2013-12-08 02:38:21 - Recently published research from Business Monitor International, "Australia Pharmaceuticals & Healthcare Report Q1 2014", is now available at Fast Market Research
We maintain our broad view toward Australia's pharmaceutical and healthcare sectors, as new Prime Minister Tony Abbott stated that 'there will be no cuts to health'. While the country's ageing population will continue to spur demand for medical services, we note that a downside risk to our forecasts is potential cuts to healthcare spending as the country, like many other developed states, runs the risk of unsustainable health expenditure acceleration.
Headline Expenditure Projections
* Pharmaceuticals: AUD13.23bn (US$13.73bn) in 2012 to AUD13.72bn (US$13.51bn) in 2013; +3.7% in local currency terms and -1.4% in US dollar terms, due to exchange rate fluctuations. Forecast was slightly upgraded after taking into account new data from Pharmaceutical Benefits Scheme's expenditure.
* Healthcare: AUD135.7bn (US$140.5bn) in 2012
to AUD142.0bn (US$139.8bn) in 2013; +4.6% in local currency terms and -0.5% in US dollar terms, due to exchange rate fluctuations. Forecast remained unchanged from Q413.
Full Report Details at
- www.fastmr.com/prod/723415_australia_pharmaceuticals_healthcare_ ..
Australia's Pharmaceutical Risk/Reward Rating (RRR) score for Q114 is 67.0 out of the maximum 100 in our newly improved RRR system. The country scored above average for all indicators and sub-indicators including overall market expenditure, sector value growth, pensionable population. With this high score, Australia ranks second, behind Japan and South Korea out of the 19 key Asia Pacific markets. This is an improvement from the third position in Q413, due to a downgrade in South Korea pharmaceutical market.
Key Trends And Developments
* In September 2013, Pfizer Australia announced plans to close its West Ryde plant, which produces tablets and capsules for both humans and animals, in 2015. The shutdown will take place in phases and will result in a loss of nearly 140 jobs. According to Manufacturing Operations Director Justin Mathie, the decision reflects the requirement to align the company's global manufacturing capacity with the needs of its business,
* In the same month, Telstra bought e-health software company Database Consultants Australia (DCA) to expand and diversify its healthcare portfolio. Telstra reportedly made the acquisition to develop and sustain a strong portfolio of healthcare businesses. The company has already made some important capital investments in 2013 in the online healthcare sector, such as the online health directory and appointment booking service HealthEngine, and in IP Health.
* In August 2013, Australia released a guidance document entitled 'Evaluation of Biosimilars'. This document will assist sponsors to identify data necessary to support applications for the registration of biosimilars, as well as clarifying the scientific and regulatory principles used by the Therapeutic Goods Administration (TGA) to evaluate these applications. Under the guidance, TGA clearly defined the difference between a biosimilar and a generic drug, stating that 'biosimilars are complex, microheterogenous mixtures of isoforms of the desired substance', unlike generic drugs which are 'chemically derived small molecules'. Consequently, 'principles relevant to the evaluation and use of generic drugs cannot be simply extrapolated to biosimilars'.
BMI Economic View: Apart from the large number of small parties that the incoming coalition will need support from, the divisions within the Liberal-National coalition itself suggests that Prime Minister Tony Abbott will face more challenges to push through certain business environment reforms. The opposing stance held by the Liberal and National parties on issues such as foreign investment suggests that Abbott will be less successful, with delays and increasingly sector-specific regulation likely. That said, we believe that labour market reforms are likely to be easier and expect the coalition to increase its efforts, providing businesses with some reprieve even as economic activity slows.
BMI Political View: Australia's Liberal-National coalition, led by Tony Abbott, was awarded 86 out of the 150 seats in the House of Representatives, taking the helm from Prime Minister Kevin Rudd's Australian Labor Party (ALP) after six years of rule. Over the course of the elections, the policy stance of both major parties has converged, suggesting that the sombre trajectory of Australia's fiscal finances will not change under the new government. Although we believe that the coalition government will attempt to improve the business environment, its lack of a majority in the Senate suggests that there are risks its policies will be diluted and delayed.
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