2013-10-19 09:05:19 - Fast Market Research recommends "Spain Pharmaceuticals & Healthcare Report Q4 2013" from Business Monitor International, now available
We expect pressures on the French government to mount over the coming quarters encouraging it to engage in more concerted fiscal consolidation, particularly as lower growth begins to translate into lower government revenues. We believe that the pharmaceuticals and healthcare sector, which is a recipient of a large proportion of public funds, will be a target of the government's cost containment efforts. While France has not fallen prey to the bond vigilantes thus far, unlike the peripheral countries of the eurozone, the country nonetheless has one of the largest public sector debt piles in Europe and remains susceptible to contagion effects.
Headline Expenditure Projections
Full Report Details at
- www.fastmr.com/prod/694809_spain_pharmaceuticals_healthcare_repo ..
* Pharmaceuticals: EUR34.17bn (US$43.40bn) in 2012 to EUR33.02bn (US$43.91bn) in 2013;
-3.4% in local currency terms and 1.2% in US dollar terms.
* Healthcare: EUR237.74bn (US$301.93bn) in 2012 to EUR243.95bn (US$297.61bn) in 2013; +1.9% in local currency terms and -2.1% in US dollar terms.
Risk/Reward Ratings: France remains ranked fourth out of the 13 markets in BMI's Western Europe Pharmaceutical Risk/Reward Ratings (RRR) matrix for Q313, with a composite score, at 70.1 out of the maximum 100 points. The country's reward profile remains considerably less attractive than its risk score, reinforcing our view of the country's potential due to a stronger emphasis on the regulatory environment, which we regard as a major factor affecting the business environment for drugmakers, rather than on the basis of real opportunities for higher per-capita drug consumption.
Key Trends And Developments
National health insurance data published by the LEEM (les entreprises du medicament) revealed that between 2005 and 2013, cost containment policies implemented in the healthcare sector resulted in the greatest savings being achieved in pharmaceutical spending (EUR1.14bn, US$1.52bn) on average annually compared to other areas of insurance expenditure - hospitals and clinics (EUR422mn, US$562mn), clinical laboratories (EUR97mn, US$129mn), medical devices (EUR60mn, US$80mn), healthcare transport facilities (EUR56mn, US$74mn) and physiotherapy (EUR25mn, US$33mn).
In Q213, multinational drugmaker Sanofi recorded sales of EUR8.00bn (US$10.59bn), a 9.8% decrease on reported basis terms (-6.3% in constant exchange rate (CER) terms). In the second quarter, sales for the Pharmaceuticals business (the company's largest division by revenue) were EUR6.71bn (US$8.88bn), a decrease of 7.1%, attributed to generic competition, EU austerity measures and an adjustment of EUR122mn (US$161mn) related to Brazil. Inventory in Brazil was 'significantly and inappropriately' higher than necessary, resulting in Sanofi recalling expiring stock. The Consumer Healthcare division recorded sales of EUR729mnn (US$965mn) (+1.8%) and the Generics division recorded sales of EUR300mn (US $397mn) (-36.8%).
BMI Economic View: From a medium-term perspective, the lack of economic reform (particularly with regard to the labour market and tax system) remains the main impediment towards robust real GDP growth, restricting growth in both the household segments (through sticky unemployment and lower purchasing power) and net exports (high labour costs driving lack of export competitiveness). Over a shorter time horizon, the government's inability to pursue an expansionary fiscal policy due to EU budget targets, and weak demand for exports from major trade partners (primarily in the EU) will cause sustained economic stagnation.
BMI Political View: Facing the worst approval ratings of any president of the Fifth Republic as the French economy continues to stagnate, Francois Hollande has begun to adopt increasingly reformist rhetoric. Nonetheless, we expect Hollande's ability to push through structural reforms will be severely curtailed by divisions within his own party and core support base in addition to resistance from the proliferation of special interest groups, which will make unilateral reform a troublesome and compromised process.
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