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Spain Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Oct 2011, Pages: 99
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.
BMI View: BMI believes the Spanish government's decision to implement further austerity measures is a necessary and prudent course of action. The country still has the third highest budget deficit in the eurozone and continues to receive negative attention from bond markets. However, its decision to further target the pharmaceuticals and healthcare sector will not sit well with drug companies, as the overall austerity measures have had a crimping effect on overall economic growth in Spain. Cost-containment within the healthcare sector will significantly affect revenue-earning opportunities for drugmakers.
Headline Expenditure Projections:
Pharmaceuticals: EUR16.08bn (US$21.33bn) in 2010 to EUR15.57bn (US$22.26bn) in 2011; -3.2% in local currency terms and +4.4% in US dollar terms.
Healthcare: EUR103.15bn (US$136.83bn) in 2010 to EUR105.13bn (US$150.33bn) in 2011; +1.9% in local currency terms and +9.9% in US dollar terms.
Medical Devices EUR4.10bn (US$5.44bn) in 2010 to EUR4.20bn (US$6.01bn) in 2011; +2.5% in local currency terms and +10.5% in US dollar terms.
Business Environment Rating:
In BMI's Business Environment Ratings (BERs) for Q411, Spain is ranked eighth of the 10 countries surveyed in Western Europe, maintaining its place above both Italy and Portugal. While Spain offers investors positives, such as its large drug market, it also displays several downfalls, such as low population growth, cumbersome bureaucracy, provincial differences with regard to drug regulation and reimbursement, and modest forecast market expansion due to cost-containment measures. The key components of Spain's score are examined below.
Key Trends & Developments:
- On July 21 2011, the country's Ministry of Health and the inter-territorial cabinet of ministers approved new austerity measures aiming to cut spending on drugs by EUR2.4bn (US$3.4bn).
- In August 2011, it was revealed that jobs in the Spanish pharmaceutical sector are under threat as the government is delaying payments for medicines. This led to the shutdown of operations in approximately 85% of 1,300 pharmacies in the Castilla-La Mancha region for a day. The pharmacies were protesting against the government's lack of payment of debts totalling EUR130mn (US$184mn), according to Dolores Espinosa, president of a regional pharmacy industry group.
BMI Economic View:
According to a host of leading indicator data, Spain's economic recovery remains weak by regional standards, and BMI holds to BMI's forecast for real GDP growth to come in at 0.7% in 2011 following the 0.1% contraction witnessed in 2010. Aggressive fiscal austerity, rising interest rates, stubbornly high unemployment and ongoing deleveraging within the private sector will keep growth well below potential over the medium term, and at this juncture, BMI does not rule out a foray back into recessionary territory within the next few quarters.
BMI Political View:
The calling of early elections in Spain has intensified political risk at a time when eurozone debt contagion fears are already heightened, which could see the country's sovereign credit worthiness come into yet further doubt. While the opposition People's Party (PP) is expected to be assured of victory come November, any signals that economic reform efforts might slow under a new administration, and the release of further poor economic data could yet push Spain towards requesting an EU bailout.
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