2010-07-27 16:35:04 -
Spain Pharmaceuticals and Healthcare Report Q3 2010 - a new market research report on companiesandmarkets.com
In the Business Environment Ratings for Q310, Spain continued to fall down the matrix. It is now rated eighth out of the 10 countries surveyed, having already dropped one place to fifth in the previous quarter. While Spain offers positives such as its large drug market, its downfalls are low population growth, cumbersome bureaucracy, provincial differences regarding drug regulation and reimbursement, and modest forecast market expansion, largely as a result of cost containment measures. Globally, Spain is rated 16th, having previously been 14th, between the Netherlands and Brazil.
With the aim of slashing EUR1.5bn (US$2.0bn) from its annual drugs bill, the Spanish government implemented a new reference pricing system in Q110 that includes price cuts of up to 25% on generic
medicines. With more than EUR600mn (US$782mn, or 40%) of the planned savings to come from these cuts, Spains generic medicines industry association, AESEG), has said the new reference pricing system seriously threatens the survival of the sector. Furthermore, the government expects to save EUR889mn (US$1,156mn) by basing reference prices on the lowest available price, rather than the average of the three lowest priced products as is currently the case. A further EUR360mn (US$468mn) is to come from cutting the prices for commonly used drugs such as analgesics and antipyretics.
Still reeling from the March price cuts, drugmakers operating in the Spanish pharmaceutical market will be hit by a new round of price cuts from August 2010, aimed at generating savings of EUR1.05bn (US$1.31bn). The price cuts are to be applied to medicines that are not included in the countrys reference pricing system. Spanish prescription medicine sales reached a value of EUR14.83bn (US$20.88bn), accounting for a significant 89.4% of the countrys pharmaceutical expenditure in 2009. The governments focus on cost containment therefore does not come as a surprise drug price reductions may be seen as a relatively easy way to cut costs in the face of the countrys poor fiscal status.
The Spanish economy is likely to contract for a second consecutive year in 2010 as virtually every category of GDP suffers the hangover from a credit-fuelled housing boom. We forecast a contraction of 0.6% in 2010 and meagre growth of just 0.9% in 2011. We believe these figures highlight the governments extreme stance on price reductions in the pharmaceutical market.
Reinforcing the view that companies with significant exposure to European markets will be hit hard by government austerity measures across the region, in particular by pharmaceutical price erosion mechanisms implemented in order to generate much needed fiscal savings, Danish medical supplies producer Coloplast expects price reforms in Spain to reduce its turnover in the country by up to DKK30mn (US$5mn) annually from its next fiscal year. Furthermore, according to Banco Español de Crédito analysts, the impact of the austerity measures could translate into a worrying 4.6% decline in Spanish drugmaker Almiralls revenues.
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