2012-11-18 04:22:06 - New Healthcare research report from Business Monitor International is now available from Fast Market Research

The sharp drop in public pharmaceutical expenditure in Spain in the first four months of 2012 serves as a warning for the continuation of a fall in spending on medicines in the remainder of the year. BMI notes that this does not bode well for drugmakers selling their products in Spain as the success of the implemented policies may encourage the enforcement of further cost-containment measures, which, together with the ongoing public hospital debt situation, seriously hampers the country's attractiveness as a location in which to sell drugs, despite its favourable demographic characteristics.


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Headline Expenditure Projections

* Pharmaceuticals: EUR20.15bn (US$28.00bn) in 2011 to EUR18.34bn (US$23.30bn) in 2012; -9.0% in local currency terms and -16.8% in

US dollar terms.
* Healthcare: EUR104.99bn (US$145.93bn) in 2011 to EUR105.51bn (US$133.99bn) in 2012; +0.5% in local currency terms and -8.2% in US dollar terms.
* Medical Devices: EUR4.32bn (US$6.01bn) in 2011 to EUR4.35bn (US$5.52bn) in 2011; +0.7% in local currency terms and -8.0% in US dollar terms.

Risk/Reward Ratings: In BMI's Pharmaceutical Risk/Reward Ratings (RRRs) for Q412, Spain is ranked eight among the 10 countries surveyed in Western Europe. While Spain offers investors positive factors, such as its large drug market, it also has problems, such as the government's focus on cost containment, low population growth, cumbersome bureaucracy and provincial differences regarding drug regulations and reimbursement.

Key Trends And Developments

* Government expenditure on medicines in Spain fell by 24% annually in July 2012, according to the health ministry. The Spanish government spent about US$885mn on medicines in July 2012 compared with about US$1.2bn in drug expenditure in July 2011. The number of prescription drugs produced in Spain in July 2012 also fell by 14.14% year-on-year (y-o-y), with average governmental spending on prescriptions decreasing by 11.41%. Notably, inflation increased by 2.2% and drug prices rose 36% during the period. The drop in public healthcare expenditure was attributed to severe austerity measures, particularly the mandatory patient co-payment scheme and revision of drug prices. The government withdrew 426 medicines worth about US$705mn from its basic co-payment list on July 1 2012.
* Doctors, nurses and other healthcare professionals in Spain are protesting against a new law that denies free healthcare to illegal immigrants in the country. Some 850 doctors across the country have already expressed their opposition to the law by signing forms distributed by the Society of Family and Community Medicine and registering themselves as 'conscientious objectors'. The ruling is scheduled to become effective from September 1 2012. The ruling denies free healthcare access at public hospitals and healthcare centres to immigrants who do not have Spanish residency cards except when they are under 18 years of age, pregnant or require emergency care. The healthcare reform is one of the many austerity measures taken by the government to reduce public expenditure and meet budget deficit targets imposed by Brussels.
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BMI Economic View: On account of our expectation for Spain to receive a eurozone sovereign bailout within the next few quarters as well as the deteriorating economic prospects in the wider eurozone, we have revised down the country's medium-term growth forecasts. The domestic economy is facing a lost decade in light of the degree of adjustment taking place within the housing market, the banking sector as well as on the fiscal front. Short of a major pick-up in economic activity within the wider eurozone, exports will also fail to bring about a meaningful recovery in Spain.

BMI Political View: While Spain's centre-right government cannot be solely blamed for the depth of Spain's current macroeconomic troubles, they have nonetheless contributed to the rapid deterioration in government borrowing costs and broader credit conditions in recent months by, at times, failing to be proactive in addressing the country's fiscal and banking sector woes. With a eurozone sovereign bailout for Spain now looking unavoidable, and a lost decade ahead for the domestic sector, we believe the People's Party will find it difficult to arrest the decline in its popularity, leaving re-election in 2015 looking like a pipedream.

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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 www.fastmr.com/catalog/publishers.aspx?pubid=1010

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