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)

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)

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)

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)

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)

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)

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)

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)

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)

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)