesof financing, not the realizationof the investment,” he said.

Mr Milczarczyk confirmedthat the amendment was partlydue to the fact that City Hallstill hasn’t obtained all the per-mits necessary for the construc-tion of the subway stations.

“We expect to get [the per-mits] before this year’s summerholidays,” he said. “As soon aswe get them, we will knowwhich stages to accelerate tomeet the deadline.”

In addition, Mr Mil-

czarczyk cited the need foraccess to the National Stadiumduring Euro 2012 as a furtherreason for the changes.

“During the tournament,work on the subway may beslowed down to provide accessto the stadium,” he said.

In contrast, Czes∏aw Bielec-ki, an architect, politician andpublicist, feels modifications tothe construction schedule are,to a great extent, caused byWarsaw City Hall’s inability toplan properly.

“The city’s authorities failedto prepare professional infra-structure development plans.Additionally, the bureaucracywhich accompanies them inalmost every investment trig-gers delays. Public investmentsclerks are now falling into thesame traps they used to preparefor private enterprises,” MrBielecki stated. KKPP

Senator cornerstone laid in WarsawBelgian developer Ghelamcolast week laid the cornerstoneon its Senator office project onWarsaw’s ul. Bielaƒska. Amongthe guests joining GhelamcoGroup president Paul Ghey-sens at the event were BelgianMinister Vincent Van Quicken-borne, Warsaw Mayor HannaGronkiewicz-Waltz and Bel-gian Ambassador to PolandRaoul Delcorde.

Senator is being constructedin a historical area of the Polishcapital. With this in mind,Jeroen van der Toolen, Ghe-lamco’s managing director forCEE, said, “We meet today in aspecial place, which has for agesbeen tied to the largest financialinstitutions in Poland.”

The six-storey Senator

building will comprise 25,000sqm of class-A office space aswell as underground parkingfor 300 vehicles. Its facadedraws inspiration from theoriginal Polish Bank building.

Construction began lastOctober, with completionscheduled for 2012. The firsttenant in the building,Rabobank Group, signed on atthe start of April.

Since entering the Polishmarket 20 years ago, Ghelam-co has delivered over 350,000sqm of office and warehousespace, with more in thepipeline. Under its GhelamcoResidential brand, the firm isalso working on a pair of hous-ing projects in Warsaw.

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Work on the C13 PowiÊle subway station is under way

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From left: Ghelamco Group president Paul Gheysens, Warsaw Mayor Hanna

Gronkiewicz-Waltz and Belgian Minister Vincent Van Quickenborne placed a time

capsule in the cornerstone containing documents and newspapers

MAY 16-22, 2011 www.wbj.pl 19TTHHEE LLIISSTT

Corporate services

Business Consulting CompaniesRanked by total number of consultants www.bookoflists.pl

Notes: Notes: NR = Not Ranked, WND = Would Not Disclose. Research for the List was done in December2010. Number of employees and ownership structure are as of November 2010. All information pertains tothe companies’ activities in Poland. Companies not responding to our survey are not listed.Footnotes: (1) Financial year July 1 – June 30; (2) Financial year July 1 2008 – June 30 2009

To the best of WBJ ’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omis-sions and typographical errors may occur. Corrections or additions to the List should be sent, on official letterhead, to Warsaw Business Journal, attn.Joanna Raszka, ul. Elblàska 15/17, 01-747 Warsaw, via fax to (48-22) 639-8569, or via e-mail to wbjbol@wbj.pl. Copyright 2011, Valkea Media SA.The List may not be reprinted or reproduced in whole or in part without prior written permission of the publisher. Reprints are available.

Rank

Company nameAddressTel./FaxE-mailWeb page

Number ofconsultants:

Total /Polish /Foreign

Revenue frommanagement

consulting (z∏. mln)

Total revenuefrom consulting

Total revenuein Poland (z∏. mln)

Main activities Selected clientsTotal

employees /Year founded

Top local executive /Title

1

Deloitte Al. Jana Paw∏a II 19, 00-854 Warsaw22 511-0811/22 511-0813dpoland@deloittece.comwww.deloitte.com/pl

298298

-

58.5120.2180.5170.9

157.1335.6363.7314.4

160.6340.3371.8319.6

Audit; consulting; tax and financial advisoryPZU; BRE Bank; PGNiG; CSIOZ; Ministry of

Economy1,1001990

Dariusz Kraszewski; Marek MetryckiConsulting Department Managing Partner; Manag-

ing Partner for Deloitte Poland

2

Ernst & Young Business Advisory Sp. z o.o. i Wspólnicy Sp. k.Rondo ONZ 1, 00-124 Warsaw22 557-7000/22 557-7001ernst.young@pl.ey.comwww.ey.com/pl

2952941

WND110.798.896.3

WND133.7120.8121.6

WND406.1444.0389.5

Business consulting; IT advisoryEnerga; Agora; Pekao; Ministry of Interior

and Administration; BOÂ1,3091990

Duleep Aluwihare; ¸ukasz ZalickiErnst & Young Managing Partner for Poland; Ernst &

Young Advisory Managing Partner

3

PricewaterhouseCoopers(1)

Al. Armii Ludowej 14, 00-638 Warsaw22 523-4000/22 523-4040pwcpoland@pl.pwc.comwww.pwc.com/pl

27226210

WNDWNDWNDWND

WND146.9146.7118.2

WND389.1399.7388.8

Industry-focused assurance; tax and advisory services tobuild public trust and enhance value for clients and their

shareholdersPGNiG; TP; GDDKiA; PKN Orlen; PKO BP

1,4961990

Andrew FriarsAdvisory Managing Partner

4

Capgemini Polska Sp. z o.o.ul. Pi´kna 18, 00-541 Warsaw22 464-7000/22 464-7100office.pl@capgemini.comwww.pl.capgemini.com

250WNDWND

WNDWNDWNDWND

WNDWNDWNDWND

WND392.3333.2258.6

WND WND3,7851996

Frank WagenbauerDirector, Board Member

5

KPMGul. Ch∏odna 51, 00-867 Warsaw22 528-1100/22 528-1009kpmg@kpmg.plwww.kpmg.pl

1731694

24.357.1

55.8(2)

WND

30.170.7

72.3(2)

WND

200.3455.0

440.3(2)

WND

WND WND1,2901990

Andrzej Âcis∏owskiSenior Partner

6

WYG International Sp. z o.o.ul. Marynarska 15, 02-674 Warsaw22 492-7100/22 492-7113warszawa@wyginternational.plwww.wyginternational.pl

152152

-

WND71.2WNDWND

WND72.462.1WND

WND100.568.6WND

WND

Polish Agency for EntrepreneurshipDevelopment; Centrum Rozwoju ZasobówLudzkich; Carrefour Polska; Bumar; Philips

Polska

2471999

Andrzej DziurdzikPresident

7

CGI Information Systems and Management Consultants (Polska) Sp. z o.o.ul. Sienna 39, 00-121 Warsaw22 526-5700/22 526-5701info.poland@cgi.comwww.cgi.com

150150

-

WNDWNDWNDWND

WNDWNDWNDWND

WNDWNDWNDWND

Development and maintenance of applications; IT consulting

TP; Polkomtel; Netia; Allianz; Bank BPH;BRE Bank; BZWBK

31,0001997

Dariusz GorzeƒGeneral Manager

8

Accenture Sp. z o.o.ul. Sienna 39, 00-121 Warsaw22 464-0000/22 464-0001pl.office@accenture.comwww.accenture.pl/com

145WNDWND

WNDWNDWNDWND

WNDWNDWNDWND

WND308.9367.0386.4

WND WNDWND1993

Jaros∏ow KrocPresident

9

F5 Konsulting Sp. z o.o.ul. Sk∏adowa 5, 61-897 Poznaƒ61 856-6960/61 853-0295konsulting@f5.plwww.f5.pl

120120

-

8.619.618.929.9

8.619.618.929.9

8.619.618.929.9

Business consulting; EU projects; human resourcesdevelopment

Ministry of Treasury; Polish PharmaceuticalHolding; Oil and Gas exploration “Diament”;

KGHM Ecoren; PKN Orlen

2721991

Marek PankowskiPresident

10

DGA SAul. Towarowa 35, 61-896 Poznaƒ61 859-5900/61 859-5901dgasa@dga.com.plwww.dga.pl

3838-

3.410.17.29.3

22.949.625.241.9

23.752.327.442.6

Strategies for business development; business plans andfinancial models; business valuation; privatization; M&A;

preparation and implementation of comprehensivetraining and consulting projects; outplacement projects;research projects; comprehensive support for human

resources

WND52

1990Andrzej G∏owacki

President

11

Aon Hewitt ul. Marsza∏kowska 76, 00-517 Warsaw22 696-5220/22 696-5221dominika.korzeniowska@hewitt.comwww.hewitt.pl

3232-

WNDWNDWNDWND

WNDWNDWNDWND

WNDWNDWNDWND

Engagement management; leadership and talentmanagement; high performance workforce; HR

benchmarks; HR excellenceBRE Bank; JSW; Provimi; RWE; SPEC

431995

Edward Robert StanochManaging Director, Board Member

11

Doradca Consultants Ltd. Sp. z o.o.ul. WolnoÊci 18A, 81-327 Gdynia58 621-0331/58 621-9927office@doradca.com.plwww.doradca.com.pl

3232-

3.65.15.611.3

3.65.15.611.3

3.75.66.011.7

Management consultancyPolish Agency for Enterprise Development;Energa; TP; Sopra Consulting; Ministry of

Treasury

451985

Jaros∏aw ZysnarskiPresident

13

Hay Group Sp. z o.o.ul. Flisa 4, 02-247 Warsaw22 577-4444/22 577-4445polandoffice@haygroup.plwww.haygroup.pl

30291

WNDWNDWNDWND

13.011.915.513.9

13.011.915.513.9

Transforming business strategies into organizationalsolutions; strategy decoding and development; board

support post-M&A; operational reorganization andimprovment; climate change; leadership transformation;

talent managment; reward strategies and rewardinformation services

Skandia; AkzoNobel; KBC Group; HDI;Lukas; BG˚

411998

Mik KuczkiewiczPresident

14

Konsorcjum doradczo-szkoleniowe SAul. Flisa 4, 02-247 Warsaw22 577-4040/22 577-4047office@weknowhow.plwww.weknowhow.pl

22211

1.83.33.63.3

1.83.33.63.3

15.724.624.528.4

Leadership and management; efficiency: individual, team,organization, strategies; talent management; executive

development

ArcelorMittal Poland; Bank Handlowy;Polska Telefonia Cyfrowa; BG˚; Merck

802004

Aleksander DrzewieckiPresident

15

Mercer (Polska) Sp. z o.o.Al. Jerozolimskie 94, 00-807 Warsaw22 456-4020/22 456-4021ewa.pieniazek@mercer.comwww.mercer.com.pl

2020-

WNDWNDWNDWND

4.66.52.24.3

10.820.718.010.1

WND WND2201999

Krzysztof NowakMarket Leader, Board Member

1st half of 2010 / 2009 / 2008 / 2007

MAY 16-22, 2011MMAARRKKEETTSS 20 www.wbj.pl

SO

UR

CE

: W

SE

PLN-EUR

3

.960

0

3.9

215

3.9

284

3.9

193

3.9

147

3.91

35

06.0

5

09.0

5

10.0

5

11.0

5

12.0

5

13.0

53.5

4.0 PLN-USD

06.0

5

09.0

5

10.0

5

11.0

5

12.0

5

13.0

5

2.7

270

2.71

90

2.7

361

2.72

01

2.

7573

2.7

321

2.5

3.0 PLN-GBP

06.0

5

09.0

5

10.0

5

11.0

5

12.0

5

13.0

5

4.4

652

4.44

66

4.4

783

4.4

611

4.

4932

4.44

72

4

5 PLN-CHF

3.1

236

3.1

092

3.1

194

3.09

48

3.1

102

3.09

65

06.0

5

09.0

5

10.0

5

11.0

5

12.0

5

13.0

53.0

3.5 PLN-RUB

06.0

5

09.0

5

10.0

5

11.0

5

12.0

5

13.0

5

0.0

982

0.09

80

0

.098

6

0

.098

5

0.

0985

0.0

982

0.095

0.100 PLN-100JPY

06.0

5

09.0

5

10.0

5

11.0

5

12.0

5

13.0

5

3.3

943

3.37

03

3.3

906

3.37

25

3.

4031

3.3

936

3.0

3.5

currency rates

Mixed data leads

to volatility

Stocks report

Investors last week respond-ed to mixed financial data,with the WIG index as wellas foreign indices seeingerratic fluctuations. Betterthan expected non-farm pay-roll data released in the US aweek prior did little to easeinvestors’ worries last week,as many turned their atten-tion towards problems inGreece and the continuedvolatility within the com-modity sector.

The beginning of the weeksaw the WIG and WIG20decline sharply, both fallingby around one percent onMonday. Setting the overalltone for the week was S&P’sdecision to downgradeGreece’s debt from BB- to B.

In Poland, big lossesreported by Bank Handlowyon Monday and worse thanexpected results from PKOBP on Tuesday soured the

mood, and sent most finan-cial stocks falling.

News on Tuesday of asolution to Greece’s woesreassured investors andpushed markets higherthroughout Europe, but forthe most part declines char-acterized the week. Wednes-day’s big news came with thecentral bank’s surprise 0.25bps rate hike.

Friday saw a rally, howev-er, as better than expectedQ1 GDP increases for theleading euro zone countriessent markets climbing. As ofmidday Friday, most Euro-pean bourses were morethan half a percentage pointhigher.

Next week’s most impor-tant data will come when theEuropean Monetary Unionreleases CPI figures forApril, with expectations at2.8 percent. ●

A surprising

decision

Currency report

The rate-setting MonetaryPolicy Council (RPP) lastweek hiked the benchmarkinterest rate by 0.25 percent-age points to 4.25 percent.

The markets was notexpecting the decision, as theRPP’s statements sinceMarch inflation came in at4.3 percent had been ratherdovish. Marek Belka, thepresident of the centralbank, argued the hike wasnecessary because othercommodities, in addition tofood and energy, have risenin value.

Investors now expectquicker monetary policytightening than before. Therate hike, along with theFinance Ministry’s decisionto buy z∏oty on the openmarket with euro given to itby the EU, has created addi-tional demand for Poland’scurrency. This is not good

news for exporters, as astronger z∏oty will eat intotheir profits.

The EUR/USD contin-ued its corrective movementlast week. The US ConsumerPrice Index increased on ayearly basis, preventing thedollar from depreciating.The EUR/USD reached amonthly low at $1.4122 andfinished the week at $1.4230.If it breaks the support levelat $1.4085, the downwardmove could become pro-nounced.

The usually volatileUSD/PLN was fairly steadythroughout the week, finish-ing Friday’s session at z∏.2.75,the level it opened at onMonday. After the RPP’sdecision, the EUR/PLNreached a two-month low ofz∏.3.89, but by Friday the eurohad recovered to finish atz∏.3.91 against the z∏oty. ●

Andrew NawrockiMarket analyst/Trader, gowebtrade.com

Adam Narczewski, X-TradeBrokers Dom Maklerski SA

SO

UR

CE

: N

BP

Major indices

Top 5 Closing % change (week) 52-week high 52-week lowKREZUS 3.70 21.71 3.70 1.31INVESTCON 3.70 19.35 3.70 1.69PAGED 14.75 17.06 24.00 12.60FASING 19.29 15.10 30.85 15.00NEWWORLDR 46.00 13.52 48.99 33.21

WIG 48,795.21 (May 12 closure)

Change for the week: -0.96% 52-week high: 50,371.74

Change year to May 12: 2.41% 52-week low: 39,109.37

Top 5 Closing % change (week) 52-week high 52-week lowPGNIG 4.10 7.33 4.10 3.16TAURONPE 6.28 4.49 6.89 5.04CYFRPOLSAT 16.70 4.11 17.30 13.36PZU 385.00 3.72 411.00 330.00PGE 24.11 1.99 24.11 19.70

Bottom 5 Closing % change (week) 52-week high 52-week lowIRENA 0.53 -55.46 4.35 0.53MIDAS 1.39 -18.24 6.22 1.39TFONE 5.48 -16.21 12.48 0.63IGROUP 0.21 -16.00 0.95 0.21IZNS 2.07 -14.46 3.64 2.07

Bottom 5 Closing % change (week) 52-week high 52-week lowPBG 146.00 -8.92 252.00 146.00POLIMEXMS 3.09 -7.21 4.84 3.09PKOBP 43.35 -4.83 46.81 36.15GETIN 13.51 -4.39 15.29 9.35TVN 16.75 -3.18 18.90 15.95

WIG20 2,829.83 (May 12 closure)

Change for the week: -1.02% 52-week high: 2,932.62

Change year to May 12: 2.73 % 52-week low: 2,270.13

mWIG40 2,903.17 (May 12 closure)

Change for the week: -1.23% 52-week high: 2,987.72

Change year to May 12: 3.40% 52-week low: 2,361.69

sWIG80 12,587.42 (May 12 closure)

Change for the week: -1.95% 52-week high: 12,932.00

Change year to May 12: 2.76% 52-week low: 10,980.45

NewConnect 57.59 (May 12 closure)

Change for the week: -1.91% 52-week high: 64.39

Change year to May 12: -9.18% 52-week low: 54.52

WIG-Banki 6,995.37 (May 12 closure)

Change for the week: -3.37% 52-week high: 7,387.49

Change year to May 12: 0.48% 52-week low: 5,751.39

DJIA12,701.48 (May 12 close)

0.93% (for the week)

CHANGE: 9.71%

(year to May 12)

52-week high: 12,928.50

52-week low: 9,596.04

NASDAQ2,857.88 (May 12 close)

1.53% (for the week)

CHANGE: 6.77%

(year to May 12)

52-week high: 2,887.75

52-week low: 2,061.14

S&P5001,348.65 (May 12 close)

1.01% (for the week)

CHANGE: 7.24%

(year to May 12)

52-week high: 1,370.58

52-week low: 1,010.91

FTSE1005,939.87 (May 12 close)

0.34% (for the week)

CHANGE: 0.68%

(year to May 12)

52-week high: 6,105.80

52-week low: 4,790.00

DAX7,440.31 (May 12 close)

0.86% (for the week)

CHANGE: 6.70%

(year to May 12)

52-week high: 7,600.41

52-week low: 5,607.68

NIKKEI2259,729.28 (May 12 close)

-1.32% (for the week)

CHANGE: -6.02%

(year to May 12)

52-week high: 10,891.60

52-week low: 8,227.63

world stock indices

12.0

4

13.0

4

14.0

4

15.0

4

18.0

4

19.0

4

20.0

4

21.0

4

26.0

4

27.0

4

28.0

4

29.0

4

02.0

5

04.0

5

05.0

5

06.0

5

09.0

5

10.0

5

11.0

5

12.0

548,000

48,600

49,200

49,800

50,400

51,00012

.04

13.0

4

14.0

4

15.0

4

18.0

4

19.0

4

20.0

4

21.0

4

26.0

4

27.0

4

28.0

4

29.0

4

02.0

5

04.0

5

05.0

5

06.0

5

09.0

5

10.0

5

11.0

5

12.0

52,800

2,840

2,880

2,920

2,960

3,000

12.0

4

13.0

4

14.0

4

15.0

4

18.0

4

19.0

4

20.0

4

21.0

4

26.0

4

27.0

4

28.0

4

29.0

4

02.0

5

04.0

5

05.0

5

06.0

5

09.0

5

10.0

5

11.0

5

12.0

52,900

2,920

2,940

2,960

2,980

3,000

12.0

4

13.0

4

14.0

4

15.0

4

18.0

4

19.0

4

20.0

4

21.0

4

26.0

4

27.0

4

28.0

4

29.0

4

02.0

5

04.0

5

05.0

5

06.0

5

09.0

5

10.0

5

11.0

5

12.0

512,500

12,600

12,700

12,800

12,900

13,000

12.0

4

13.0

4

14.0

4

15.0

4

18.0

4

19.0

4

20.0

4

21.0

4

26.0

4

27.0

4

28.0

4

29.0

4

02.0

5

04.0

5

05.0

5

06.0

5

09.0

5

10.0

5

11.0

5

12.0

557.0

57.6

58.2

58.8

59.4

60.0

12.0

4

13.0

4

14.0

4

15.0

4

18.0

4

19.0

4

20.0

4

21.0

4

26.0

4

27.0

4

28.0

4

29.0

4

02.0

5

04.0

5

05.0

5

06.0

5

09.0

5

10.0

5

11.0

5

12.0

56,900

7,000

7,100

7,200

7,300

7,400

Other indices

MAY 16-22, 2011 LLIISSTTEEDD FFIIRRMMSS www.wbj.pl 21

Warsaw Stock Exchange

WSE’s net profit up 45 percentLots of IPOs and hightrading revenue gavethe bourse a boost

The first quarter of 2011proved successful for the War-saw Stock Exchange (WSE),with net profit amounting toz∏.38.6 million on revenues ofz∏.69.2 million. Those figuresmark y/y increases of 45 and 30percent, respectively.

The results represent thefirst full quarter of the WSE’soperations as a publicly tradedcompany.

In a statement concerningthe results, CEO LudwikSobolewski was straight to thepoint. “The WSE’s quarterlyresults reflect the very goodcondition of the Polish capitalmarket,” he said.

Trading accounted for themajority (79.2 percent) of totalrevenues and amounted toz∏.54.78 million, up 33.5 percenty/y. According to the bourse’sauthorities, the high tradingrevenue in the first quarter wasdriven by tenders for significantblocks of shares as well as byinvestors trading more actively.

During the first quarter theWSE hosted 45 initial publicofferings, the highest of anyEuropean bourse. The majori-ty of those listings were on its

alternative market, NewCon-nect. In terms of main floordebuts, the WSE was secondin Europe with seven, com-pared to the London StockExchange’s 13.

In terms of volume, thePolish exchange accounted for47 percent of all European list-ings in Q1, according toresearch by Pricewaterhouse-Coopers. But if you look atvalue, it accounted for justfour percent of the total, whilethe LSE’s debuts were respon-sible for 61 percent.

Looking to the future, MrSobolewski was cautiously

optimistic. “I foresee the rest of the

year as being steady, with aregular inflow of public offer-ings to our markets,” he toldWBJ, stating that this would beequally true for equities andcorporate bonds.

But the head of the WSEisn’t expecting an explosion ofgrowth either. “I consider thefirst quarter to have beenmarked by an impressive out-come in this regard, and henceI would not expect it to be con-siderably heightened in theupcoming months,” he said.

DDaavviidd IInngghhaamm

IPOs

Kruk collects z∏.43.7 million from initial public offeringThe debt collector wasthe WSE’s 19th

debutant this year

Kruk, a leading debt collectionfirm in Poland, held its IPO onthe Warsaw Stock Exchangelast week.

At the launch of trade, thefirm’s share price rose by aslight 0.18 percent to z∏.39.77from its issue price of z∏.39.70.But by the close of the day’strading, the share price stoodat z∏.41.71, a five percentincrease.

As WBJ went to press,Kruk’s shares were trading atz∏.40.53, up 1.91 percent onthe week.

While its opening couldhave been stronger, the firm’sIPO was successful by mostmeasures. It sold all 9.3 millionshares it put up for sale, havingset the maximum issue price.

“We are very glad aboutthe large interest Kruk isenjoying among investors,”Dariusz Proƒczuk, chairmanof the firm’s supervisoryboard, said prior to the debut.

“We believe that both thegrowth potential of Polish andother Central European debtcollection markets, as well asthe growth potential of Kruk,

are very promising forinvestors,” he added.

Kruk specializes in themanagement of large-scaledebt portfolios of banks, finan-cial intermediaries, insurancefirms, leasing companies, tele-coms as well as energy firmsand firms from the fast movingconsumer goods sector.

The firm has announcedthat it plans to use the funds itraised from the offer, z∏.43.7million, for investments in the

development of its debt port-folio as well as for expansioninto the Czech and Hungarianmarkets. Kruk is already pres-ent in Romania.

In 2010, the firm recordeda net profit of z∏.36 million andz∏.164 million in revenues.

Kruk was the 19th firm todebut on the main floor of thebourse this year and the 411th

firm to list on the WSE since itopened in 1991.

RReemmii AAddeekkooyyaa

0

1

2

3

4

5

6

7

May 20

11**

Apr 2

011

Mar 20

11

Feb 20

11

Jan 20

11

Dec 20

10

Nov 20

10

Oct 2010

Sept 2

010

Aug 20

10

July 20

10

June 2

010

*not including firms transferring from NewConnect**to May 12

2 2 2 2

10

1

6

5

44 4

3

Welcome to the bourse

Number of IPOs held on the WSE's main market*,

June 2010 to May 2011

Source: Warsaw Stock Exchange

CO

UR

TE

SY O

F T

HE

WA

RS

AW

ST

OC

K E

XC

HA

NG

E

Kruk CEO Piotr Krupa celebrates his firm’s IPO

MAY 16-22, 2011AARRTTSS && CCUULLTTUURREE22 www.wbj.pl

DJ ShadowPalladium, ul. Z∏ota 9May 16, 7 pm

Since DJ Shadow (JoshuaDavis) came onto the scene inthe mid-1990s he has been aluminary of the electronic trip-hop movement. His debutalbum “Entroducing” wasdescribed a few years ago asone of the “Top 100 Albums ofAll Time” by Time; he also pro-duced the critically acclaimed1998 release “Psyence Fiction”by British outfit Unkle. Fanscan expect a combination ofgreatest hits and new material,as the California-born DJcomes to Warsaw on his cur-rent world tour. ●

For more information, log onto www.palladium.art.pl Arkady Kubickiego

Royal Castle, Pl. Zamkowy 4May 22, 11 am – 4 pm

Collectors and first-time buy-ers alike will be interested in

this event, organized by theWarsaw Academy of FineArts, Poland’s most presti-gious art school. The market,currently in its 10th year will

include work from approxi-mately 150 artists who areeither past or present studentsof the academy. A wide varietyof work will be on sale, frompaintings and graphic art toceramics and jewelery. ●

For more information, log onto www.targowiskosztuki.com

Concert

A Shadow cast over Warsaw

Art market

Bargains and beauty

“Opening the Door” Zach´ta GalleryPl. Ma∏achowskiego 3May 23 – Aug 20

Belarus is not known as a cen-ter for artistic talent, but a newexhibition at Zach´ta Galleryhopes to change this percep-

tion. The exhibition, whichfeatures “new art” fromBelarusian artists based inMinsk and Western Europe,attempts to open new chan-nels of communication for thecountry’s comparatively isolat-ed and internationallyunknown art. A diverse artistic

scene is united within theframework of this project,bringing the viewer into directcontact with the major ques-tions currently facing thisevolving nation. ●

For more information, log onto www.zacheta.art.pl

Exhibition

A peek at Belarus’ artistic side

Critical MassPl. ZamkowyMay 20, 6 pm

Aimed at increasing aware-ness about cyclists in Warsaw,

Critical Mass is the biggestregular bike event of its kindin Europe. Held on the lastFriday of every month, over2,000 people leave Pl.

Zamkowy at 6 pm to ridethrough the city. ●

For more information, log onto www.masa.waw.pl

Monthly event

Freedom ride

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Bollywood Brass BandPalladium, ul. Z∏ota 9 May 19, 8 pm

With a combination of brassinstruments, traditional Hindimusic, drums, and dancing,the London-based “BollywoodBrass Band” will bring itsunique sound to Poland thismonth. Formed in 1992, theband has previously per-formed at both the RoyalAlbert Hall and England’s leg-endary Glastonbury Festival.

The group’s 10 musicians per-form an eclectic brand ofmusic, encompassing bothBollywood film music and jazz

improvisation. ●

For more information, log onto www.erajazzu.eu

Concert

The sounds

of India

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MAY 16-22, 2011 LLAASSTT WWOORRDD www.wbj.pl 23

TThhee ffaasstt aanndd tthhee ffuurriioouuss eeaatteerrssTech Eye

Having just returned from a longholiday in the United States, Techeyeis exhausted. Not because of themarathon of terrible movies wewatched on the plane, nor the jetlag.No, the source of our fatigue can besummed up thusly: fat people.

You simply can’t escape them inthe US, where (over)eating hasbecome the nationalpastime. Thesedays the mor-bidly obeser o a mtogether inherds of motorizedcarts, gnawingthrough anythingin their path andriding roughshodover the unwary.

Much of ourholiday time waslost to circumnavigat-ing the fleshy, ravenousbehemoths who lurch up anddown the aisles of every grocerystore. And there were dangerousencounters, like having to hold ourbreath and scooch past the corpu-lent couple whose sweaty attemptsat romance would block the hallwayin our friend’s apartment building.

Such experiences were emotionallyscarring.

Is Techeye being unduly harsh toAmerica’s weight afflicted? Perhaps.To those who suffer from true ail-ments, we apologize. To the rest –stop eating from the trough andwe’ll stop ridiculing you. Failing that,invest in technology to capture and

store the energy generatedwhen giant thighs rub

together. You’ll still bethe butt of jokes (liter-

ally, in many cases), butat least you’ll also be a source

of green power.What does all that

have to do

with this week’stech? Not much,except that Techeyewas inspired to chooseproducts which are rarely associat-

ed with them o r b i d l yobese –motorcyclesand go karts.

First up isB r a m m o ’ sEmpulse (notpictured), ane l e c t r i cm o t o r b i k ewhich lookspretty svelte.The bike waso r i g i n a l l ysupposed tocome out thisyear, but hasjust been delayed until 2012, appar-

ently so its maker can squish somenew tech into it.

Nevertheless, you canpre-order now andprices range fromroughly $10k to $14kdepending on themodel of Empulse.The low-end modelhas a range of 60

miles, while the high-end can go up to 100

miles. All have a top speedof 100+ mph.

Perchance you yearn for some-thing a little more gas-guzzly?Something with a samurai on it? Ifso, look no further than Poland.

Yes, you read that right – up-and-coming designer S∏awomirPoros jr, of Poros Customs, recent-ly debuted his Samurai-flavoredMusashi Miaymoto custom motor-cycle to much acclaim. The bikehas a 750cc BMW motor with acustom exhaust and valve cover aswell as a suicide clutch. If youknow what that last thing is, you’reat least a little awesome.

Mr Poros says theprice of the MusashiMiaymoto is as yetundecided, he’s cur-rently preparing it fora custom bike cham-pionship in the CzechRepublic. But one ofhis previous bikes, theAlien, cost around€12,000.

Last but not least,there’s the Linde E1electric go kart. Thislittle critter recentlyset a world record(for electric vehicles)by going from 0 to 100

km/h in 3.45 seconds. By compari-son, the average American can gofrom 0 to 1 km/h in about 10 sec-onds, possibly faster if twinkies areinvolved.

Can you buy a Linde E1? Notat the moment, but interestappears to be high so Linde maydecide to market it.

In any case, Techeye wouldoffer a word to the wise (and thetubby) – all three of these vehiclesare nacho-free zones. Spill cheeseon them, and you’ve ruined yourride. ●

Ever been forced to circumnavigate a fleshy land mass? Let us know: techeye@wbj.pl

COURTESY OF POROS CU

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