2013-03-23 08:26:15 - New Healthcare research report from Business Monitor International is now available from Fast Market Research

BMI View: We forecast continued growth in Romania's pharmaceutical market due to greater private contributions to the cost of healthcare and a return to slight economic growth in 2013. The partial removal of elements of the clawback tax will undoubtedly provide the industry with a slight boost this year. In terms of debts and timeliness of payments, the CNAS is still within its remit to reimburse drugmakers some 210 days after request and almost RON6.3bn (EUR1.44bn) of debts remain unpaid to the industry. The tax remains most punitive for generic drugmakers with lower-value medicines and could lead to these cheaper medicines exiting the market. The tax continues to weigh down BMI's assessment of Romania's Pharmaceutical and Healthcare Risk/Reward ratings.


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Headline Expenditure Projections

* Pharmaceuticals: RON13.52bn (US$3.90bn) in 2012 to RON14.6bn (US$4.25bn) in 2013; +8.0% in local currency terms and +9.1% in US dollar terms. Local currency forecast up from Q113 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.
* Healthcare: RON32.07bn (US$9.25bn) in 2012 to RON34.37bn (US$10.01bn) in 2013; +7.2% in local currency terms and +8.2% in US dollar terms. US dollar forecast revised upwards from Q113 due to macroeconomic factors.

Risk/Reward Rating

Romania's pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is the case for all other countries in BMI's proprietary system, which ranks pharmaceutical markets according to their attractiveness to multinational drugmakers. A minor re-weighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q312 updates of the Pharmaceuticals & Healthcare reports. Romania has a RRR score of 55.3 out of 100, making it the sixth most attractive pharmaceutical market in the Central and Eastern Europe region.

Key Trends And Developments

* In February 2013 the Romanian Constitutional Court ruled that part of the clawback tax was unconstitutional. The calculation method for determining the amount the industry had to pay the Romanian government used the post-VAT price of medicines, thereby inflating the amount due back to the government. The court ruled that drugmakers had been unfairly double-taxed by the provision.
* An estimated EUR85mn (US$110mn) was expected to be collected by the Romanian health ministry through the claw-back tax in 2012, supplementing the EUR33mn (US$43mn) allocated to the ministry by the government. The tax revenue, planned to be transferred to the single health insurance fund, was to be spent on hospitals, with priority given to regional network and emergency hospitals. Newly launched drugs and medical supplies supervision programmes in Romania were also reportedly to be allocated EUR880,000 (US$1.14mn).
* Private health providers and insurers have collaborated to offer Romanian consumers private health insurance. While most Romanians are registered on state health insurance (CNAS), this offering will likely be taken up by middle class Romanians tired of the country's dysfunctional healthcare system.
* In October 2012, it was revealed that medicines and sanitary materials for emergency care units would be procured centrally in Romania from 2013, according to statements made by the interim health minister Raed Arafat. The government will issue tenders for all medicines and sanitary materials that are used in the 63 state-funded emergency care centres in the country. The tenders will help to control cost in emergency care, thereby reducing healthcare expenditure. The public health departments and health units have also been asked by Arafat to spend all available funds so that none remains at the end of the year.
* A new proposal related to patient co-payment rules in Romania stipulates that patients with a compulsory health insurance policy might pay less in patient co-payments, reported PMR in September 2012. The proposal suggests RON2-RON4 (US$0.57-1.15) patient co-payment tariffs for a consultation, subject to the professional qualifications of the doctor. The proposal also recommends RON10-30 (US$2.87-8.63) patient tariffs for one day in hospital and RON20-40 (US$5.75-11.51) for an extended hospital
* Around 88.5% of Romanians prefer innovative drugs for the treatment of serious illnesses, Business Review reported in October 2012, citing a survey conducted by the IMAS Marketing & Sondaje Institute. Almost 80% of respondents feel that it is imperative to buy innovative drugs; however, only 19.5% were able to distinguish between generic drugs and original drugs. Of the total 1,036 Romanians surveyed, 45% stated that they wanted access to innovative drugs and 17% preferred generic drugs.

BMI Economic View

Disappointing Q312 data released by the Romanian Institute of National Statistics has led us to revise our forecasts for real GDP growth to 1.7% in 2013 and 3.1% in 2014, from 2.2% and 3.5% respectively. In line with our previous forecast (see our online service, September 9 2012, 'Teetering On Full-Year Recession real GDP growth slowed in Q312, contracting by 0.5% y-o-y, the largest quarterly GDP contraction since Q410, and grew by just 0.2% y-o-y in unadjusted real GDP terms in the first nine months of 2012. While poor weather conditions and inflated oil prices contributed to the sluggish growth figures in 2012, we see weakened growth in Europe and heightened uncertainty over the future of the eurozone continuing to weigh on Romanian growth for the next few quarters.

BMI Political View

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