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Romania Pharmaceuticals and Healthcare Report Q3 2012
BMI View: Although the fall of Romania’s government in a no-confidence vote in late April was a surprise, apart from changes in risk sentiment negatively affecting our outlook for the leu, the formation of a new interim government, which will be in charge until elections in November 2012, has not had a major impact on our 2012- 2013 projections for the pharmaceutical or healthcare market. We have not had to make significant amendments to our forecast scenario for this period. We continue to highlight the burdensome nature and unpredictability of the recently reintroduced claw-back tax on drugmakers, which weighs heavily on the attractiveness of the market.
Headline Expenditure Projections:
- Pharmaceuticals: RON12.76bn (US$4.19bn) in 2011 to RON13.49bn (US$4.19bn) in 2012; +5.7% in local currency terms and -5.3% in US dollar terms. Forecast in local currency terms unchanged from Q212, but weaker in US dollar terms due to leu weakness.
- Healthcare: RON28.13bn (US$9.23bn) in 2011 to RON29.43bn (US$8.74bn) in 2012; +4.6% in local currency terms and -6.3% in US dollar terms. Forecast broadly unchanged from Q212.
- Medical devices: RON1.56bn (US$512mn) in 2011 to RON1.65bn (US$451mn) in 2012; +5.5% in local currency terms and -5.5% in US dollar terms. 2011 figures revised upwards based on stronger than expected medical device expenditure recovery. Risk/Reward Rating: Romania’s pharmaceutical market has held steady in our latest Risk/Reward analysis coming in at 56.8 in Q312, holding its rank of sixth place in the 20 pharmaceutical markets of Central and Eastern Europe. Globally, Romania is now 30th of the 95 markets assessed.
Key Trends And Developments
- In February, following the resignation of Emil Boc’s government, we highlighted the fact that we expected the healthcare reforms which were being reconsidered for introduction would be less likely to progress until after November’s elections. The formation of an interim government further supports this view. This underlines the fact that these healthcare reforms, which offered significant opportunities for private healthcare insurers in the country, are unlikely to get through the legislature until mid-2013 and have a high chance of being abandoned entirely.
- One of the most encouraging signs from the interim government, formed by the previously opposition Social-Liberal Union (USL), is the confirmation of its commitment to Romania’s EUR3.5bn IMF Stand-By Arrangement and the EU’s EUR1.5bn balance of payments support. We expect this will anchor investor confidence in the country’s sovereign credentials. In similarity to parts of Western Europe, namely France and Greece, Romanian president Traian Basescu’s decision to appoint USL leader Victor Ponta as interim prime minister is indicative of the shift to anti-austerity sentiment in the country. It is also likely that USL or a component party will win the elections in November, so policy proposals for this sector will be of interest.
- Romania has a new minister for public healthcare, with Vasile Cepoi replacing Ladislau Ritli, who had only been in the position since November 2011. Cepoi was appointed as state secretary at the ministry in January this year. He has been head of the healthcare insurance house in Iasi since 2001 and was general executive director of the national insurance house, the CNAS, between 2005 and 2008. In another major change to the leadership of medical provision in the country, the president of the CNAS, Lucian Duta, announced his resignation in May and is expected to be replaced soon.
- In Bulgaria, new heads of the Ministry of Health and National Health Insurance Fund was a sign that the pace of drug policy and healthcare reform in the country was accelerating – they had a strong mandate and backing from the prime minister. In contrast, in Romania an interim health minister may propose new policies and is likely to work on healthcare reforms that are currently in a discussion stage, but it is very unlikely that significant health or drug policy reforms will be approved before the elections. Furthermore, due to the controversial aspects of Romania’s healthcare reforms, which were unceremoniously pulled in January after critical Deputy Health Minister Raed Arafat resigned – triggering austerity protests and demonstrations – the heads of political parties may try and avoid an overly open debate on healthcare reforms. There is little political benefit from discussing the necessary changes and a high chance of a public backlash to anything remotely austere.
- Some of the most damaging drug policy reforms have already been introduced. In 2010-2011, significant amendments to the reimbursement regime have shifted consumption towards generic medicines. More recently, the reintroduction of the claw-back tax, as has been consistently highlighted by BMI, has significantly – and negatively – affected the attractiveness of the market to local and multinational drugmakers. Industry anger towards the claw-back tax is likely to remain but following a Court of Appeal decision in March 2012, it looks like the legal actions to fight it have failed. The unpredictability of this tax, as it is based on CNAS’ overspend of its own underfunded budgets, makes the levy particularly burdensome for drugmakers operating in the country. Furthermore, co-payments in the public healthcare service, which were set to be introduced in February 2012, have faced significant delays in implementation and further modifications are under discussion.
BMI Economic View: We have revised down Romania’s real GDP growth forecast to 1.0% and 2.1% in 2012 and 2013, from 1.4% and 2.3% respectively. Renewed uncertainty over the future of the eurozone will weigh on Romania’s trade and investment flows, while the domestic banking sector’s exposure to deleveraging Western European parent banks is set to limit credit availability and weigh on headline growth going forward.
BMI Political View: We expect Romania’s interim USL coalition government to win upcoming parliamentary elections in November. The USL will remain committed to the terms of Romania’s IMF Stand-By Arrangement, although we expect some re-negotiations to take place. Continued IMF-led reforms will likely cost the USL in popularity in the coming months, and we believe that significant challenges to Romania’s economy could test the USL’s cohesion.
SWOT Analysis 8
Romania Pharmaceuticals And Healthcare Industry SWOT 8
Romania Political SWOT 10
Romania Economic SWOT 10
Romania Business Environment SWOT 11
Pharmaceutical Risk/Reward Ratings 12
Table: Emerging Europe Pharmaceutical Risk/Reward Ratings, Q312 12
Romania – Market Summary 16
Regulatory Regime 18
Intellectual Property Issues 18
Reimbursement Regime 21
Reimbursement Regime Developments 21
Claw-back Tax 22
Pricing Regime 23
Industry Developments 26
Healthcare Sector 27
Possible Delays To Further Healthcare Reforms 28
Approved Healthcare Reforms In Brief 29
Drafted But Withdrawn Structural Healthcare Reforms 30
Private Healthcare Services 31
Payment Delays And Propensity To Pay 33
Industry Forecast Scenario 34
Pharmaceutical Market Forecast 34
Table: Pharmaceutical Sales Indicators 2008-2016 36
Key Growth Factors – Industry 37
Table: Healthcare Expenditure Indicators 2008-2016 38
Table: Government Healthcare Indicators 2008-2016 38
Table: Private Healthcare Indicators 2008-2016 39
Key Growth Factors – Macroeconomic 40
Table: Romania Economic Activity, 2011-2016 45
Prescription Drug Market Forecast 46
Table: Prescription Drug Sales Indicators 2008-2016 47
Patented Drug Market Forecast 48
Table: Patented Drug Market Indicators 2008-2016 49
Generic Drug Market Forecast 50
Table: Generic Drug Sales Indicators 2008-2016 51
OTC Medicine Market Forecast 52
Table: OTC Medicine Sales By Subsector, 2007-2010 53
Table: OTC Medicine Sales Indicators 2008-2016 54
Pharmaceutical Trade Forecast 55
Table: Exports And Imports Indicators, 2008-2016 58
Medical Device Market Forecast 59
Table: Medical Devices Sales Indicators 2008-2016 61
Key Risks To our Forecast Scenario 62
Competitive Landscape 63
Pharmaceutical Industry 63
Pharmaceutical Company Developments 65
Company Profiles 70
Local Companies 70
Zentiva Romania 70
Actavis Romania (Sindan) 72
Antibiotice Iasi 77
LaborMed Pharma 81
Multinational Companies 83
GlaxoSmithKline (Europharm) 83
Merck & Co 91
Demographic Outlook 92
Table: Romania’s Population By Age Group, 1990-2020 (‘000) 93
Table: Romania’s Population By Age Group, 1990-2020 (% of total) 94
Table: Romania’s Key Population Ratios, 1990-2020 95
BMI Methodology 98
How We Generate Our Pharmaceutical Industry Forecasts 98
Pharmaceutical Risk/Reward Ratings Methodology 99
Ratings Overview 99
Table: Pharmaceutical Business Environment Indicators 100
Table: Weighting Of Components 101
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