2010-02-04 16:23:00 - Fast Market Research recommends "Czech Republic Pharmaceuticals & Healthcare Report Q1 2010" from Business Monitor International, now available

In BMI's Q110 Business Environment Ratings (BER) matrix for Emerging Europe, the mature pharmaceutical market of the Czech Republic remains placed second in the group of 20 countries surveyed, buoyed by its largely stable environment. While the country's pharmaceutical expenditure growth is expected to be negatively impacted by the economic downturn as well as by the new reference pricing system, the government's desire to reimburse more innovative medicines should, to a degree, offset the falling revenues. An overall upward trend will be also driven by demographic and epidemiological considerations, as circulatory system disease and cancer remain the leading causes of death in the country. Over our five-year forecast period (2009-2014), pharmaceutical expenditure at consumer prices should reach CZK94.75bn (US$5.43bn), posting

a compound annual growth rate (CAGR) of 4.55% in local currency terms. Faster growth rates will be precluded by the fact that patented medicines will lose out to generics in terms of market share, falling from around 50%, projected for full-year 2009, to 48% in 2014, and further to 46% at the end of our ten-year forecast to 2019. The upcoming patent cliff forms a major part of such a forecast, especially considering that the usage of older, generic medicines (which represent the majority of reimbursable products) has been disadvantaged by the introduction of prescription fees, even though these are not being collected by regional governments. This practice has, however, put a major financial strain on those pharmacies, decreasing their income by between 30 and 70%, according to the Czech Pharmacists' Union. The situation will also impact on the availability of over-the-counter (OTC) products, given the shortening of the pharmacy opening hours by some outlets. Despite a largely upbeat forecast, a number of companies have decided to downscale their operations (which also serve export markets that are experiencing lower demand) in the Czech Republic. Israel's generic drugmaker Teva Pharmaceutical Industries is shutting one of its plants by the end of 2009, despite making an US$58mn investment in the boosting of its production at its main plant in 2010. Similarly, Croatia-based drug manufacturer Pliva (also part of Teva, through its owner Barr Laboratories) is selling its Czech Republic diagnostics business segment Pliva-Lachema and is suspending all manufacturing operations in the country by the end of the year, in order to enhance overall competence and profitability. The above decisions have been made against the backdrop of the Q209 tumble taken by the Czech economy, with the 5.5% contraction in real GDP marking the fastest drop in year-on-year (y-o-y) terms since the formation of the Czech Republic. As a highly trade integrated economy, the Czech Republic is heavily exposed to fluctuations in final demand, with Germany's deep recession and concomitant collapse in industrial orders having a substantial impact on the Czech economy. In the light of this, lower-cost Central and Eastern European (CEE) countries will also look more attractive as manufacturing bases.

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