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New Zealand Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Dec 2011, Pages: 53
New Zealand 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 New Zealand's pharmaceuticals and healthcare industry.
While New Zealand has a highly developed healthcare services system, its pharmaceutical market is not a particularly attractive prospect for multinationals. Even though the country’s risk profile is relatively benign (although market access barriers do exist), issues such as a strict pricing and reimbursement regime and approval delays will continue to deter multinational involvement in a market that is currently valued at just US$1bn, partly due to a small population.
Headline Expenditure Forecasts
- Pharmaceuticals: NZD1.31bn (US$946mn) in 2010 to NZD1.34bn (US$1.065bn) in 2011; +2.2% in local currency and +12.6% in US dollar terms. Forecasts unchanged from Q411.
- Healthcare: NZD18.71bn (US$13.49bn) in 2010 to NZD19.12bn (US$15.19bn) in 2011; +2.2% in local currency and +12.6% in US dollar terms. Forecasts virtually unchanged from Q411.
- Medical Devices: NZD819mn (US$590mn) in 2010 to NZD810mn (US$644mn) in 2011; -1.0% in local currency and +9.1% in US dollar terms. Local currency forecast significantly down on Q411 due to exchange rate considerations.
Business Environment Rating: New Zealand’s unchanged score of 56.3 out of 100 in the Q112 Pharmaceutical Business Environment Ratings (BERs) again places it ninth within the 18-strong regional Asia Pacific matrix. However, its Rewards score remains very poor (at just 43 and therefore also below the regional average of 51), as its Industry Rewards potential is considerably below par for a developed country due to a strong focus on cost-containment. Its relatively high matrix placement is, therefore, largely a function of its favourable risk profile.
Key Trends & Developments
In September 2011, Pharmaceutical Management Agency (PHARMAC) was facing criticism for putting patients at risk, following the death of two patients that had reportedly taken German pharmaceutical company Boehringer Ingelheim's new blood thinner Pradaxa (dabigatran etexilate). The agency said that the drug's safety profile was fully evaluated before its inclusion into the PHARMAC formulary. However, medical director Peter Moodie said the agency was aware of bleeding risks related to the drug. PHARMAC has come under fire for introducing the drug to the market before providing enough product knowledge to the doctors, according to some medical experts.
In the same month, the New Zealand government launched a new national drug formulary in the country. The New Zealand Medicines Formulary (NZMF) will operate as a one-stop-shop offering clinical information as well as classification and subsidy status on medicines. According to Associate Health Minister Peter Dunne, the NZMF will become an up-to-date, comprehensive and New Zealand-specific medicines information resource for the country's health professionals. Dunne added that the formulary will offer concise, independent, evidence-based medicines information and guidance on best practice, and will be available in all service areas. The NZMF is scheduled to launch across the sector within the next 12 months.
Economic View: While New Zealand's Q111 real GDP growth came in at a surprisingly strong 0.8% quarter-on-quarter (q-o-q), it posted dismal seasonally adjusted growth of 0.1% in Q211, as the economy took the brunt of the latest series of earthquakes and aftershocks in Canterbury, which was reflected in the sharp drop in private consumption. As this process of consumer deleveraging continues, and due to the weakening of the local currency, we are pencilling in 1.0% real GDP growth for 2011 (below the 2.5% Bloomberg consensus). However, this will rebound to 1.7% in 2012 (below consensus of 3.9%), which will clearly have a bearing on the availability of government finances for healthcare and pharmaceuticals.
Political View: Despite a confluence of negative events – including a number of earthquakes in Canterbury and the Rena oil spill – we maintain our view that the ruling New Zealand National Party will win a second term in office. The party's timely response to these disasters should help retain critical votes and we anticipate a re-election victory on November 26 2011. We therefore envisage little change to the direction of country’s healthcare policy.
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