2013-02-01 01:57:15 - New Healthcare market report from Business Monitor International: "Serbia Pharmaceuticals & Healthcare Report Q1 2013"
BMI View: While the market is small in terms of absolute numbers, relative per capita spending on medicines is expected to improve over the long term. As the country continues its economic convergence with developed Europe, drug consumption is also expected to rise. However, financial inefficiencies within the health insurance system mean that the National Health Insurance Institution (RZZO) is unable to always meet its obligations on time, leaving patients to pay for formerly reimbursed medicines or hospitals having to cover the difference.
Full Report Details at
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Headline Expenditure Projections
* Pharmaceuticals: RSD75.70bn (US$1.03bn) in 2011 to RSD81.44bn (US$0.92bn) in 2012; +7.6% in local currency terms and -11.0% in US dollar terms.
* Healthcare: RSD347.71bn (US$4.74bn) in 2011 to
RSD367.32bn (US$4.14bn) in 2012; +5.6% in local currency terms and -12.6% in US dollar terms.
* Medical devices: RSD16.64bn (US$223mn) in 2011 to RSD19.98bn (US$223mn) in 2012; +20.1% in local currency terms and -0.7% in US dollar terms.
Risk/Reward Rating (RRR): In BMI's RRR matrix for Q113, Serbia scored 44.7 and ranked 17th out of 20 pharmaceutical markets surveyed in the Emerging Europe region. The Serbian market's key selling points include its advantageous geographical position, which allows easy access to the rest of Europe, a largely untapped pharmaceutical market and the low cost and abundant supply of skilled labour - a position helped by a growing network of free trade agreements. However, Serbia will continue to be a challenging market for foreign investors because of the prevalence of corruption, a large-scale black-market economy, and the poor state of the country's infrastructure and finances, in both public and private spheres.
Key Trends & Developments
* The government will introduce a central procurement policy for medical drugs in Serbia to eliminate price and structural mismatch between local pharmacies and the Republic Health Insurance Fund, according to finance and economy minister Mladjan Dinkic. The health ministry is expected to adopt measures to prevent accumulated debt in the country by the end of 2012. Dinkic asked the ministry to propose a law to convert the existing debt into public debt after negotiating with drug manufacturers. The law should allow conversion of some debt into public debt, with the remaining to be paid by the state over five years. The net debt in Serbia currently stands at RSD25bn (US$286mn), with RSD15bn (US$172mn) owed by the Republic Health Insurance Fund and RSD10bn (US$115mn) owed by local hospitals.
* The quality of healthcare in Serbia is the worst in Europe despite consolidated health spending of EUR20bn (US$26bn) over the last 10 years, Doctors Against Corruption announced in October 2012. Serbia was ranked last among the 34 European countries for its mortality rate, with 14 deaths per 1,000 inhabitants. The country was ranked third in the region for mortality and number of patients suffering from heart disease. The poor healthcare in Serbia has been attributed to bad health policies since 2002 and growing corruption. Doctors Against Corruption said citizens spend EUR225 (US$291) on average on bribes, 57% of which goes to doctors. Lack of basic medical supplies in hospitals, limited access to medicines and a large section of the population without health cards were indentified as indicators of the deteriorating healthcare system in Serbia.
BMI Economic View We forecast Serbia's current account deficit to widen to 11.6% of GDP in 2012 from 9.3% in 2011. The perennially high deficits are the result of several structural factors including an economic model that has focused on consumption rather than export competitiveness. Government policy has also been an important driver of the widening shortfall, particularly the fiscal expansion in the run-up to the May general election. The budget deficit increased from 4.5% of GDP in 2011 to 7.1% in H112, and we expect recently announced fiscal consolidation measures to reduce the shortfall somewhat to 6.4% of GDP by end-2012, resulting in negligible improvement in the trade balance. We expect the deficit to narrow to 8.9% of GDP in 2013 as the new government implements austerity measures, but we caution that Serbia's external position remains precarious..
BMI Political View: The EU's Serbia 2012 Progress Report, released on October 10 2012, highlighted shortcomings in a number of governance areas. This has prompted Brussels to delay announcing a date for the start of accession talks until more concrete progress towards the Stabilisation and Association Process criteria can be observed. We expect Serbia to continue progressing towards EU membership despite a recent critical EU report and the new Serbian government rekindling relations with Russia. However, progress towards accession will be a halting decade-long process.
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