Slovakia Pharmaceuticals & Healthcare Report Q1 2013 - New Market Report

2013-02-03 16:37:12 - Recently published research from Business Monitor International, "Slovakia Pharmaceuticals & Healthcare Report Q1 2013", is now available at Fast Market Research

BMI View: Slovak Prime Minister Robert Fico plans to unify the country's private and public health insurance funds into a single state-owned insurer, but there is likely to be a lengthy negotiation and a legal battle before this is realised. We do not expect either of the two private insurers - Dovera or Dutchowned Union - will surrender their businesses

without a fight, with Union in particular well-placed to oppose the move, potentially invoking EU law on protectionism. The outcome of this step towards a single insurer is broadly neutral for BMI's healthcare expenditure projections and is unlikely to have any meaningful impact until 2014 at the earliest, after which it would be negative for private healthcare providers.

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Headline Expenditure Projections

* Pharmaceuticals: EUR1.72bn (US$2.39bn) in 2011 to EUR1.65bn (US$2.10bn) in 2012; -3.8% in local currency terms and -12.1% in US dollar terms. Local currency forecast broadly unchanged from Q412.
* Healthcare: EUR5.92bn (US$8.23bn) in 2011 to EUR6.03bn (US$7.65bn) in 2012; +1.7% in local currency terms and -7.0% in US dollar terms. Local currency forecast slightly lower from Q412, on account of new historical trends.
* Medical devices: EUR396mn (US$550mn) in 2011 to EUR396mn (US$503) in 2012; +0.2% in local currency terms and -8.4% in US dollar terms. Local currency forecast considerably lower from Q412, on account of new historical data.

Risk/Reward Rating: In our latest Pharmaceutical Risk/Reward Rating (RRR) matrix assessing the 20 key markets in Emerging Europe, Slovakia remains in seventh position, with an unchanged composite score. We expect its risk profile to remain above average, supported by a pro-business operating environment, although risks are on the downside, considering authorities' move to unify healthcare insurance and improve labour conditions. In the meantime, rewards will continue to be depressed by factors including fiscal austerities and low population growth.

Key Trends And Developments

* As of the start of October 2012, the State Institute for Drug Control (SUKL) charges new fees list for marketing authorisations, variations, renewals and other procedures. Marketing authorisation holders will be able to generate variable symbols for their payments from the electronic application system. Charges now stand at EUR9,600 (US$12,525) for self-standing marketing authorisations of new products. For generic medicines or medicines with a wellestablished use, the government increased the fees to EUR8,000 (US$10,437).
* In August 2012, an analysis by the Institute for Economic and Social Reforms (INEKO) and Transparency International Slovakia (TIS) was reported to have found that the number of companies taking part in public tenders organised by hospitals in Slovakia were fewer than that in other industry sectors between January 2009 and March 2012. While hospital tenders attracted an average of just 1.7 bidders per tender during the period, three companies bid for public tenders in other sectors. Among reasons identified by the analysis for the small amount of bidders was announcing tenders for specific products that could only be delivered by one company. Other factors included late payments by hospitals, strong regulatory practices, corruption, political issues and a segregated provider market.

BMI Economic View: Economic activity slowed in Q312 according to flash estimates, with Slovakia's real GDP expanding by 2.2% year-on-year (y-o-y), from 2.6% y-o-y in the previous quarter. In quarteron- quarter (q-o-q) terms, the economy expanded by 0.6% q-o-q. While a more detailed breakdown of economic growth has not been made available yet, we expect that growth was driven by external demand, while household and government demand remained negligible contributors to economic activity. We hold to our end-2012 forecast for real GDP growth to reach 2.5%, falling to 2.0% of GDP in 2013. Over our 10-year forecast period, Slovak real GDP growth is forecast to average 2.9%.

BMI Political View: The adoption of a number of revisions to Slovakia's labour market code designed to improve worker's rights poses both near- and long-term risks to the economy. From a short-term perspective, increasing labour market rigidity at time of slowing economic growth and rising payroll levies could prompt companies to begin laying off employees in anticipation of additional costs. From a long-term viewpoint, the reforms could reduce Slovakia's competitiveness, prompting foreign investors to seek new bases for manufacturing operations

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