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Spain Pharmaceuticals and Healthcare Report Q4 2010
Business Monitor International, Sep 2010, Pages: 88
Business Monitor International's Spain Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Spain's pharmaceuticals and healthcare industry.
In BMI's Q410 Pharmaceuticals & Healthcare Business Environment Ratings (BERs), the Western Europe region scored a total of 64.5 out of 100. The attractiveness of the region to pharmaceutical firms stems from the fact that its countries are key revenue sources for 'big pharma', particularly for companies selling high-end products, as per-capita spending is substantially higher than in emerging markets. However, it is BMI's view that drug companies will face many challenges in Western Europe over the next decade, including the need to reduce fiscal deficits, the patent cliff, additional regulatory hurdles and increasingly scrupulous cost-effectiveness assessments of new drugs – all factors that will influence the risk and reward scores assigned to markets in the region.
In BMI’s Q410 BERs, Spain continued to fall down the matrix – it is now ninth of the 10 countries surveyed. 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 ranked 20th, having previously been 16th.
In fact, it is BMI’s view that the Spanish pharmaceutical market will decline in value in 2010, with drug sales expected to reach a value of EUR16.09bn (US$20.75bn), a drop of 3.01% in local currency terms (-10.6% in US dollar terms) from the 2009 value of EUR16.59bn (US$23.22bn). We attribute this to the country’s poor fiscal status and the effects of price cuts on pharmaceuticals, aimed at generating muchneeded savings. The Spanish economy is likely to contract again in 2010 as only the net exports component of GDP is supporting economic growth. We forecast real GDP to shrink by 0.6% this year and project only meagre growth of 0.9% in 2011. Over the longer run, in order to regain competitiveness and shift away from an over-reliance on domestic demand, a long and painful deflationary period will be necessary in order to bring down wages and asset price levels in line with the country's macroeconomic realties. As such, we see potential for only weak average growth of 1.1% over the next five years.
The Spanish government's efforts to contain expenditure on pharmaceuticals already seem to be paying off. In line with BMI's June forecasts, data released by the country's ministry of health in late July shows that public expenditure on prescription medicines in June 2010 declined by 6.2% compared with the previous June. This was attributed to the 7.5% discount on medicines implemented the same month.
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