2013-02-01 18:15:47 - Recently published research from Business Monitor International, "Romania Pharmaceuticals & Healthcare Report Q1 2013", is now available at Fast Market Research

BMI View: While it is clear that drugmakers operating in Romania are far from happy with the latest revisions to the pharmaceutical claw-back tax, and the tax remains unfairly punitive, all things considered, the August 2012 amendments are a small improvement, though definitely not what producers would have wanted ideally. With part of the objective of the claw-back tax to improve the timeliness of payments for reimbursed medicines, which has been a major difficulty for drug producers and distributors over the last four years, there are some upsides to this mechanism working effectively. 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 on

BMI's assessment of Romania's Pharmaceutical and Healthcare Risk/Reward ratings.

Headline Expenditure Projections:

* Pharmaceuticals: RON12.76bn (US$4.18bn) in 2011 to RON13.52bn (US$3.78bn) in 2012; +6.0% in local currency terms and -9.7% in US dollar terms. Local currency forecast slightly down from Q412 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.
* Healthcare: RON30.17bn (US$9.90bn) in 2011 to RON32.07bn (US$9.86bn) in 2012; +6.3% in local currency terms and -9.5% in US dollar terms. Local currency forecast slightly down from Q412 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.
* Medical devices: RON1.61bn (US$527mn) in 2011 to RON1.69bn (US$471mn) in 2012; +5.0% in local currency terms and -10.6% in US dollar terms. Local currency forecast slightly down from Q412 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.


Full Report Details at
- www.fastmr.com/prod/529471_romania_pharmaceuticals_healthcare_re ..


Risk/Reward Rating: Our Risk/Reward rating score for Romania's pharmaceutical market remains unchanged in Q113, at 55.3 out of the maximum 100 points. Despite operational improvements in recent years, Romania remains a challenging market, largely on account of low per capita incomes and spending on medicines, while the US dollar forecast for its pharmaceutical market continues to be negatively impacted by leu weakness. Regionally, Romania is again ranked sixth out of the 20 key markets surveyed in the Emerging Europe region.

Key Trends And Developments

* An estimated EUR85mn (US$110mn) is expected to be collected by the Romanian health ministry through the claw-back tax in 2012, supplementing the EUR33mn (US$43mn) recently allocated to the ministry by the government. The tax revenue, which will be transferred to the single health insurance fund, will be spent on hospitals, with priority given to regional network and emergency hospitals. Newly-launched drugs and medical supplies supervision programmes in Romania will reportedly also be allocated EUR880,000 (US$1.14mn).
* In October 2012, it was revealed that medicines and sanitary materials for emergency care units will be procured centrally in Romania from 2013, according to statements made by the interim health minister Raed Arafat. The government is to 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 stay.
* 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: Romanian consumer price inflation ticked up significantly in September, rising to 5.3% year-on-year (y-o-y) from just 3.5% the previous month. While this puts the inflation rate well above the central bank's target range (2.5% +/- 1 percentage point), we do not anticipate monetary policymakers to hike rates anytime soon, as price pressures appear to be mainly supply-side driven. Nevertheless, while we agree with Central Bank Governor Mugur Isarescu that the price spike is transitory, we are revising up our end-2012 inflation forecast, from 3.3% to 4.3%, to reflect the impact of higher food prices.

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