Argentina - What are the most recent developments affecting the biologic sector in Argentina?

The most recent developments include new production capabilities in the public sector, and a licence agreement between GTC and Bio Sidus in the private sector.

Pharmaceutical R&D activities in the public sector are focused on biotechnology. Historically, investments have been low, concentrated on basic science and developed by public institutions which do not co-operate with the private sector. Recent developments affecting the biologic sector, however, include the plan to create the Pilar Biotechnology Park; the installation of a plant for the production of vaccines against seasonal influenza and influenza A (H1N1), in co-operation with the private sector; and technology transference for the local production of the yellow fever vaccine in Argentina.

In the private sector, GTC Biotherapeutics and the Argentine Bio Sidus, part of the Sidus Group, entered into a registration licence agreement in May 2010 under which Bio Sidus will perform all necessary actions to obtain sales authorisations for GTC's lead product, the recombinant human antithrombin ATryn. A product licence agreement for the supply of material and marketing rights will be negotiated separately. It is anticipated that the review process in Argentina will be completed within a fast-tracked period of no less than six months from the filing of the dossier with the regulatory authorities.

Further reading - A detailed analysis of the Argentinian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Argentina (published May 2010)

Australia - What actions are the Australian government taking to improve the healthcare system and how will this impact the pharmaceutical market?

Prime Minister Kevin Rudd has already implemented an overhaul of the healthcare system and is expected to announce further reforms in the May Budget.

In March 2010, Prime Minister Kevin Rudd announced an A$50 billion (US$46.4 billion) overhaul of the healthcare system, which will free up funds for economic infrastructure over the next decade. The overhaul includes investment to add a record number of medical specialists over the next 10 years, and spending on aged care will also increase.

The government is expected to announce in its May Budget plan to slash US$2 billion in health spending over four years, by paying pharmaceutical companies less for their medicines. The plan will include increasing the use of generic medicines and ensuring that patients pay less for a range of commonly used blood-pressure and cholesterol-lowering drugs. Also under the proposed plan, people could save on the cost of prescription drugs.

Further reading - An in-depth analysis of the Australian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Australia (published May 2010)

Bangladesh - What is the state of the pharmaceutical balance of trade in Bangladesh?

The balance of trade will remain negative and the deficit is likely to grow.

Bangladesh does not export pharmaceutical products to any significant degree, although there are tentative signs of growth since 2006. Finished medicaments accounted for almost the whole export market in 2008. Imports are low but continue to increase. Raw materials accounted for just less than 50% of all imports in 2008. Imports of finished medicaments and antisera & vaccines represented the remainder of the total.

It is difficult to project how the balance of pharmaceutical trade will change throughout the forecast period. On the one hand, reports indicate that exports are rising. On the other hand, Bangladesh’s pharmaceutical reputation may have been tarnished by the recent scandal involving Rid Pharmaceuticals, which could result in fewer exports of domestically-produced drugs. Espicom expects that the balance of trade will remain negative and the deficit is likely to grow.

Further reading - Detailed information on the pharmaceutical market in Bangladesh is available from Espicom: The Pharmaceutical Market: Bangladesh (published May 2010)

Brazil - Is there room for more acquisitions in the Brazilian generic market?

Brazil is the most attractive bioequivalent generic market in the Latin American region and will continue to attract the interest of multinationals.

Pharmacy sales of generic medicines increased by 24.0% in value terms and 19.0% in volume terms in 2009. Generic medicines have increased their pharmacy market share in recent years, passing from representing 4.0% of the pharmacy sector by value in 2001 to 15.1% in 2009. In volume terms, generic medicines represented 19.4% of the pharmacy sector by volume in 2009, compared to 4.8% in 2001. Market growth opportunities will continue in 2010 and generics are expected to represent about 22.0% of the pharmacy sector by volume in 2010 and 33.0% by 2014.

Due to its growth potential, foreign producers continue to penetrate the Brazilian generic sector. The American pharmaceutical producer Valeant, for instance, announced the acquisition of a Brazilian generic producer in May 2010. This was its second acquisition in Brazil in less than one month. A number of international and local producers seem interested in the acquisition of the local generic producer Teuto. In 2009, two leading generic producers, Neo Química and Medley, were snapped up by Hypermarcas and sanofi-aventis, respectively.

Further reading - A detailed review of the Brazilian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Brazil (published May 2010)

Canada - What effect will recent pricing changes in Ontario have on the generic pharmaceutical industry?

There is concern that generic price cuts will make it harder for manufacturers to produce low-cost generic medicines currently on the market, not to mention develop and manufacture new ones.

In April 2010, Ontario announced plans to reform its prescription drug system, including cutting the price of generic drugs to 25% of the cost of the brand-name originator, and ending the practice of professional allowances paid to pharmacists by generic drug companies, often used for rebates instead of patient care. Other provinces are expected to follow Ontario’s lead with these new measures.

Ontario officials have dismissed claims that the new regulations will lead to job cuts, shorter opening hours and store closures. However, the Canadian Generic Pharmaceutical Association (CGPA) has expressed concern that the generic price cuts could undermine the ability of manufacturers to produce and supply low-cost generic medicines currently on the market, as well as developing and bringing to market new ones. The CGPA is also concerned that the moves could jeopardise jobs within the industry. In addition, Shoppers Drug Mart, the largest pharmacy chain in Canada, has claimed that the withdrawal of professional allowances would force it to close stores and shorten opening hours. Shares in the company have fallen by 12% since the government’s announcement.

Further reading - An in-depth analysis of the Canadian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Canada (published May 2010)

China - How significant is the Chinese biologic/biosimilar market?

The Chinese government has recognised the importance of the biologic/biosimilar market and China claims to be the largest vaccine producer in the world.

The biotechnology industry was identified as a key strategic sector in the government’s 11^th Five Year Plan for 2006-2010. The biologic/biosimilar market is an integral part of the biotechnology industry.

China has 29 domestic companies which produce 49 different types of vaccines for the prevention of 26 infectious diseases. The total annual vaccine output has exceeded 1 billion doses.

In September 2009, China approved the clinical use of an A H1N1 influenza vaccine produced by the domestic company Sinovac, making it the first company in the world to be granted with a production licence for the disease.

Further reading - A detailed analysis of the Chinese pharmaceutical market is available from Espicom: The Pharmaceutical Market: China (published May 2010)

Germany - How will the German government deal with large deficits seen within the health insurance sector?

The government has proposed a package of reforms aimed at easing the financial problems of statutory health insurers.

In March 2010, the coalition parties agreed on a package of reforms which the government hopes to bring into force by 2011. The proposals includes an increase of the mandatory discount for patented drugs sold to the statutory health system from the current 6% to 16%, which could potentially save 1.1 billion euros (US$1.4 billion). In addition, prices will be frozen at August 2009 levels until the end of 2013, and the current fixed price system for some patented drugs, as well as the discount price contract system for generic, or copied drugs, will be retained.

The government is focusing primarily on a new system to set prices for new, innovative drugs, which the Health Minister claims entirely accounted for the increase in drug spending in 2009. Manufacturers will have the freedom to set prices themselves for the first year of a drug being on the market, but it will need to compile a dossier on its costs and benefits, which will be assessed by the authorities. If the drug does not offer additional benefit to medications already available, it will immediately be put under the fixed price system. The prices of drugs which do offer additional benefit will be subject to central negotiation on prices for the statutory system.

The proposals have angered industry associations which had been promised deregulation for the drug sector when the coalition government was formed, and noted that the system would jeopardise investment prospects. The plans were welcomed by the GKV, however.

Further reading - An in-depth review of the German pharmaceutical market is available from Espicom: The Pharmaceutical Market: Germany (published May 2010)

India - As Hospira finalises Orchid acquisition, AstraZeneca collaborates with Torrent

Hospira completes Orchid acquisition; AstraZeneca signs a deal with Torrent

On 30th March, Orchid and Hospira announced the completion of the transfer of Orchid’s generic injectable pharmaceuticals business to Hospira for approximately US$400 million.

The transfer includes Orchid’s beta-lactam antibiotic formulations manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities), and pharmaceutical research and development facility at Irungattukottai, Chennai, India, as well as its generic injectable dosage-form product portfolio and pipeline. Orchid is one of the top five generic beta-lactam antibiotics manufacturers globally.

In addition, the companies signed a long-term agreement for Orchid to supply APIs for the acquired business. To help facilitate the transition process, the companies entered into transitional services agreements for approximately 15 months.

Also in March, it was announced that a licence and supply agreement had been signed, pursuant to which Torrent will supply to AstraZeneca a portfolio of generic medicines for which Torrent already has licences in a range of countries. Working in partnership with Torrent, AstraZeneca intends to brand and market these products in many of its emerging markets, where it already has a strong commercial footprint.

Under the agreement, AstraZeneca will initially purchase from Torrent the licences and market authorisations for 18 products in nine countries. The agreement allows the flexibility to add further products and new countries where AstraZeneca sees opportunities for growth. Financial terms were not disclosed. Torrent will manufacture the medicines working to AstraZeneca's quality and process standards.

In making this agreement with Torrent, AstraZeneca is following in the footsteps of other large multinational innovator companies. Most notable in recent months has been Pfizer, which has entered into a series of agreements with Indian generic firms, notably Aurobindo, Claris Lifesciences and Strides Arcolab.

Further reading - A detailed review of the Indian pharmaceutical market is available from Espicom: The Pharmaceutical Market: India (published May 2010)

Indonesia - How has the USTR rated Indonesia, in relation to the IPR of pharmaceuticals, in their latest Special 301 report?

In 2010, Indonesia will remain on the Priority Watch List, due the prevalence of counterfeit pharmaceutical products, a weak IPR enforcement system, and barriers that affect pharmaceutical products.

The current state of the IPR protection of pharmaceuticals in Indonesia has not changed since 2009. This is why the country remains on the Priority Watch List in 2010. Indonesia was placed on the Priority Watch List in 2009 due to the deterioration of the IPR protection and lack of enforcement. Further concerns include an unreliable judicial system for IPR cases, a low number of criminal prosecutions, and non-deterrent penalties.

The USTR is worried about the protection against unfair commercial use, as well as unauthorised disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. In addition, market access barriers remain, including a law that restricts the importation of drugs by foreign pharmaceutical companies.

Further reading - An in-depth analysis of the Indonesian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Indonesia (published May 2010)

Ireland - How is the recession affecting the pharmaceutical market environment?

The economic downturn has led to reductions in healthcare spending, necessitating cost-saving measures such as reference pricing.

As a result of the economic downturn, the government faces an extremely tight financial operating environment in the next few years. Ireland needs to make savings of over 1.0 billion euros (US$1.4 billion) in 2010, out of a health budget of 16.0 billion euros (US$22.2 billion). In order to do this, cost-saving measures will be implemented wherever possible.

Firstly, reference pricing will be introduced in 2010. Under the new system, only the reference drug selected by the HSE from a group of treatments will be reimbursed. In addition, although reimbursement for the over 70s was more or less automatic between 2001 and 2009, a means test has now been introduced, in attempt to slow consumption.

In February 2010, the prices of nearly 300 branded medicines were cut by 40%. It is anticipated that the move will make savings for the government of up to 94 million euros (US$130 million) over 12 months. The 40% reductions mean that many patented drugs are now cheaper than their generic versions.

Another measure currently being considered by the government is to impose prescription charges on the country’s 1.4 million medical card holders, of around 50 cent per item prescribed. This would work in two ways; by raising money and discouraging the over-prescribing of medicines. The Prime Minister claimed in November 2009 that this would generate savings of around 30 million euros (US$41 million) a year.

In addition, the Irish Medical Organisation (IMO) is calling for savings to be made through increased generic prescribing and reducing prices of generics. There is vast potential for savings in this area, as use of generics is currently very low. However, this is to try and support manufacturers based in the area, and so this is not likely to be a priority area for cost savings.

Further reading - A detailed analysis of the Irish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Ireland (published May 2010)

Italy - Will the Italian generics market catch up with its European neighbours?

A number of high profile drugs have lost patent protection; will the Italian generic market take off as a result?

The Italian pharmaceutical market is expected to remain one of Europe’s slower growing markets over the next five years. Growth will continue to be constrained by low economic growth, cost containment measures for reimbursable products, reference pricing and an expected expansion of the generics market due to patent expiry on several high volume products.

On the plus side, this may be good news for the generic industry. Even by southern European standards, the Italian generics market is small. Excessive price regulation, long national patent supplementary protection, a lack of incentive distribution margins, confusion between branded and unbranded generics, a perception of generics as second-class drugs and the empowerment of doctors to stop generic substitution are all factors that have traditionally constrained the unbranded generic sector.

The combination of high profile drugs losing patent protection and the need to reduce costs should provide a boost to the generic market. In addition to the blockbusters that have lost patent protection in Italy in the last couple of years, a large number of medicines will lose their national supplementary certificates during 2010. Consumer perception of generics and generic awareness continue to improve. The Italian generic market is also being consolidated by leading generic producers in the country.

However, the generic industry has been coming under increasing pressure from manufacturers of branded products, which have begun to implement price cuts to minimise loss of market share. Significant price reductions have been closing the gap between off-patent brands and unbranded generics. The generic industry still has some way to go, but anticipates continued growth in market share and a progressive alignment with the rest of Europe.

Further reading - An in-depth review of the Italian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Italy (published May 2010)

Japan - Which companies have recently announced plans to enter the Japanese generic drug market?

In the first quarter of 2010, both Pfizer and Fujifilm unveiled plans to produce generic drugs.

In February 2010, Pfizer announced that it aims to be the leading manufacturer of generic drugs in Japan, which it plans to enter in 2010. Pfizer unveiled its Japanese generic drug business plan in December 2009 as part of its global move to offset risks on patent drugs. Fujifilm also plans to enter the Japanese generic drug market in 2010 and expects to sell products by spring. The government is currently providing incentives to manufacturers and pharmacists to promote generic drugs in an attempt to reduce the amount spent on branded drugs, and it wants the generic drugs to represent nearly one-third of the pharmaceutical market by 2013.

Further reading - A detailed review of the Japanese pharmaceutical market is available from Espicom: The Pharmaceutical Market: Japan (published May 2010)

Mexico - Which factors are increasing market opportunities in Mexico?

Pharmaceutical regulatory developments and market growth, particularly in the public sector, are attracting multinationals.

There are a number of regulatory developments that are currently transforming the market, particularly a draft to regulate biologic and biosimilar medicines, new guidelines to regulate antibiotics, regulatory developments for manufacturing, a new registration renewal process and regulatory developments for medical samples. The Federal National Commission for Protection against Health Risks (COFEPRIS) also aims to increase its participation in international forums and is working closer with the EMA and FDA.

Pharmaceutical regulatory advances are making the market more attractive, in spite of containment factors such as tighter out-of-pocket pharmaceutical expenditure as unemployment has risen and economic conditions have toughened up; a number of key pharmaceutical and biologic products losing their patents in the next years; and an infant bioequivalent generic sector which is expected to shoot up from 2010 onwards. The market, however, will be encouraged by increasing sales in the public sector, particularly derived from further coverage by the Popular Insurance Programme (SP).

Further reading - An in-depth analysis of the Mexican pharmaceutical market is available from Espicom: The Pharmaceutical Market: Mexico (published May 2010)

Poland - Has the economic crisis affected the Polish pharmaceutical market?

Changes have been made to the reimbursement list due to the economic crisis but the pharmaceutical market will continue to grow.

Whilst many countries have entered recession as a result of the economic crises, Poland’s economy did not shrink in 2009. In fact, it was the only economy in the EU that avoided contraction. Consequently, the impact on the Polish pharmaceutical market will be far less than in other countries of similar development in Central & Eastern Europe, such as Hungary. There will be less of a need to reduce spending on healthcare and the disposable income available for purchasing pharmaceuticals should remain steady, although unemployment is predicted to rise marginally in 2010, which may be detrimental to retail sales.

However, recent changes to the drug reimbursement list do reflect the government’s cost-containment policy that was prompted by the economic downturn. Only two new innovative drugs have been placed on the list, although innovative drugs that had previously been approved for reimbursement were not removed. Over 100 generic drugs were added to the lists, but around 50 were removed. Along with the many medicine price decreases that the MoH has negotiated with several pharmaceutical companies, overall savings are expected to reach 45 million zlotys (US$15.2 million).

Further reading - A detailed analysis of the Polish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Poland (published May 2010)

Russia - How will the Russian pharmaceutical market be affected by recent price freezes?

Recent price freezes are expected to result in lower availability of cheaper drugs.

The government has forbidden drug companies from raising the prices of drugs which are included on the MoH’s list of vitally essential medicines in 2010. As new prices must take into account the average prices for the previous six months, this could result in falling prices. Wholesalers may revise prices once a year but the increases must not exceed inflation and price hikes related to the rising costs of production, substances and rent will not be permitted.

Russian pharmaceutical companies have warned of the possible consequences of new legislation. They claim that the pricing policy will make the production of some medicines loss-making and ultimately lead to certain medicines disappearing from the shelves. Producers will consequently focus on expensive drugs which bring the biggest profit and abandon cheaper drugs which are unprofitable to produce and distribute. The prices of other items may be increased in order to cover any losses resulting from the price freezes. Critical drugs will not vanish from the market, but fewer cheaper drugs are expected to be available in the drugstores.

Smaller companies are expected to suffer, as they tend not to make profitable drugs and distributors may lose interest in products with smaller margins. It is therefore possible that smaller producers and distributors may be swept out of the market. Some manufacturers have considered scaling down production or moving part of it to other CIS countries. However, the market is expected to become more civilised and benefit from consolidation. The largest distributor, Protek, is to improve its distribution and logistics models in order to help it through the changing environment.

Further reading - An in-depth review of the Russian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Russia (published May 2010)

South Korea - Why is drug patent protection being threatened in South Korea?

The South Korean legal courts have favoured domestic companies over multinational companies in recent patent cases, under the guidance of a government that is keen to promote branded generic production.

This year, several high profile court cases that have involved multinational pharmaceutical companies trying to protect their drug patents against domestic generic companies, have seen the decision go in favour of the latter.

In April 2010, the Korea Intellectual Property Tribunal invalidated Janssen's patent on Ultracet, claiming that the pain killer contained widely used materials. In March 2010, Pfizer lost its two year legal battle with six local pharmaceutical companies over the patent of Lipitor, its anti-cholesterol drug.

Further reading - A detailed analysis of the South Korean pharmaceutical market is available from Espicom: The Pharmaceutical Market: South Korea (published May 2010)

UK - How will the aftermath of the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are inevitable, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. According to the Budget 2010, the NHS and the Department of Health will be required to make savings of £4.35 billion (US$6.81 billion) by 2012/13. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Many pharmaceutical companies based in the UK have announced job cuts and site closures in recent months, in an effort to reduce costs. AstraZeneca announced the closure of a number of its R&D sites in March 2010 leading to 3,500 job cuts worldwide, including a site in Charnwood and another in Cambridge. This follows a further 8,000 job cuts within the company worldwide, which were reported in January 2010. In February 2010, GlaxoSmithKline announced in 380 jobs cuts at its R&D site in Essex, following a shift in the company’s research focus. Furthermore, Eli Lilly, Pfizer, GlaxoSmithKline and AstraZeneca all announced job losses worldwide during 2009, affecting positions in the UK. These cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

Further reading - An in-depth review of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published May 2010)

Switzerland - How will the government’s cost-containment plans affect the generics market?

The generics market will benefit from upcoming patent expiries, but further price controls may hinder growth in money terms.

The Swiss government is keen to contain costs in the healthcare sector, and a number of specific measures have been taken to rein in costs. The promotion of generics has been at the forefront, with spectacular success since 2001, when generic substitution was introduced.

The first price control on generic drugs was implemented in 2005; new generics had to be priced at least 30% below the level of the corresponding original drug in order to qualify for reimbursement. In 2008, this was reduced further to 40%. This is likely to boost generic use by volume, but will serve to hinder growth in value terms. The major companies in the market have been able to cope with previous price cuts by increasing volume sales, although the decreasing amount of ‘slack’ in the market may make growth harder to maintain in 2010. Patent expiries will become a far more significant source of growth.

By international standards the Swiss generics market remains uncompetitive. Over 70% of generic sales are made by two companies; Mepha, acquired by Cephalon in April 2010, and Sandoz. A more competitive environment would almost certainly lead to lower price levels. However, the government’s policy of period price reductions may prove counterproductive in this regard, by making the market less attractive for new players and further solidifying the position of the existing manufacturers. A few other companies, notably Teva, Actavis and sanofi-aventis (through Winthrop), are active in the market, but to date have not gained much market share. It is noticeable that, in stark contrast to the other leading markets of Western Europe, no Indian or central European companies have yet shown much interest in Switzerland.

Further reading - An in-depth analysis of the Swiss pharmaceutical market is available from Espicom: The Pharmaceutical Market: Switzerland (published May 2010)

Turkey - What are the future prospects for the Turkish pharmaceutical market?

The Turkish pharmaceutical market continues to exhibit strong growth.

Turkey is a key emerging market which is continuing to grow strongly, despite the government’s ongoing healthcare reforms and recent economic crisis. Due to its large population and GDP, Turkey accounts for around 40% the total Middle Eastern pharmaceutical market. The Turkish pharmaceutical market is expected to grow by a relatively high CAGR between 2010 and 2015, driven by import growth; the value of imports grew by 23.7% in 2008. Turkey carries out most of its trade with the EU and USA.

Around a third of the pharmaceutical market is represented by generic drugs, in value terms. As Turkey recovers from the economic downturn, generics may become a more popular alternative to expensive branded pharmaceuticals. This will be helped by the fact that generic substitution is legal in Turkey; the pharmacist is obliged to inform the patient of the substitution, but this may be declined. The ageing population and associated increase in health spending may also force the government to look into the possibility of using generics to cut costs.

Further reading - A detailed review of the Turkish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Turkey (published May 2010)

USA - How will the new regulation of biosimilars impact the US pharmaceutical market?

The US pharmaceutical market has opened the market to biosimilars. It remains to be seen what will happen in practice.

In March 2010, the House of Representatives passed H.R. 3590. This is the bill as previously passed by the Senate, with some House amendments. The President signed it into law on 23rd March. H.R. 3590 includes the biosimilar pathway provisions.

Now that the legislation has become law, attention will move to its operation in practice, and it will be interesting to see when it will be used first, and by whom. There are a number of areas to watch: data exclusivity, evergreening, interchangeability and patent resolution.

Further reading - A detailed analysis of the US pharmaceutical market is available from Espicom: The Pharmaceutical Market: USA (published May 2010)

Croatia - How has the prospect of EU accession affected the Croatian pharmaceutical market?

Croatia has boosted investments in healthcare and updated legislation in preparation for EU membership.

Croatia applied for EU membership in February 2003 and has worked hard to align its legislation with the EU acquis. Following a number of political hurdles, Croatia was able to resume talks on EU membership in October 2009, once neighbouring Slovenia had lifted a block on negotiations. When Croatia becomes a member state, most likely in 2011, the pharmaceutical market will benefit from free access to the larger European market. The prospect of EU accession has increased investments into the Croatian healthcare system, as the country has sought to bring it up to European standards. It has also prompted the authorities to align Croatian law with EU legislation. The Medicinal Products Act came into force in July 2007 and a bylaw was adopted in December 2008 to ensure full harmonisation with EU legislation.

Further reading - A detailed review of the Croatian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Croatia (published April 2010)

Denmark - How is the Danish government attempting to reduce healthcare expenditure?

The government is increasing efficiency within the healthcare system, while pharmaceutical prices have been subject to price freezes and caps.

The Danish government is seeking to minimise costs across the healthcare system. The largely successful attempt to convert inpatient operations to outpatient ones has saved both time and money, and is one way in which the Danish hospital service is becoming more efficient. In addition, the local government reform has placed a greater emphasis on the responsibility of the municipalities to provide rehabilitation and nursing home care. This is reinforced by the recent announcement that the Health Minister may raise hospital charges for those patients who are in hospital unnecessarily, and could have been discharged with other appropriate care, to encourage the municipalities to work to get patients discharged from hospital faster. Also, the municipalities are in charge of health promotion and preventative care, and their contribution to the cost of healthcare provides an incentive to do this effectively. The strong growth in hospital prescribing suggests an increase in new therapies being utilised there, while the modest growth in the primary sector is indicative of a steady consumption of pharmaceuticals in general.

Meanwhile, the increasing pharmaceutical expenditure has led to price freezes and caps in recent years. A price ceiling, which has fixed pharmaceutical prices at the level they were in 2006, has been extended to remain in place until the end of 2011. This extension is a sign of the government’s determination to keep the price of pharmaceuticals down, and so this form of price restriction is likely to continue beyond 2011. However, despite the positive results from cost containment measures, efforts to reduce the cost of pharmaceuticals have proved unsuccessful. The savings made have been more than counterbalanced by the wider use of new and expensive pharmaceuticals, which are required to ensure the most effective treatment. This is especially true in areas such as hypertension, high cholesterol and so on, where many new therapies have become available recently.

Further reading - An in-depth analysis of the Danish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Denmark (published April 2010)

Egypt - Why are patient groups against the new drug pricing system in Egypt?

They believe that the prices of new branded and generic drugs will increase by a substantial margin.

Cairo’s Court of Administrative Justice was expected to issue a decision on the suspension of the Ministry of Health’s new pricing decree in April 2010. A local patients’ rights group filed a lawsuit against the new drug pricing decree in October 2009. This decree effectively establishes a new drug pricing system. However, this decree liberalises rather than controls drug prices in Egypt. Indeed, the new pricing system makes drug prices dependent on market forces in other countries which have different macroenvironment conditions. As a result, drug prices could increase to levels which would not be affordable for the majority of the population.

The new decree establishes two new pricing systems for new medicines registered in the market, one for branded pharmaceuticals and one for generic drugs. The price of branded drugs will be 10.0% lower that the cheapest retail price of the drug in the countries in which is available; the decree uses 36 reference countries. However, the drug does not need to be registered in all 36 countries. The price of generic drugs will be a fixed percentage markdown on branded drugs, and therefore is expected to increase as a result, as generic drugs used to be between 80% and 90% cheaper than branded drugs.

Further reading - A detailed review of the Egyptian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Egypt (published April 2010)

Estonia - What are the future prospects for Estonia’s pharmaceutical and biotechnology industries?

The pharmaceutical and biotechnology markets in Estonia are expected perform well over the next few years, despite the recession.

Estonia is the smallest pharmaceutical market in Central & Eastern Europe, although the per capita figure is above average. Imports account for around 75% of the market and are the most significant factor driving market growth; imports rose by a high double-digit CAGR over 2004-2008. The market is predicted to expand at a moderate CAGR in US dollar terms over the next few years, although the continuing recession may affect the growth rate.

According to the Estonian Biotechnology Association (EBio), Estonia’s biotechnology sector is still at an early stage of development and it will not reach its full potential for around 20 years. EBio has developed the Estonian Biotechnology Strategy 2008-2013, to help advise the government on how it could efficiently support the country’s biotechnology sector and help the sector itself contribute to future development. It is hoped that by 2013, biotechnology will have become Estonia’s fastest-growing sector.

Further reading - An in-depth report on the Estonian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Estonia (published April 2010)

Finland - How is the Finnish government attempting to contain the rising costs of pharmaceuticals?

A reference price system has been introduced in an effort to reduce the use of more expensive pharmaceuticals.

Several cost-containment measures have been implemented in the past few years. Generic substitution was first implemented in April 2003 and has generated considerable cost savings since then. In January 2006, the government followed the example of other EU member states, and for the first time statutorily cut the approved wholesale prices for all reimbursable pharmaceuticals by 5%.

The most recent measure is the introduction of a reference price system for medicines, which came into force in April 2009. The new system is expected to reduce the use of more expensive pharmaceutical products, thus lowering the costs for patients and reducing the pressure to raise health insurance payments. A recent study has estimated that the reference price system will reduce the costs of medicines in Finland by 10%, while total pharmaceutical expenditure is also expected to fall by 5%. However, the effect of the reference price system on medicinal costs may be less significant than would normally be expected due to the strong price reductions resulting from generic substitution.

Also in April 2009, generic substitution was extended to include medicinal products protected by analogy process patents, which were previously excluded. This will result in further cost savings, but patented original products are entering the generic price competition phase several years before product patents expire in other European countries.

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

France - What is the latest reimbursement measure introduced in France?

The reimbursement level for some 110 medicaments of low therapeutic value is expected to be reduced from 35.0% to 15.0% from April 2010.

The high level of healthcare expenditure, at over 11.0% of GDP, and the substantial health deficit are major concerns that have prompted a series of reform programmes and cost containment measures. Tentative limits have been placed on doctors’ prescribing activities, access to doctors is being more closely controlled, while the pharmaceutical industry has been subjected to a series of taxes and other charges.

The current medicines policy is that improved access to innovative medicines will be financed through cost-saving measures on existing medicines, such as cutting the reimbursement rate for products with a low or moderate value rating and delisting products with an insufficient value rating, as well as measures to increase sales of generics. As a result of these measures, pharmaceutical spending is expected to slow in the coming years.

For example, under the Law Project for Financing Social Security (PLFSS – Projet de Loi de Financement de la Sécurité Sociale) for 2010, the reimbursement level for some 110 medicaments of low therapeutic value is expected to be reduced from 35.0% to 15.0% from April 2010. PLFSS is expected to result in savings of 145.0 million euros (US$201.2 million) for the social security system. This new reimbursement level will be added to the current reimbursement levels.

Further reading - An in-depth report on the French pharmaceutical market is available from Espicom: The Pharmaceutical Market: France (published April 2010)

Greece - How will the current economic environment in Greece affect the market?

Strict austerity measures have been introduced to reduce the government deficit, which will lead to reductions in public healthcare spending.

The Greek Prime Minister, George Papandreou, has announced strict austerity measures to reduce the government deficit, facing considerable pressure from international markets and the European Commission. These will lead to a reduction in public spending, which could affect healthcare expenditure. Coupled with an increase in the use of cost containment measures, healthcare spending is likely to remain at relatively the same level over the coming years.

This is despite the fact that large investments have been put into healthcare in recent years, although the sustainability of these was always questionable, with public hospitals running at ever-greater levels of debt and late payments to suppliers becoming more of a problem. For example, hospital debt towards pharmaceutical companies has become a major problem for the industry. It is estimated that the Greek authorities owe nearly 7.0 billion euros (US$10.0 billion) in outstanding hospital debts, and a number of pharmaceutical companies have begun legal action against Greek hospitals that have failed to meet payments on debts on drugs and medical products. The pharmaceutical industry has also sought to persuade the European Commission to pursue a legal ruling that Greece has violated a European Union directive and broken late payment rules by not reimbursing pharmaceutical debts.

However, the ageing population will ensure a need for pharmaceuticals, and there will be a continuing demand for new therapies so that patients can be treated more effectively. A reduction in funding from the public sector could also be counterbalanced by an increase in the involvement of the private sector.

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

Hong Kong - How will the major regulatory review affect the pharmaceutical market in Hong Kong?

The major review of the regulatory system should bring positive changes to the pharmaceutical market in Hong Kong.

In early 2009, a number of incidents concerning pharmaceutical products in Hong Kong caused public concerns on drug safety. The FHB and the DH took immediate measures to address the concerns, including the inspection of all local drug manufacturers. As a longer term measure, it was decided that a comprehensive review on the existing regime for the regulation of pharmaceutical products should be conducted.

This review, which was published in January 2010, decided to focus on certain areas of the regulatory environment, and identified these as areas for improvement. These are: Good Manufacturing Practice (GMP); pre-market control of drugs; regulations for importers/exporters, wholesalers & retailers; pharmacovigilance and public awareness; and increasing penalties for manufacturers/sellers who disobey the law.

Further reading - An in-depth analysis of Hong Kong's pharmaceutical market is available from Espicom: The Pharmaceutical Market: Hong Kong (published April 2010)

Jordan - How is Jordan’s regulatory environment affecting the pharmaceutical market?

Jordan adheres to WTO rules, in particular the TRIPS agreement, but the regulatory environment is still facing criticism.

Prior to developments in the late 1990s, Jordan was regularly placed on the USTR 301 Priority Watch List for copyright infringement and breaking patent laws. Since its accession to the WTO, Jordan has demonstrated its commitment to WTO rules, in particular the TRIPS agreement. This is exemplified by the recent improvements to, and enforcement of, intellectual property protection.

Jordan’s regulatory environment has been criticised in the past, mainly by international manufacturers, for regulatory discrimination in favour of domestic companies, as the approval time seemed to be much shorter for local products and there have been reports of these products ‘queue-jumping’ others.

However, Jordan has since made significant inroads into improving and enforcing IP protection. This has led to Jordanian authorities now being criticised by domestic producers, over the blocked registration of 39 pharmaceuticals, as they infringe copyright laws.

While this change of attitude towards IP laws has produced criticism from and problems for some domestic producers, the overall effect of an improved IP business environment has arguably been beneficial. In particular, the pharmaceutical industry as a whole is expected to benefit from increased foreign direct investment and more international companies considering joint ventures or subcontracting.

Further reading - A detailed review of the Jordanian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Jordan (published April 2010)

Latvia - What are the future prospects for the pharmaceutical industry?

The pharmaceutical market in Latvia is expected to grow steadily over the next few years.

Latvia is among the few economies in Central & Eastern Europe that is expected to continue contracting in 2010, due to falling domestic demand. Whilst the economic situation will affect the growth of the pharmaceutical market, a continued increase in the value of imports will result in moderate growth. Imports dominate the market; Latvia has a small number of drug makers which concentrate on former Soviet markets.

The development of biotechnology was seriously hindered in the 1990s with the closure of many large factories and plants. However, the pace of development has picked up since Latvia joined the EU in 2004. Latvia has made progress in biomedicine, but it has not yet reached EU levels. R&D capabilities are strong but public spending on R&D is low.

Further reading - An in-depth review of the Latvian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Latvia (published April 2010)

Morocco - Why is the Moroccan Ministry of Health keen to cut drug prices and encourage drug promotion?

Moroccan drug prices are too high and cost-containment measures are needed following the extension of the compulsory health system.

Following the publication of a Parliamentary report in November 2009, which found that drug prices were too high in Morocco, even in comparison to Tunisia, the government has launched a new regulation to bring pharmaceutical prices down and encourage generics consumption. The new system limits the number of generic medicaments to 14, by International Common Denomination (ICD) and only one generic per manufacturer. One of the main measures is that the new pricing system introduces international benchmarking criteria. Another measure is the regular review of pharmaceutical prices. Contrary to the actual system, pharmaceutical prices will no longer be fixed.

The national health insurance scheme is expected to provide substantial additional funding for the health sector. Initially aimed at salaried workers, the scheme has been expanded to cover the self-employed. The CNSS, which operates the scheme in the private sector, has announced that it will be extending cover to ambulatory care in addition to hospital treatment from February 2010 onwards. A health insurance scheme for those on very low incomes is still in the early stages of implementation and is expected to be rolled out on a national basis in 2010. Full implementation of the national health insurance will require cost-containment measures due to increasing reimbursement levels.

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

Philippines - Why have the Cheaper Medicine Act’s drug price reductions ensured volatility in the pharmaceutical market?

The Filipino government is battling with the international pharmaceutical industry for ground in the market, which up until recently experienced a free-market policy with no price regulations in place.

The Philippines paradoxically has one of the highest drug prices in the world, especially considering the majority of the population cannot afford them. Changes brought about by the controversial Cheaper Medicine Act have impacted the Philippines pharmaceutical market in a number of areas, including IP laws, competition and drug price control mechanisms.

Under the Act, 200 drugs have seen price reductions by up to 50% since August 2009. This represents 12-15% of the total market for essential drugs. The majority of drugs involved are new products in the market, whose prices are disproportionately higher in the Philippines in comparison to the Asia-Pacific region. They also tend to be drugs which are top sellers, the most expensive, and have limited generic competition.

Further reading - A detailed report on the pharmaceutical market in the Philippines is available from Espicom: The Pharmaceutical Market: Philippines (published April 2010)

Slovenia - What are the future prospects for the pharmaceutical industry?

The Slovenian pharmaceutical market is set to grow as the economy improves.

In per capita terms, Slovenia is the richest country in Central & Eastern Europe, with spending per head at least double that found elsewhere in the former Communist countries of the region. Although the economy contracted in 2009, for the first time in 16 years, there are signs that the recession has peaked and the economy is set to grow over the next few years.

The market is predicted to expand at a moderate CAGR over the next five years, although this may be tempered by slow economic growth in 2010. Generics account for a high proportion of the pharmaceutical market in volume terms. Domestic production is strong, dominated by the leading generic companies, Krka and Lek. Both companies play a major role in Eastern European markets and are also seeking to expand their presence in the USA. Multinationals tend not to have manufacturing plants in Slovenia, given the country's small size and proximity to the major Western European manufacturing centres.

Further reading - An in-depth analysis of the Slovenian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Slovenia (published April 2010)

Spain - How is the current economic environment affecting pharmaceutical sales?

The pharmaceutical industry is expected to overcome the economic crisis in 2011.

Spain is the fifth largest economy in the European Union. However, the economic downturn has affected the country seriously. It is one of largest developed economies expected to experience a negative growth in 2010. The Economist Intelligence Unit (EIU) projects that the GDP will contract by 0.8% in 2010 and is only expected to experience modest real growth from 2011 onwards.

FARMAINDUSTRIA believes that more new pharmaceutical medicines will be entering the Spanish pharmaceutical market in the coming years, together with biologic medicines. The pharmaceutical industry expects to overcome the economic crisis in 2010, but this might be delayed until 2011 considering the current economic outlook.

The pharmacy sector is expected to increase at a lower rate than the hospital sector, but cost-containment policies will affect both sectors. By 2015, the Spanish pharmaceutical market could rank fourth in Western Europe, ahead of the UK. Almirall and Esteve are the best positioned local companies.

Further reading - A detailed review of the Spanish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Spain (published April 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)

Ukraine - How will the pharmaceutical market perform over the next few years?

The market is expected to grow despite the economic situation.

Ukraine is the poorest pharmaceutical market in the region in per capita terms, but growth is expected to be strong over the next few years. Whilst Ukraine was hit hard by the economic crisis, the economy is expected to recover in 2010 and increase by an average 3.6% per annum over the next five years. Ukraine’s ability to deal with the economic crisis has been hindered by ongoing political infighting. However, in March 2010, Yulia Tymoshenko's coalition officially collapsed, as it failed to prove it had a majority. Whilst essential work on stabilising the country’s economic situation may be delayed by early parliamentary elections, Mrs Tymoshenko’s exit from the government is expected to help ease political turbulence.

The pharmaceutical market is also driven by strong import growth; imports rose by a CAGR of 34.0% over 2004-2008. Import growth is expected to remain strong due to a lack of locally manufactured innovative products. The pharmaceutical market could also grow more rapidly if the government manages to implement an effective health insurance system, which has been under discussion for several years.

Further reading - An in-depth analysis of the Ukranian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Ukraine (published April 2010)

UK Trade & Investment (UKTI) promotes healthcare investment in China

China is set to become the world’s fifth largest pharmaceutical market by 2010. This growth provides the perfect opportunity for businesses from the UK to invest in the pharmaceutical industry in China.

In 2009, the Chinese government stated that RMB850.0 billion (US$124.5 billion) would be invested into the healthcare sector over the next three years. This is in accordance of Healthcare 2020 reform, the public framework for healthcare that aims to provide safe, effective, convenient and affordable health services to the entire population by 2020. The reform also includes the building and upgrading of hospitals, as well as increasing the medical insurance coverage of the population.

China has also shifted focus onto R&D and innovation, with the development of science and technology parks for pharmaceutical and biotechnological research, rather than on the manufacturing and production side. This is in response to the realisation that, in the near future, China will lose the advantage of its large and cheap manufacturing force to places such as India, due to its ageing population.

The issue of IPR has been a considerable hindrance to companies wanting to enter the Chinese pharmaceutical market, although recently the government has made significant inroads to strengthen its protection. The IP system in China is now a substantial network; with highly qualified judges, short trials and low enforcement costs. But a continual presence and awareness on the ground in China is still required to police and enforce IP.

The Chinese government wants to encourage partnerships with foreign companies, expand R&D by domestic companies and to improve the quality and efficacy of pharmaceutical products. It is hoped that the fruits of this will dispel any notion of ‘Made in China’, cheap and mass produced, in favour of ‘Made by China’, whereby Chinese brands and products are synonymous with quality and value.

China aims to showcase the opportunities available in its pharmaceutical industry at the Shanghai World Expo, which is to be held from May to October 2010.

Further reading - An in-depth analysis of the Chinese pharmaceutical market is available from Espicom: The Pharmaceutical Market: China (published January 2010)

Key Developments in Latin America and Europe

Regulatory developments in Latin America

There have been several pharmaceutical regulatory developments in Latin America this week. In Mexico, the renewal registration process is affecting smaller pharmaceutical producers, while in Peru, the new regulation for pharmaceuticals is expected to increase the quality of drugs approved in the country. In Colombia, Abbott has finally decided to comply with the national pricing commission and reduce the price of one of its antiretrovirals sold in the country.

Manufacturing developments in Europe

There have also been interesting developments in Europe. In Germany, the race to acquire ratiopharm is coming closer to an end, with two leading generic producers, Teva and Actavis, interested in the acquisition. In Ireland, Taro Pharmaceuticals has announced that it is to close its manufacturing facility by the end of March. Meanwhile, Medis International has opened a new packaging plant in Czech Republic and a local biologic producer, Philogen, has acquired a manufacturing site from Bayer in Italy.

Further reading - Detailed reports on these pharmaceutical markets are available from Espicom: Mexico, Peru, Colombia, Germany, Ireland, Czech Republic and Italy.

Cost-containment measures restricting pharmaceutical market growth

Cost-containment policies continue to affect underdeveloped, emerging and mature pharmaceutical markets. In Asia Pacific, for example, the Philippines is expected to announce a second drug-price list in mid February. This would be the second time it has happened in less than one year. Hospital drug price negotiations in Taiwan are increasing drug access but, as a result, some problems have arisen in the pharmaceutical supply chain.

Eastern European pharmaceutical markets are not immune to cost-containment policies. Drug companies in Russia have been forbidden from raising the prices of essential medicines. There are concerns whether this move could make the production of some medicines loss-making. Meanwhile, pharmaceutical producers have delayed their rebates in Romania, a small but growing pharmaceutical market.

In the more mature Western European pharmaceutical markets, pricing & reimbursement policies are generalised, with recent cuts seen in Ireland and Germany. Hospital drug debt levels, particularly common in more Southern European pharmaceutical markets, can also impact pharmaceutical producers. Following the pledge by the European Union to support Greece economically, it remains to be seen how Greek authorities plan to pay off their outstanding hospital drug debts.

Further reading - In-depth reports on the pharmaceutical markets in these countries, including detailed information on pricing & reimbursement, are available from Espicom: Philippines, Taiwan, Russia, Romania, Ireland, Germany and Greece.

Argentina - Why were new drug regulatory measures implemented in Argentina in QIV 2009?

Argentina aims to tackle drug counterfeiting, fight against the “medicine mafia” and control drug prices.

The distribution of counterfeited drugs in the public sector has been a difficult pill to swallow, but the government has responded with new, and more aggressive, regulatory measures to tackle drug counterfeiting and fight against the “medicine mafia”. Additionally, the government aims to reduce drug prices and has indeed formalised an agreement with drug producers valid until 2010. Below follow the main regulatory measures implemented in QIV 2009:

• Under Law 26,524, issued in November 2009, the penal code was reformed, incorporating drug counterfeiting.
• In November 2009, Article 1 of the Pharmacy Law No. 17,565 was modified, therefore OTC medicines can only be sold by pharmacists or authorised dispensers in pharmacies.
• The Chamber of Deputies approved a drug traceability regulatory draft in October 2009, which is now pending in the Senate.
• Additionally, a formal price-cut regulation was introduced in November 2009 to reduce the price of 600 medicaments by 30.0% until 1st July 2010.

Further reading - An in-depth review of the Argentinian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Argentina (published January 2010)

Australia - How will the imminent expiry of a number of blockbuster drugs affect the Australian pharmaceutical market?

The Australian generics market will benefit from the impending patent expiry of a number of successful drugs, which will cushion it against further government price cuts.

Recently-released data from the Pharmaceutical Benefits Scheme (PBS) indicated that 12 out of the top 20 best-selling drugs by volume in 2008 were now available as generic drugs; the majority of these drugs experienced falling sales in the same year. An example of one of these drugs is Merck’s Zocor (simvastatin), whose patent expired in December 2008; this was the second leading drug by volume of sales. However, generic drugs are also going to be the target of further PBS price cuts, as the Scheme seeks to keep health expenditure low. For example, legislation that came into effect towards the end of 2008 has generally been viewed as negative by generic companies, which believe that they reduce the pharmacist’s ability to discount, as well as cutting prices.

It is likely that Australian imports of pharmaceuticals will increase by a substantial amount in 2010. This is because the Australian dollar in 2010 is projected to be as close to parity with the US dollar as it ever has been. Having invested in R&D pipelines in recent years, the PBS will be expecting new blockbuster drugs to emerge, and like in the past, the PBS will be willing to pay for them. Indeed, generic drugs will likely face the brunt of price cuts if a new blockbuster drug were to emerge.

Further reading - A detailed analysis of the Australian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Australia (published January 2010)

Bangladesh - Could the disorganisation in the OTC and distribution sectors seriously affect the Bangladeshi pharmaceutical market as a whole?

There have been a number of worrying signs for the Bangladeshi pharmaceutical market in the last year.

Reportedly, unscrupulous drug sellers sell almost 90% of stocked drugs without prescription. Bangladesh is an extremely poor country, and many of the population cannot afford to see health professionals when they fall ill. There has therefore been a long tradition of self-medication in the country, which, for a country where many citizens are uneducated, leads to the misuse of drugs; a study by the University of Dhaka found that 83.4% of people have bought drugs or medicines in life without a formal prescription of a physician. Unlike in other markets, the Bangladeshi pharmaceutical distribution network tends to be more retail-orientated and the bulk of distribution is done by the companies themselves. However, drug stores at Dhaka's major wholesale market closed their shutters in November 2009 in protest against the arrest of their fellow traders in the port city of Chittagong. An anarchic situation is prevailing in the marketing and sales of medicines in the Bangladesh; thousands of illegal and unlicensed drug stores exist in the country. On top of this, the scandal involving Rid Pharmaceuticals, which led to the deaths of 24 children, highlighted the shortcomings of the regulatory agency, the DDA.

Due to the sheer size of the population, Bangladesh cannot simply be dismissed. The country has a large generics market, and companies such as Square and Beximco are beginning to have success overseas. However, despite the country possessing huge manufacturing capabilities which supply 96% of domestic need, the complete lack of R&D in domestic companies could cause the market to stagnate, especially if companies have not evolved by the time the TRIPS agreement comes into effect. Having said that, multinationals should view Bangladesh as a possible manufacturing base. Bangladesh also appears politically stable after decades of instability and coups, and the economy is growing by over 6% per annum.

Further reading - An in-depth analysis of the Bangladeshi pharmaceutical market is available from Espicom: The Pharmaceutical Market: Bangladesh (published January 2010)

Brazil - Why is Brazil the most attractive market in Latin America?

The market is stronger due to new regulatory measures, increasing drug consumption and sizeable opportunities in the generic sector.

Increasing regulatory compliance ...

Demand should increase as the country is emerging from the economic downturn much quicker than anticipated. Recent regulatory developments include the implementation of the National Drug Control System, published in November 2009; registration requirements for APIs, published in November 2009; and a new labelling & packaging regulation, published in September 2009. ANVISA is also working on a draft for the regulation of biologic copies; the aim is to encourage local production of these medicines.

Rising purchasing power, fuelling drug consumption ...

The pharmacy sector in dollar values registered a slow growth in 2009 but the outlook is positive, as the population’s purchasing power is increasing. Future OTC sales are expected to be affected by the new advertising regulation, enforced in June 2009, and the new dispensing practices, published in August 2009. One of the new dispensing measures was that OTC medicines could no longer be sold over the counter. This, however, was overturned by ABRAFARMA in October 2009.

Wave of acquisitions in the generic sector ...

Generics sales continue to grow at a higher rate than the overall pharmacy sector, and they are expected to represent 20% of the sector by volume in 2010. In September 2009, it was rumoured that the local generic producer, Neo Química, was being acquired by Pfizer, but instead it was grabbed by the leading OTC company Hypermarcas in December 2009. This was the second major acquisition in the generic sector in 2009, following sanofi-aventis’ acquisition of Medley.

Further reading - A detailed review of the Brazilian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Brazil (published January 2010)

Canada - What does the future look like for the Canadian pharmaceutical market?

Demand for pharmaceuticals is set to increase, but the economic downturn could have an impact on future healthcare expenditure.

The Canadian pharmaceutical market is projected to grow at a relatively fast rate in the coming years, strengthened by an increasing demand for pharmaceuticals, due to an ageing population and a commitment to a high standard of healthcare provision. However, due to the economic recession, public finances are set to deteriorate for the first time in a decade, and spending constraints could affect future expenditure on healthcare. In addition, since Canadians’ private health insurance tends to be through their employment, redundancies caused by the global economic downturn may mean a reduction in private healthcare insurance.

The future of parallel trade between Canada and the USA is uncertain. As patented drug prices in Canada are controlled by the government, they tend to be considerably lower than in the USA, which has led to a burgeoning parallel trade between the two countries. The US has taken no clear position on the issue, but in 2005 the Canadian government indicated that it would legislate to severely restrict parallel trade. As yet, this has not happened, however.

Further reading - A in-depth review of the Canadian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Canada (published January 2010)

China - What is likely to be the fastest growing segment of the Chinese pharmaceutical market?

The Chinese government will actively promote self-medication as it seeks to keep rising health expenditure down to counterbalance investment elsewhere.

China’s OTC market is growing at a considerable rate each year, faster than anywhere else in Asia-Pacific, and Espicom anticipates this market to continue to flourish over the coming years. OTC drugs only make up around 10% of the pharmaceutical market in China, so more and more foreign drug companies are entering and/or expanding their presence in the country with OTC drugs. Self-medication will be further promoted by the government as it seeks to keep rising health expenditure down to counterbalance investment elsewhere, and also to try to reduce hospital visits. Unlike in many other countries, China has permitted the internet to be a marketplace for OTC products. This will further boost sales in a country with the most online citizens in the world.

Having said this, one must not assume that traditional Chinese medicine (TCM) is not the favoured medication for many people in China. Official data from the China Association of Pharmaceutical Commerce (CAPC) puts total profit for the TCM industry in 2007 at US$2.0 billion, higher than the Western pharmaceutical market. Also, the size of the TCM market is nearly as large as the Western pharmaceutical market in China, and this market is growing at a faster pace than the Western pharmaceutical market, with a year on year increase of 21.7%. However, the government is keen to advance the Western pharmaceutical market, and is investing jointly with foreign companies into numerous R&D parks, such as ‘Medicine Valley’ near Shanghai.

Further reading - A detailed analysis of the Chinese pharmaceutical market is available from Espicom: The Pharmaceutical Market: China (published January 2010)

Germany - How is the German generic market set to perform in the future?

The generic market has become increasingly competitive in recent years and will gradually increase its market share.

Reforms instigated in 2004, which entailed greater use of substitution, have placed a lot of pressure on older branded drugs, and prescribers and patients have been given financial incentives to switch to generics. However, reforms have not been especially ‘pro-generic’, so whilst generics will continue to be increasingly widely prescribed, their value share of the overall market will alter less rapidly. In 2007, generic drugs accounted for 36.5% of the prescription market by value; around 81% of this was covered under the GKV. In volume terms, the generic market has continued to grow each year. This was particularly impressive in 2007, when it reached 65.4% of the total market, compared with 60.0% in 2006.

Overall, Germany is the largest pharmaceutical market in Western Europe, twice the size of Italy. Growth in recent years has tended to be uneven, as government reforms take effect on pricing and/or reimbursement. While overall expenditure is still growing, GKV expenditure, which accounts for around 80% of the market, is characterised by price reductions. These are due to tighter reimbursement rules, greater use of generics and downward pressure on generic prices due to the rebate system.

Further reading - An in-depth analysis of the German pharmaceutical market is available from Espicom: The Pharmaceutical Market: Germany (published January 2010)

India - Indian firms with sterile injectable expertise targeted by Pfizer and Hospira

Pfizer and Hospira gain injectable generics from Indian firms

The Indian pharmaceutical industry has been targeting the US generics market for some years. More recently, a number of companies have successfully gained FDA approval for a growing portfolio of injectable generics. This relatively exclusive segment of the generics market appears to be gaining a higher profile and Hospira and Pfizer have each found a way of increasing market share by doing deals with Indian manufacturers.

At the end of last year, Hospira agreed to acquire Orchid’s generic injectable finished-dosage form pharmaceuticals business for approximately $400 million. The acquisition included Orchid’s beta-lactam antibiotics manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities) and pharmaceutical R&D facility at Irungattukottai, Chennai, as well as its generic injectable product portfolio and pipeline. In addition, the companies signed a long-term exclusive agreement for Orchid to supply APIs for the acquired generic injectable pharmaceuticals business.

At the beginning of this year, Pfizer and Strides Arcolab entered into a collaboration whereby Pfizer will commercialise off-patent sterile injectable and oral products in the US through its Established Products Business Unit. The companies believe that this is a highly complementary collaboration, which is expected to deliver 40 off-patent products, many of which are oncology therapeutics, to healthcare providers and patients in the US, by joining Pfizer's solid commercial infrastructure with Strides' high-quality manufacturing capabilities. The first of the products commercialised under this collaboration are expected to be launched this year.

Pfizer is obviously keen to work with Indian manufacturers to provide a boost into the injectable generics market. In May 2009, Pfizer entered into a commercialisation agreement with Claris Lifesciences, under which the firm acquired the rights to 15 injectable products that have lost patent protection in major markets, covering a wide range of therapeutic areas including anti-infectives and pain management. The products will be marketed under the Pfizer brand in the US, where the deal is exclusive; Claris will continue to market the products elsewhere.

Further reading - A detailed review of the Indian pharmaceutical market is available from Espicom: The Pharmaceutical Market: India (published January 2010)

Indonesia - What is expected to be the fastest growing sector of the Indonesian pharmaceutical market?

The rapid growth of the OTC market and pharmacy sector will be mutually beneficial to one another.

The Indonesian OTC market has a double-digit growth rate according to some estimates, which can be attributed to a number of factors that will continue to make it an attractive market. The first of these is that as Indonesia is generally a poor country, its citizens will continue to self-medicate. This can also be linked to a long history of self-medication in the country, albeit with traditional Indonesian medicines. Another factor that will help the OTC market grow is the fast-growing pharmacy sector, helped by companies such as Apotek K-24 and Century. Companies such as these have not only made OTC products more accessible and affordable, but they have also increased consumers’ knowledge of drugs, and their confidence to self-medicate. The success of pharmacy companies such as Apotek K-24 with franchising has forced the state-owned company, Kimia Farma, to follow suit. This is likely to increase sales of OTC products throughout Indonesia, making it an attractive market.

The future growth of the generics industry in Indonesia is uncertain, and is arguably dependent on a number of factors. The first of these is the value of the rupiah against the US dollar; if the rupiah continues to devaluate against the dollar as projected, many smaller generic companies could go out of business, as the market is heavily reliant on imported raw materials. Another factor is government price cuts of branded generics, which are intended to give poor citizens access to branded drugs. However, the cuts could also be viewed as biased towards the government, which owns most of the non-branded drugs. Having said that, the generics market is estimated to make up 75% of the total pharmaceutical market in Indonesia, and it will continue to dominate the country in the forecast period.

Further reading - An in-depth analysis of the Indonesian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Indonesia (published January 2010)

Ireland - How will the aftermath of recession affect the pharmaceutical market?

The economic downturn has led to reductions in healthcare spending, necessitating cost-saving measures such as reference pricing.

As a result of the economic downturn, the government faces an extremely tight financial operating environment in the next few years. Ireland needs to make savings of over 1 billion euros in 2010, out of a health budget of 16 billion euros. In order to do this, cost-saving measures will be implemented wherever possible.

Firstly, reference pricing will be introduced in 2010. Under the new system, only the reference drug selected by the HSE from a group of treatments will be reimbursed. In addition, although reimbursement for the over 70s was more or less automatic between 2001 and 2009, a means test has now been introduced, in attempt to slow consumption.

Another measure currently being considered by the government is to impose prescription charges on the country’s 1.4 million medical card holders, of around 50 cent per item prescribed. This would work in two ways; by raising money and discouraging the over-prescribing of medicines. The Prime Minister claimed in November 2009 that this would generate savings of around 30 million euros a year.

In addition, the Irish Medical Organisation (IMO) is calling for savings to be made through increased generic prescribing and reducing prices of generics. There is vast potential for savings in this area, as use of generics is currently very low. However, this is to try and support manufacturers based in the area, and so this is not likely to be a priority area for cost savings.

Further reading - A detailed analysis of the Irish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Ireland (published January 2010)

Italy - Will generics continue to gain greater acceptance in the Italian market?

A number of high profile drugs have lost patent protection; will the Italian generic market take off as a result?

The Italian pharmaceutical market is expected to remain one of Europe’s slower growing markets over the next five years. Growth will continue to be constrained by low economic growth, cost containment measures for reimbursable products, reference pricing and an expected expansion of the generics market due to patent expiry on several high volume products.

On the plus side, this may be good news for the generic industry. Even by southern European standards, the Italian generics market is small. Excessive price regulation, long national patent supplementary protection, a lack of incentive distribution margins, confusion between branded and unbranded generics, a perception of generics as second-class drugs and the empowerment of doctors to stop generic substitution are all factors that have traditionally constrained the unbranded generic sector.

The combination of high profile drugs losing patent protection and the need to reduce costs should provide a boost to the generic market. In addition to the blockbusters that have lost patent protection in Italy in the last couple of years, a large number of medicines will lose their national supplementary certificates during 2010. Consumer perception of generics and generic awareness continue to improve. The Italian generic market is also being consolidated by leading generic producers in the country.

However, the generic industry has been coming under increasing pressure from manufacturers of branded products, which have begun to implement price cuts to minimise loss of market share. Significant price reductions have been closing the gap between off-patent brands and unbranded generics. The generic industry still has some way to go, but anticipates continued growth in market share and a progressive alignment with the rest of Europe.

Further reading - A detailed review of the Italian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Italy (published January 2010)

Japan - How will Japan’s ageing population affect the pharmaceutical market?

The Japanese government is actively pursuing generic promotion, along with changes in the OTC market, in order to cope with its ageing population.

With 26% of the Japanese population projected to be aged over 65 in 2015, the government has a number of obstacles to overcome in order to keep health expenditure to a minimum, and the pharmaceutical market will play a part in this. Although the generic market is currently small and fragmented, it has opened up recently to foreign companies such as Teva, indeed this company could well be the national leader in the near future. Recent JV’s in the generic market, such as Teva-Kowa, have highlighted that the key to success is for foreign companies to have a local partner. Despite all this, the MHLW’s target for generics to make up 30% of the market by 2012 appears unattainable at present.

Another cost-containment measure is biennially price cuts for pharmaceutical products, although these can sometimes take place annually. Annual price cuts will likely increase in the future. In view of this, a number of Japanese companies are seeking to acquire rights to foreign companies R&D lines, in order to guarantee sales outside of the Japanese market. An example of this is Takeda’s recent acquisition of Amylin’s anti-obesity pipeline, in a deal which could eventually reach US$1 billion.

Further reading - An in-depth review of the Japanese pharmaceutical market is available from Espicom: The Pharmaceutical Market: Japan (published January 2010)

Mexico - How are biologics & biosimilars regulated in Mexico?

In September 2009, the regulatory reform for the sale and production of biologic and biosimilar medicines was enforced.

The new regulation establishes the requirements to launch ‘biocomparables’, which is the term chosen in Mexico to define off-patent biologics ‘comparable’ with innovative biologics; other terms such as ‘biosimilars’, ‘biogenerics’ or ‘non original biologics’ are rejected. The new regulation also sets out the creation of a Committee of New Molecules and a Subcommittee of Biologic Medicines to determine, on a case-by-case basis, the clinical or in vitro studies necessary for market registration, depending on the medical use of the product. Once marketed, a pharmacovigilance system will assess these products.

The new regulation represents sizeable opportunities for both local and foreign producers. Local producers such as Probiomed, Silanes and Landsteiner Scientific already produce biologic medicines in Mexico. Competition, however, is expected to arise from foreign producers such as Roche, Amgen, GlaxoSmithKline, Sandoz, Teva and Ranbaxy. On a patient level, the new regulation provides more safety and availability, as the sector had grown in the country without any legal framework.

Further reading - A detailed analysis of the Mexican pharmaceutical market is available from Espicom: The Pharmaceutical Market: Mexico (published January 2010)

Poland - To what extent will the economic crisis affect the Polish pharmaceutical market?

The effects of the crisis are expected to be minimal given the country’s economic structure.

Whilst many countries have entered recession as a result of the economic crises, Poland’s economy did not shrink in 2009. In fact, it was the only economy in the EU that avoided contraction. There are a number of reasons for this: Polish businesses tend to rely on their own resources rather than loans and have therefore been less affected by the constraints on lending since the crisis broke out; exports account for only 30% of GDP, compared with 66% in the Czech Republic and 69% in Hungary; and consumer spending has remained high.

Consequently, the impact on the Polish pharmaceutical market will be far less than in other countries of similar development in Central & Eastern Europe, such as Hungary. There will be less of a need to reduce spending on healthcare and the disposable income available for purchasing pharmaceuticals should remain steady, although unemployment is predicted to rise marginally in 2010, which may be detrimental to retail sales. The market will continue to be driven by high import growth and the increased demands on healthcare that are associated with the ageing population.

Further reading - A detailed review of the Polish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Poland (published January 2010)

Russia - Will generics continue to dominate the Russian pharmaceutical market?

The Russian government has developed an initiative to help boost the domestic production of innovative pharmaceuticals, which could ultimately lead to generics losing market share.

Currently, Russian manufacturers mainly produce inexpensive, low technological products; a strategy for encouraging growth in the local pharmaceutical industry for the period up to 2020 envisages the government helping local producers to cover the costs of the R&D that is required to boost production of innovative pharmaceuticals. If the objectives of the plan are realised, by 2020, the local industry will be responsible for 50% of drugs in circulation (compared with 5% in 2007), 80% of which will be innovative.

The modernisation of the local pharmaceutical industry will ensure the replacement of foreign generics with Russian equivalents and ultimately by innovative drugs of Russian origin. However, the setting up of innovative production will be a long process requiring substantial investment. Slow economic growth will remain an obstacle to funding in the short term at least. In addition, generics will remain a popular alternative to the more expensive branded pharmaceuticals whilst the country recovers from the economic downturn.

Further reading - An in-depth review of the Russian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Russia (published January 2010)