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Australia Pharmaceuticals & Healthcare Report Q1 2013 - New Market Report

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2012-12-09 13:39:11 - New Healthcare research report from Business Monitor International is now available from Fast Market Research

BMI View: The country's health expenditure will continue to increase with the increasingly ageing population and the need for the government to subsidise more drugs to treat chronic, non-communicable disease. Such a rise in expenditure will attract pharmaceutical firms despite the low growth potential in the developed market. However, given the poor fiscal outlook in the general economy, we believe such a generous healthcare system will be unsustainable over the long term and the country will continue look at cost-cutting measures, negatively affecting the earnings of pharmaceutical firms. .

Headline Expenditure Projections

* Pharmaceuticals: AUD12.85bn (US$13.27bn) in 2011 to AUD13.07bn (US$13.59bn) in 2012; +1.6% in local currency terms and +2.4% in US dollar terms due to exchange rate fluctuations. Forecast broadly

in line with Q412.
* Healthcare: AUD122.27bn (US$126.22bn) in 2011 to AUD127.37bn (US$132.47bn) in 2012; +4.2% in local currency terms and +5.0% in US dollar terms due to exchange rate fluctuations. Forecast broadly in line with previous quarter.
* Medical Devices: AUD5.57bn (US$5.75bn) in 2011 to AUD5.82bn (US$6.05bn) in 2012; +4.4% in local currency terms and +5.2% in US dollar terms due to exchange rate fluctuations. Forecast broadly in line with Q412.

Full Report Details at
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Risk/Reward Rating: In BMI's Q113 Asia Pacific Pharmaceutical and Healthcare Risk/Reward Ratings (RRRs), while Australia's overall RRR score remains 66.2, its ranking has improved from third to second out of the 18 key markets in the region due to the decline in South Korea's RRR. Australia's affluent and increasingly ageing population, coupled with its proper legal framework, will continue to attract pharmaceutical firms to the country. However, profit growth will be limited given that it is a developed market.

Key Trends And Developments

* In September 2012, CSL secured a five-year vaccine supply contract with the US government. The indefinite delivery and quantity contract could be worth up to US$1.5bn (if there is a pandemic).
* In the same month, the government committed another AUD4bn (US$4.13bn) to address fundamental inequalities in dental care. It is looking to fund the programme through cutting the Teen Dental Plan, which cost about AUD60mn (US$62mn) a year and is budgeted to cost AUD98mn (US$101mn) in 2014/15. The rest of the funding is expected to come from the cancelled Chronic Disease Dental Scheme
* In August 2012, GlaxoSmithKline (GSK) sold 25 of its pharmaceutical brands to Aspen for US$262mn after it ended the Pharmannuity and Valtrex agreements with Ascent on July 31 2012. GSK had already sold a portfolio of over-the-counter (OTC) products in several countries in April 2012.

BMI Economic View: Australia's economy is on the brink of recession as the unsustainable pillars of growth are giving way. The structural shortcomings that we have highlighted over recent years are now being revealed and we see potential for a period of significant economic instability as the country's muchneeded rebalancing process begins in earnest. We remain bearish towards the Australian dollar and Australian financials. We still see some value in government bonds, particularly on a relative basis.

BMI Political View: Due to the lack of policy direction of the Australian Labour Party (ALP), the popularity of the Australian Greens has been growing, leaving the ruling party increasingly marginalised. Even with the ALP's latest attempt to refocus on industrial relations and workers' rights, these efforts are unlikely to succeed and the ALP could face a severe defeat in the 2013 federal election. From a business environment perspective, attempts by the ALP to win back votes by focusing on workers' rights could add to businesses' woes amid an economic downturn.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at or call us at 1.800.844.8156.

Bill Thompson
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