2013-02-24 15:19:50 - New Healthcare market report from Business Monitor International: "United Kingdom Pharmaceuticals & Healthcare Report Q1 2013"

BMI View: Drugmakers and governments will increasingly enter agreements that provide some form of risk- sharing or price protection for new drugs. Since most European governments, including the UK authorities, are focussing on cost containment in the healthcare sector, alternative pricing schemes for medicines allow for budget control, as well as providing patients with access to highly innovative treatments. Guidance drafted by the National Institute for Health and Clinical Excellence (NICE) has recommended the use of Bristol-Myers Squibb's Yervoy (ipilimumab) and Roche's Zelboraf (vemurafenib) for the treatment of advanced skin cancer. These are the first new drugs approved for routine use by the UK's National Health Service for the disease in more than a decade. While this is positive news

for both drugmakers, NICE's stamp of approval came only after the manufacturers of both drugs agreed to offer discounts, overturning a prior rejection of the treatments by the watchdog.


Full Report Details at
- www.fastmr.com/prod/536449_united_kingdom_pharmaceuticals_health ..


Headline Expenditure Projections:

* Pharmaceuticals: GBP23.81bn (US$38.33bn) in 2011 to GBP23.74bn (US$37.27bn) in 2012; -0.3% in local currency terms and -2.8% in US dollar terms. Forecast unchanged from Q412.
* Healthcare: GBP144.79bn (US$232.99bn) in 2011 to GBP149.35bn (US$234.48bn) in 2012; +3.2% in local currency terms and +0.6% in US dollar terms. Forecast unchanged from Q412.
* Medical devices: GBP5.89bn (US$9.48nn) in 2011 to GBP5.93bn (US$9.30bn) in 2012; +0.6% in local currency terms and -1.9% in US dollar terms. Forecast unchanged from Q412.

Risk/Reward Rating: The UK is again ranked second out of the 10 Western European markets surveyed. While the country's risk profile is among the best globally, cost containment and patent expirations will hamper faster growth in pharmaceutical market values. Nevertheless, the market is well-developed and regulated and the government is making efforts to boost the healthcare and life sciences sectors - meaning the UK will continue to be one of the most important targets for multinationals. Globally, the UK ranks fourth, behind the US, Japan and Switzerland, out of 95 countries surveyed.

Key Trends And Developments

* According to research by Ernst & Young published in November 2012, the fragmented procurement of medical supplies in the UK is costing taxpayers GBP500mn (US$795) per year, and could affect patient care. The study analysed expenditure by 10 National Health Service (NHS) healthcare trusts, finding substantial variation in the price of supplies bought. Several trusts were paying more than twice (164%) the average for everyday products. The difference between the minimum and average price of 11 essential items, such as warming blankets, was reported to increase to 20% in 2012 from 18% in 2010, when the National Audit Office (NAO) first raised concerns over wasteful procurement by the NHS. E&Y analysts attributed the cost inefficiency of the purchasing practice to a lack of transparency in the market.
* In October 2012, the government announced the launch of Healthwatch England, which will provide leadership and support to local bodies that are to be set up by April 2013. They will be helped by GBP3.2mn set aside by the government in 2013. BMI believes the increasing role of patients and carers in influencing the type of care provided by the NHS will force drugmakers to increase communication telling patients about their products' value. Additionally, as in other developed markets, patient expectations will rise as the shift towards taking greater responsibility for personal healthcare plays out, driven by the increasing individuality of modern drugs - further requiring companies to engage with patients.
* In the same month, NHS Suffolk awarded a GBP140mn (US$224mn), three-year community care contract to Serco. Serco will provide a wide range of NHS services, including community nursing, specialist nursing, community hospitals, speech and language therapy and specialist children's services, to the county's population of 600,000. Serco will work with NHS partners to develop a new model of integrated service delivery for Suffolk. Processes will be simplified and new technology will be introduced to boost efficiency, increasing the amount of time clinicians can spend with their patients by about a quarter.

BMI Economic View: UK Prime Minister David Cameron gave the nod to parliament when he claimed further 'good news' could be expected for the economy. Although the prime minister may have breached the law (disclosure of market-sensitive data is prohibited), the allusion at least did not disappoint as GDP data released on October 25 2012 reveal a marked turnaround in economic growth to 1.0% quarter-onquarter (q-o-q) for the third quarter, following a 0.4% contraction in Q212. A positive reading was largely expected given the 'Olympic' boost to the service sector as well as a natural pull back following the Queen's Jubilee in June, which had shaved a hefty chunk off the Q212 print owing to the additional bank holiday.

BMI Political View: With the UK political party conference season in full flow, leaders of the three main parties are under pressure to connect with an increasingly disenchanted and disenfranchised electorate. While party politics within the cabinet will be challenging for coalition unity going forward, we warn that the biggest risk stems from the detachment of the cabinet from both parties' respective backbenchers.

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