2012-08-31 14:01:32 - New Healthcare research report from Business Monitor International is now available from Fast Market Research
BMI View: While the Spanish government has pledged to pay back drugmakers that are owed money by public hospitals, we believe the slow speed of discussions and the growing public debt pile will mean drugmakers in the country face stunted revenues for the time being. This is compounded by the government's continued focus on cost containment within the pharmaceutical and healthcare industry, which does not bode well for companies selling their products in Spain and will lead to the implementation of revenue protection strategies by firms focused on avoiding the full impact of austerity in the market.
Headline Expenditure Projections
* Pharmaceuticals: EUR20.15bn (US$28.00bn) in 2011 to EUR18.37bn (US$23.69bn) in 2012; -8.8% in local currency terms and -15.4% in US dollar
* Healthcare: EUR104.88bn (US$145.78bn) in 2011 to EUR105.41bn (US$135.98bn) in 2012; +0.5% in local currency terms and -6.7% in US dollar terms.
* Medical Devices: EUR4.32bn (US$6.01bn) in 2011 to EUR4.36bn (US$5.62bn) in 2011; +0.8% in local currency terms and -6.5% in US dollar terms.
Full Report Details at
- www.fastmr.com/prod/451259_spain_pharmaceuticals_healthcare_repo ..
Risk/Reward Ratings: In BMI's Pharmaceutical Risk/Reward Ratings (RRRs) for Q312, Spain is ranked ninth among the 10 countries surveyed in Western Europe, above Portugal and below Italy. 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
* Almirall announced that is to focus on foreign markets and take its international operations to up to 60% of its total business by the end of 2012. The company's international division accounted for 52% of its total business in the first quarter, compared to 44% in 2011. CEO Eduardo Sanchiz said the company operates in more than 70 countries and has 'great expectations' on two new drugs (for COPD and IBS) 'which will level the impact of health budget cuts in Spain'.
* In May 2012, Multinational drugmaker Roche tightened medicine supply conditions to 12 hospitals in Spain, requiring clinics with the worst arrears to pay down debts before they can get more drugs on credit. This means Roche will not supply drugs to hospitals in Spain that are more than 700 days behind on payments. Hospitals are given credit again if they pay down their old debts to reach a certain level. The new conditions apply to four hospitals in the Valencia region, two in Castilla-La Mancha, three in the Castilla y Leon and three in Andalucia. The company introduced this policy last year in Spain, with more Spanish hospitals added to the list in March and April. We believe Roche is particularly vulnerable to hospital payment delays as the company is reliant on sales to these institutions (its product portfolio is characterised by highvalue oncology drugs) rather than to pharmacies, in comparison to other drugmakers who may not be as exposed to hospital debt and may generate a greater volume of business in pharmaciesGlaxoSmithKline, Baxter and Sanofi have said they will not be employing the trading conditions implemented by Roche, however, we believe that if conditions deteriorate further, companies will be forced to enforce revenue protection strategies.
* In June 2012, France's National office for compensation for medical accidents (Oniam) announced that it had received about 7,000 compensation requests from alleged victims of Servier's Mediator (benfluorex).
BMI Economic View: Spain's domestic economy continues to be crippled by the government's fiscal austerity drive, with unemployment continuing to head higher, and house prices still tumbling. At the same time, Spain's ability to export its way out of recession has disappeared with the rest of the eurozone caught up in a pronounced slowdown. It is becoming increasingly clear that fiscal austerity is not working for Spain, and in order to escape the debt-deflationary trap, the country is in desperate need of a growth stimulus. For the foreseeable future, the ECB will need to continue to safeguard Spain's financial stability via further liquidity provisions and a potential resumption of its Securities Markets Programme.
BMI Political View: Spain's government faces a tough policy environment over the next 12 months as it attempts to balance the divergent goals of fiscal deficit reduction and economic growth. While the governing People's Party has strong influence over regional finances and a healthy majority in parliament, it remains unlikely to meet its deficit target this year, leaving Spain susceptible to further sovereign bond market pressure. As the government has little room for manoeuvre on the fiscal front, we expect public discontent and social stability to continue deteriorating over the next 12 months.
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