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Australia Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, May 2011, Pages: 91
BMI View: Australia's challenging economic situation is affecting its pharmaceutical market. The acceptance of expensive patented drugs by the three main stakeholders – payers, prescribers and patients – is being superseded by the pragmatic delivery of medical services. The research expects to see the formalisation of the practice of health economics, the swifter uptake of generic drugs and the increased involvement of the private sector in pharmaceutical purchasing.
Headline Expenditure Projections:
- Pharmaceuticals: AUD12.41bn (US$11.30bn) in 2010 to AUD12.38bn (US$10.46bn) in 2011; -0.2% in local currency terms and -7.4% in US dollar terms. Our forecast has been revised up slightly from Q211 due to the receipt of more reliable historic market data.
- Healthcare: AUD123bn (US$112bn) in 2010 to AUD128bn (US$109bn) in 2011; +4.3% in local currency terms and -3.1% in US dollar terms. Our forecast has been revised down from Q211 due to analyst intervention.
- Medical devices: AUD5.33bn (US$4.85bn) in 2010 to AUD5.46bn (US$4.62bn) in 2011; +2.4% in local currency terms and -4.9% in US dollar terms. Our forecast has been revised down from Q211 due to analyst intervention.
- Business Environment Rating: Australia's Q311 Pharmaceutical Business Environment Rating (BER) score (63.7) and regional ranking (third) is unchanged compared with the previous quarter. Its Country Rewards score (80) is the highest in Asia Pacific, primarily due to significant urbanisation and the high prevalence of elderly people. Australia also posts the highest score in Asia Pacific for Country Risks, which comprises economic structure, policy continuity, bureaucracy, legal framework and corruption.
Key Trends & Developments
In November 2011, a number of Australian Senators and Members of Parliament initiated a private members Bill, which will significantly undermine the protection afforded to innovative biopharmaceutical medicines. Specifically, the legislation declares that all biological materials cannot be covered by intellectual property (IP) protection.
The Therapeutic Goods Administration's Half-Yearly Performance Report revealed that only 574 new clinical trials were initiated in Australia in 2010, the lowest number since 2001. The report also found a 13% year-on-year decline in the number of clinical trials for the three consecutive years from 2007.
BMI Economic View: The Australian economy experienced a slowdown in Q310, growing by a sluggish 0.2% q-o-q (seasonally-adjusted) from a revised 1.1% recorded in the preceding quarter. The recent deceleration in Australia's headline real GDP growth was consistent with our below-consensus growth forecast of 2.8% for 2010. Indeed, this report believes the recent tightening in borrowing costs and weakening consumer confidence will act as key headwinds in 2011. In addition, the country also suffered major destruction and disruptions of economic activity, due to flooding in parts of Queensland and Victoria in January, followed by Cyclone Yasi in the north in February. In short, the resulting impact on the domestic economy should contribute to the slowdown in economic growth to 2.4% and 2.3% in 2011 and 2012 respectively.
BMI Political View: The Australian Labor Party (ALP) government faces a number of key political challenges over the next two years, such as the 30% Mineral Resource Rent Tax (MRRT), Emissions Trading Scheme (ETS), and flood levy resulting from the Queensland floods. These issues serve as potential stumbling blocks to the ALP administration given that it only controls a one-seat majority in the lower house. While the report maintains the view that the ALP will successfully complete its three-year term, the risks to our outlook have risen substantially in 2011. Should the incumbent lose power, the rise of the business-friendly opposition Liberal-National Coalition may serve to benefit Australian corporations.
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