Friday, 7 May 2010

Sweden - How will the deregulation of the pharmacy monopoly affect the market environment?

The deregulation will increase the number of pharmacies and ensure longer opening hours, as well as creating downward pressure on prices as more providers enter the market.

The pharmacy monopoly was deregulated in July 2009 in order to create greater competition in the Swedish market, and lead to more pharmacies with longer opening hours. As a result, Apoteket is no longer the exclusive pharmaceutical retailer, but remains a key competitor in the market. A total of 465 pharmacies were sold in November 2009, and a further 150 pharmacies will be sold to small companies to create more choice for consumers. The largest cluster of 208 stores was bought by Altor Equity Partners, while Kronans Droghandel Retail purchased 171 shops, Segulah bought 62 and Vaardapoteket i Norden purchased 24. Celesio has also announced that it is planning to open a chain of around 100 pharmacies in Sweden, although it did not join the bidding for premises previously occupied by the state-run Apoteket pharmacies.

The deregulation of the pharmacy monopoly is expected to drive down prices of pharmaceuticals due to increased competition. The number of pharmacies is likely to rise rapidly in 2010 and 2011, and slow down and stabilise from 2012 onwards. In addition, wholesalers have been negotiating an increase in distribution margins with pharmaceutical manufacturers, as a result of a rise in costs due to an increasing number of distribution locations.

As part of the liberalising of the Swedish pharmacy market, OTC products have also been available to buy from shops as well as pharmacies since November 2009. This provides an opportunity for OTC medicines to reach a wider market. Freedom of pricing for OTC medicines will be maintained, and it is likely that prices will continue to increase in the short term.

Further reading - A detailed analysis of the Swedish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Sweden (published April 2010)

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