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Czech Republic Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Oct 2011, Pages: 101
BMI View: The expectations that the Czech Republic would return to moderately positive growth in 2011, before seeing negligible growth in 2012 have been revised downwards, and the author now projects very low growth for the current year as well as 2012. Despite this downward revision, BMI maintains that relatively high per-capita drug market expenditure compared with other Central and Eastern European (CEE) markets, combined with the relatively high penetration of patented drugs, continues to make the market attractive to international drugmakers.
Headline Expenditure Projections
- Pharmaceuticals: CZK80.57bn (US$4.24bn) in 2010 to CZK82.04bn (US$4.82bn) in 2011; +1.8% in local currency terms and +14.3% in US dollar terms. Forecast in local currency terms down significantly from Q311 due to analyst modification and macroeconomic factors.
- Healthcare: CZK279.35bn (US$14.63bn) in 2010 to CZK288.76bn (US$16.97bn) in 2011; +3.4% in local currency terms and +16.0% in US dollar terms. Historic figures revised, forecast broadly unchanged in local currency terms from Q311.
- Medical devices: CZK26.59bn (US$1.39bn) in 2010 to CZK27.82bn (US$1.64bn) in 2011; +4.6% in local currency terms and +17.4% in US dollar terms. Forecast down marginally in local currency terms from Q311 due macroeconomic factors.
Business Environment Rating: The Czech Republic's score declined as the increasingly pessimistic 2012 projections, as well as a more moderated long-term growth outlook, impacted the Industry Rewards component of the BERs.The Czech Republic lost the top spot in the Q411 Central and Eastern Europe (CEE) BERs, losing out to Poland. The Czech Republic's Q411 score decreased by 4.5% to 63.4 out of 100. The outlook for the Czech koruna, has also weakened lowering the assessment when measured in US dollar terms.
Key Trends & Developments
- The Czech Republic's healthcare reforms will provide additional funding for medical provision, but the majority of new resources will be required for higher salaries and offsetting VAT rises. As such, BMI believes the latest reforms, to take effect from January 2012, provide few opportunities for medical service and product suppliers. The shifting of some healthcare resources from the public insurance system to patient payments has not been welcomed by the population, but is necessary for the stability of the public healthcare system and the government's plans to reduce its fiscal deficit.
- In June 2011, in response to the expected passage of key drug policy reforms in the Czech Republic, BMI cut projections for the country's pharmaceutical market growth in 2012 and 2013, with the prospects of lower prices, impeded market entry and increased generic substitution the major contributing factors to the worsening outlook.
- In August, on the back of poor market data from Q111, the author revised expectations that the Czech Republic would return to moderately positive growth in 2011, before seeing negligible growth in 2012, and the author now projects very low growth for the current year and negative growth in 2012. Furthermore, a weakening economic outlook highlighted by BMI’s Country Risk team in September has led to an additional downgrade in the growth expectations for the market.
BMI Economic View: The author has revised down growth forecast for Czech real GDP to 2.3% in 2011 and 2.3% in 2012, from 2.4% and 3.2% previously. Mounting global macroeconomic headwinds and a persistently high degree of uncertainty in the eurozone have seen us downgrade the economic growth expectations in the Czech Republic's key export markets. That said, the author still believes net exports and investments will remain key drivers of growth given the expectation for both household and government spending to remain in the doldrums this year and next.
BMI Political View: The author holds to the view that ructions within the Czech Republic's centre-right coalition will continue to challenge the government's cohesion. However, as a result of the common goal of promoting fiscal sustainability, the author is increasingly seeing less scope for the view of a re-shuffling of the coalition to play out.
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