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Viewing report
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Greece Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Oct 2011, Pages: 89
BMI View:
It is now beyond doubt that drugmakers – particularly domestic producers, primarily exposed to their home market – are faced with the most challenging operating environment in Europe. BMI's view that Greece's pharmaceutical market is set for a decade of decline remains firmly in play.
The list of challenges is sizeable: the combination of price erosion mechanisms; rapid generic drug substitution; out-of-control hospital debt; extensive payment delays; drug shortages; and the prospect of a 'money saving' positive reimbursement list are a few of obstacles faced by those operating in the market.
Headline Expenditure Projections:
Pharmaceuticals: EUR7.20bn (US$9.55bn) in 2010 to EUR6.48bn (US$9.26bn) in 2011: -10.0% in local currency terms and -3.0% in US dollar terms. Local currency forecast broadly unchanged since Q311, up in US dollar terms.
Healthcare: EUR22.87bn (US$30.34bn) in 2010 to EUR22.02bn (US$31.49bn) in 2011; -3.7% in local currency terms and +3.8% in US dollar terms. Historic figures updated, forecast broadly unchanged from Q311 up in US dollar terms.
Medical devices: EUR959mn (US$1.27bn) in 2010 to EUR886mn (US$1.27bn) in 2011; -7.6% in local currency terms and -0.4% in US dollar terms. Forecast broadly unchanged since Q311
Business Environment Rating
Despite a moderate improvement in Greece's BER score for Q411, the upward revision is solely due to a previous revision in BMI's historic data favouring the Industry Rewards Indicators that assesses high per-capita expenditure and absolute market size. However, BMI's view that Greece's pharmaceutical market is set for a decade of decline remains firmly in play. Greece's overall BE rating stands at 58.8 for Q411, ranking it fourth in the region and still well below its historic leading position.
Key Trends & Developments
On July 01 2011, a new drug pricing bulletin came into effect detailing further price cuts for pharmaceuticals in Q3 and Q411. The list covers over 13,149 pharmaceutical preparations and is available in its entirety on the websites of the Ministry of Health and the Hellenic Association of Pharmaceutical Companies (SFEE). The Ministry of Health continues to implement legislation Article 14 of Law 3840/2010, which sets the prices of medicines to the average of the three lowest prices in the 22 EU countries.
In July 2011, the SFEE stated that it believed ongoing efforts to compress the prices of medicines and the one-sided focus of the state on this area did not constitute a solution for the rationalisation of healthcare expenditure. The association highlights that state price reductions have disrupted the market and caused significant shortages of medicines, potentially endangering patients.
The SFEE believes the state should focus its attention on other parts of the health sector, particularly controlling the distribution network, completing the IT infrastructure of the health system and establishing electronic prescribing.
BMI believes the highly vocal opposition from industry associations will not be acted on by the PASOK government and this means continued operating challenges for drugmakers. Within the context of the current Greek economic and political environment, which has seen enraged voters swamp the streets in protest over the fiscal austerity package, the vocal objections of the industry is unlikely to have considerable political leverage.
Supported by its highly pessimistic projections, BMI continues to believe the Greek drug industry is unlikely to achieve government concessions relating to pricing and expect new measures (with particular regard to the positive reimbursement list) to maintain financial pressure on the local industry and international companies operating in the market.
BMI Economic View:
The Greek economy remains in a precarious state. The impact of fiscal consolidation and internal devaluation are clear to see, with unemployment in the double digits and most sectors of the economy getting severely hammered. BMI still expects some form of sovereign debt default, though warn that a poorly executed restructuring poses the most significant risk to the economy.
BMI Political View:
Greece's political landscape is likely to become more tumultuous in the coming years. The legacy of fiscal profligacy and economic distortions will leave an indelible mark on the Greek economy and society, with political voices potentially becoming more fragmented. As such, a prolonged bout of austerity and instability is expected in the decade ahead.
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