New Zealand Pharmaceuticals and Healthcare Report Q1 2013

BMI View: Low growth potential in New Zealand's pharmaceutical market will attract risk-averse investors. However, we note that regulatory delays in funding new medicines will hinder patients' access to pharmaceuticals, constituting a downside risk for drug companies looking to sell their products in the country.

Headline Expenditure Forecasts:

- Pharmaceuticals: NZD1.35bn (US$1.07bn) in 2011 to NZD1.36bn (US$1.04bn) in 2012;
+1.2% in local currency and -2.7% in US dollar terms.

- Healthcare: NZD19.34bn (US$15.29bn) in 2011 to NZD19.93bn (US$15.14bn) in 2012; +3.0
%in local currency and -1.0% in US dollar terms.

- Medical Devices: NZD814mn (US$644mn) in 2011 to NZD832mn (US$632mn) in 2012;
+2.2% in local currency and -1.8% in US dollar terms.

Risk/Reward Rating:

New Zealand was ranked 10th out of 18 pharmaceutical markets surveyed in the Asia region in Q113. Its score is dragged down by a low industry rewards score, due to its small and relatively low-growth potential market, and a low industry risks score because of its regulatory processes.

In terms of Rewards, New Zealand is rated highly thanks to a stable economic and political environment and developed regulatory regimen.

Key Trends & Developments:

- The non-governmental organisation Diabetes New Zealand has stated that the economic costs of diabetes to the country will be more than NZD1bn (US$776mn) annually unless the population changes its eating habits. According to the Ministry of Health, there were 208,075 people with diabetes in 2011 and 21,000 cases are expected to be diagnosed by the end of 2012. Importantly,
this number is attributed mostly to the increase in type 2 diabetes that is associated with obesity.

In contrast, patients with type 1 diabetes account for less than 10% of the patient population.

- In October 2012, the New Zealand Pharmaceutical Management Agency (PHARMAC)
approved funding for several Pfizer New Zealand products. The agency made the decision,
scheduled to come into force from November 1, after considering all consultation responses received by September 14. Products approved for funding include Vfend (voriconazole) for invasive fungal infections, Loniten (minoxidil) for severe refractory hypertension and Sutent (sunitinib) for imatinib refractory or intolerant, unresectable or metastatic malignant gastrointestinal stromal tumours. PHARMAC, which gave approval with some amendments,
also cleared Zithromax (azithromycin granules for oral liquid), Fragmin (dalteparin sodium) and midazolam injections.

- In October 2012, it was reported that New Zealand-based retailer Countdown , which is owned by Progressive Enterprises, plans to develop pharmacies within its supermarkets. Countdown will operate the pharmacies as a joint venture with Lindsay Smith, a pharmacist who co-founded the Amcal brand. The pharmacies will be trialled in stores in Newtown, Wellington, and Palmerston North. The pharmacies in existing stores are expected to open in December,
providing prescription and pharmacy-only medicines. Countdown plans to open more pharmacies to other stores in 2013.

BMI Economic View: September readings of the performance indices for New Zealand's manufacturing and services sectors showed that both were in contraction since July 2009. The contraction in employment sub-indices for both sectors suggests that the unemployment rate will likely rise to meet our forecast of 7.0% by end-2012 and potentially rise further in 2013. We believe the government's introduction of youth rates is a step in the right direction to help ease youth unemployment,
although we expect its effect on the overall unemployment rate to be marginal.

BMI Political View: New Zealand's ruling centre-right National party has maintained a comfortable lead over the opposition parties in polls even as it pursues the sale of state-owned assets, which remains contentious. However, the changing structure and dynamics of the political scene, such as proposed changes to the electoral system, environmental concerns, and Maori ownership claims, suggest that the National party is likely to become more centrist as its term progresses. Nonetheless, this could lead to greater uncertainty and costs to both the government and private firms, ultimately to the ruling party's detriment. SHOW LESS READ MORE >

Executive Summary 5

SWOT Analysis 7

New Zealand Pharmaceuticals & Healthcare Industry SWOT 7

New Zealand Political SWOT 8

New Zealand Economic SWOT 8

New Zealand Business Environment SWOT 9

Risk/Reward Ratings 10

Pharmaceuticals Risk/Reward Ratings 10
Table: Asia Pacific – Regional Risk/Reward Ratings Q113 10

Rewards 11

Risks 11

New Zealand – Market Summary 13

Regulatory Regime 14

Intellectual Property Protection 14

Pricing And Reimbursement 15

Reimbursement Funding 18
Table: Leading Therapeutic Groups By PHARMAC Expenditure (NZDmn) 19
Table: Top 20 Medicines By Ex-Manufacturer Cost To PHARMAC In The Year Ending June 2010 (NZDmn) 20
Table: Top 20 Medicines Reimbursed By PHARMAC According To Prescription Numbers In The Year Ending June 2010 21

Recent Regulatory Developments 21

Industry Developments 23

Epidemiology 23

Healthcare Sector 24

Infrastructure 26

Services 26

Workforce 28
Table: Regional Ranking of Projected Physicians, 2017 28
Table: Projected Physicians, 2012-2017 29

Latest Figures 29

Active Medical Practitioners, 2005-2010 29

Distribution Channels 31

Drug Wholesaling 31

Leading Wholesalers 31

Drug Retailing 31

Leading Pharmacy Chains 32
Table: Pharmacybrands Stores by Company & Region, 2010 33

Radius Pharmacy 33

Research and Development (R&D) 33

Clinical Trials Sector 34

Medical Devices 36

Medical Devices Classes In New Zealand 36

Industry Forecast Scenario 38

Pharmaceutical Market Forecast 38
Table: Pharmaceutical Sales Indicators 2008-2016 39

Healthcare Market Forecast 40
Table: Healthcare Expenditure Indicators 2008-2016 40
Table: Healthcare Governmental Indicators 2008-2016 41
Table: Healthcare Private Indicators 2008-2016 41

Key Growth Factors – Macroeconomic Forecast 43
Table: Economic Activity 46

Prescription Drug Market Forecast 47
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 50

OTC Drug Market Forecast 51
Table: OTC Medicine Sales Indicators 2008-2016 52

Pharmaceutical Trade Forecast 53
Table: Exports and Imports Indicators 2008-2016 54

Medical Device Market Forecast 55
Table: Medical Devices Sales Indicators 2008-2016 55

Other Healthcare Data 57

Key Risks To BMI's Forecast Scenario 58

Competitive Landscape 59

Pharmaceutical Industry 59
Table: Licensed Medicine Manufacturers, 2008 59

Company Developments 61

Company Profiles 63

Douglas Pharmaceuticals 63

New Zealand Pharmaceuticals 65

Demographic Outlook 67

Population By Age Group 68

Population By Age Group 69

Key Population Ratios 70

Rural and Urban Population 70

Glossary 71

BMI Methodology 73

How We Generate Our Pharmaceutical Industry Forecasts 73

Risk/Reward Ratings Methodology 74

Ratings Overview 74
Table: Pharmaceutical Business Environment Indicators 75

Weighting 76
Table: Weighting Of Components 76

Company Profiles
Douglas Pharmaceuticals
New Zealand Pharmaceuticals