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)