Look to the East

The emerging markets of Eastern Europe are recognised as an attractive proposition for many pharmaceutical companies. Consider Poland, with its population of 48m, the Czech Republic, with around 10m people and Russia, with a further 148m potential consumers. In addition, Hungary, Slovakia and Romania are becoming more important to international business.

There is already competition with the emerging economies from low-cost pharmaceutical manufacturers in Asia. India is exporting significant volumes of pharmaceutical products to the whole of the European Union (EU). Though 15 years ago, many of these companies' products were not compliant with European best practice, this problem has been addressed and resolved now.

However, Eastern Europe still offers a substantial market opportunity for the export of finished product, possible co-manufacturing arrangements or even providing secondary production facilities. As patents expire, some products are now being manufactured more economically in these lower-cost markets of the EU and exported to the West, offering potential partnership arrangements for pharmaceutical companies.

However, to undertake successful business transactions with people of another nationality, various important cultural challenges need to be addressed. Eastern European countries have many differences, which could impede effective dealings.

For example, consider attitudes towards time and punctuality. In most relationship-driven cultures, as found in southern and eastern European countries, time is pliant and non-chronological. It is not linear. In the same way that people in the West cannot demand friendship, nor can punctuality be demanded in these regions. Furthermore, it is not merely timing between individuals that can be an issue, but also the different approaches to deadlines and timelines encountered when doing business with individual companies and organisations. Regarding deadlines, even at EU level, it often takes much longer to register products in any Eastern European country owing to local bureaucracy and other pressing priorities.

Similarly, the more hierarchical nature of the Eastern European cultures and the legacy of Communist regimes that were once in place, mean one person alone can often be an obstacle to the registration of, or amendment to, a product licence or application. Even in the established market of the UK, in the mid-1990s, an eminent professor who objected to the introduction of omeprazole for peptic ulcer disease had sufficient stature in the medical community to delay the drug's acceptance. However, although his opinion was respected and noted, eventually the product received its licence. In Eastern Europe, key opinion leaders (KOLs) can have even greater influence, so specific strategies are needed to address the requirements of a particular region. This may involve duplicate clinical trials at local hospitals to appease academic sentiment, or taking steps to meet the needs of a KOL.

The key to working successfully with any culture is actively to acknowledge and understand that people from other countries have different perspectives on life. It is also important to respect that each country has its own specific cultural values. For example, Russians have different outlooks from those of Poles, while Hungarians' values are not the same as those of people from the Czech Republic. This is because history, geography, environment and politics have shaped the way people think over many generations, creating subtle differences in actions and behaviour. These complexities must be understood and navigated to aid successful business dealings.

Most Eastern European countries are re-establishing their identity on a macro-economic and personal level after the turmoil of the late 20th century, which influences many aspects of behaviour. Until around 15 years ago, only one drug - Selegiline for the treatment of early stage Parkinson's disease, researched in Hungary - had been developed behind the Iron Curtain. Although there have been joint ventures with major pharmaceutical names, encouraging greater product innovation since the end of the Cold War, many Eastern European countries are still trying to catch up with the West.

Respect and trust
Interestingly, this is reflected in behaviour; most Eastern European countries seem sophisticated in the nature and richness of their culture. Manners and social graces are reminiscent of those found in developed countries in the 1930s and their style and courtesies should be observed carefully today. Respect and trust between individuals is important. This can be seen in elegant gestures of greeting, such as the triple kiss when a gentleman greets a lady or the removal of a hat when entering an office.

Czech and Hungarian cultures, for example, are actively seeking to regain the sophistication that was largely lost under 60 years of Soviet rule. As a result, they often seem to be looking backwards rather than to the future. Some, such as the Czech Republic, have become two-tier societies. A lost generation of 50-60-year-olds who live in substandard public housing projects contrasts with young people who are determined to make a way for themselves in the modern world. These more forward-thinking, younger individuals often feel the need to emigrate to the West. This means that one of the major challenges for local pharmaceutical companies is in retaining the younger and more technically educated members of their communities.

Building trust is critical for successful negotiations. Social engagements like meeting for dinner help strengthen personal bonds. Eastern Europeans are proud of their heritage so an invitation to the opera or a piano recital after a busy day of discussions is not unusual.

Western Europeans need to recognise that Eastern Europe has some of the most capable people in the medical profession; accepting the credibility of their medicines and expertise is an issue that still has to be overcome.

To build strong bonds it is helpful to gain an understanding of how a particular society is structured and through this, to comprehend the importance of certain aspects of life in a social and business context. For example, Poles, Lithuanians and those from the Czech Republic are predominantly Roman Catholic and the role of religion, whether it is Catholicism or Orthodox Christianity, and its historical legacy, should be recognised as an important aspect of culture. This is linked to the hierarchical nature of society. Both the Catholic and Eastern Orthodox religions act as an interface between the people and the Divine.

Plus, age is venerated, with grey hair indicative of experience and wisdom. Therefore, in meetings it is important to approach the oldest person in the room first. When negotiating with younger managers, it should be understood that someone with a higher status may well be in charge of the procurement decision.

Language is also an important consideration. Though English is the business language of Europe, it should not be assumed that a colleague speaking fluent English assigns the same meanings to words. Agreeing can be a face-saving mechanism. It can cover up embarrassment or may only be an acknowledgement of fact, rather than a confirmation of a decision.

Attitudes towards the ways meetings are conducted must also be factored into project timelines. For example, meetings will not necessarily progress in a linear way. Western cultures tend to agree the minutes from a previous meeting and move forward to agree conclusions on new agenda items. In contrast, Eastern Europeans often return to subjects previously discussed, much to the frustration of Western colleagues, as it can seem that discussions are going round in circles. Often, external factors such as the exchange rate or the political outlook may have changed since the last meeting, which may affect points previously agreed and therefore re-clarification is needed. So, more time should be allowed to deal with the typically circular nature of negotiations.

On the whole, Eastern Europeans have a proud and turbulent history with which foreigners are generally unfamiliar. For example, the President of Poland died in an air crash in 2010 on his way to commemorate the thousands of academics killed at the Katyn Forest massacre in 1940. In this act, 90 people at the top of Polish society lost their lives, but the Poles saw this as merely another milestone to be endured in the tortured history of their nation.

As a result, Eastern Europeans have an accepting nature generally and often look to their families for support. However strong a business relationship may be, business contacts will never been seen as family. The most a foreigner can aim for is to be trusted like a favourite parent-in-law.

Though working with different cultures presents many challenges, emerging markets offer exciting opportunities too. To take full advantage of these, approaches must be adapted to fit in with the culture of the target country. Start by acknowledging that everyone's perspective is different and then gain an understanding of local culture. This will assist when building relationships, which are key to most successful business dealings internationally and particularly in Eastern Europe.

The Author
Paul Stiff is intercultural trainer at Farnham Castle International Briefing & Conference Centre

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