2013-09-17 09:16:52 - Fast Market Research recommends "Romania Pharmaceuticals & Healthcare Report Q4 2013" from Business Monitor International, now available
We forecast continued growth in Romania's pharmaceutical market due to greater private contributions to the cost of healthcare and a return to slight economic growth in 2013. The partial removal of elements of the claw-back tax will undoubtedly provide the industry with a slight boost this year, as will pressure from creditors to repay debts and companies on time. However, the delaying of changes to the reimbursement list until January 2014 will moderate the growth of patented and prescription medicines in 2013. These issues continue to weigh down BMI's assessment of Romania's Pharmaceutical and Healthcare Risk/Reward ratings.
Headline Expenditure Projections
* Pharmaceuticals: RON13.55bn (US$3.91bn) in 2012 to RON13.96bn (US$4.29bn) in 2013; +3.0% in local currency terms and +9.7% in US dollar
terms. US dollar forecast down from Q313.
* Healthcare: RON33.99bn (US$9.80bn) in 2012 to RON36.35bn (US$11.17bn) in 2013; +6.9% in local currency terms and +13.9% in US dollar terms. Forecast unchanged from Q313.
Full Report Details at
- www.fastmr.com/prod/684743_romania_pharmaceuticals_healthcare_re ..
Romania has a RRR score of 56 out of 100, making it the seventh-most attractive pharmaceutical market in the Central and Eastern Europe region. Although over the long terms Romania has a promising growth story, punitive taxes, pricing controls and a lack of funding by the state for reimbursing patients will moderate the market's attractiveness to drugmakers.
Key Trends And Developments
* Having secured IMF funding, as part of its credit deal, Romania will have to pay off its debts to drugmakers and suppliers to its healthcare system. The IMF is also pushing for Romania to increase its tax base, reform its healthcare system and increase its healthcare expenditure to meet its demographic changes.
* In February 2013 the Romanian Constitutional Court ruled that part of the claw-back tax was unconstitutional. The calculation method for determining the amount the industry had to pay the Romanian government used the post-VAT price of medicines, thereby inflating the amount due back to the government. The court ruled that drugmakers had been unfairly double-taxed by the provision.
* An estimated EUR85mn (US$110mn) was expected to be collected by the Romanian health ministry through the claw-back tax in 2012, supplementing the EUR33mn (US$43mn) allocated to the ministry by the government. The tax revenue, planned to be transferred to the single health insurance fund, was to be spent on hospitals, with priority given to regional network and emergency hospitals. Newly launched drugs and medical supplies supervision programmes in Romania were also reportedly to be allocated EUR880,000 (US$1.14mn).
BMI Economic View
Romania's improving net exports drove an-above consensus 2.2% year-on-year real GDP expansion in Q113, confirming our view that the country's economic recovery would accelerate in H113, and we hold to our forecast for real GDP growth of 1.7% in 2013. Net exports will continue to drive growth, although improving private consumption and the slowing pace of fiscal consolidation will begin playing an increasingly significant role in the country's economic recovery from H213.
BMI Political View
With Romania's recent exit from the EU Commission's excessive deficit procedure providing a modest boost to Prime Minister Victor Ponta's administration, we believe political risk should be reasonably contained over the next few quarters. The recent thawing of relations between Ponta and President Traian Basescu should prevent a repeat of the political unrest that unfolded in 2012, where the attempted impeachment of Basecu led to a firm rebuke from the for the country from the EU. That said, we believe some important political challenges remain for the centre-left government, with stubbornly low wages and the slightly sluggish pace of recovery likely to drive up anti-austerity sentiment amongst the electorate, especially given the country's relatively low public debt.
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