Recently Released Market Study: Spain Pharmaceuticals & Healthcare Report Q2 2013

Boston, MA -- (SBWire) -- 06/07/2013 --The sharp drop in public pharmaceutical expenditure in Spain during the second half of 2012 warns of a continuing fall in spending on medicines in 2013. BMI notes that this does not bode well for drugmakers selling their products in Spain. The success of the implemented policies may encourage the enforcement of further cost-containment measures, which, with the ongoing public hospital debt situation, seriously hampers the country's attractiveness as a location in which to sell drugs, despite its favourable demographic characteristics.

Headline Expenditure Projections

- Pharmaceuticals: EUR18.34bn (US$23.30bn) in 2012 to EUR16.36bn (US$21.93bn) in 2013; -10.8% in local currency terms and -7.6% in US dollar terms.
- Healthcare: EUR102.74bn (US$130.48bn) in 2012 to EUR104.43bn (US$133.93bn) in 2013; +1.6% in local currency terms and 7.2% in US dollar terms.

Risk/Reward Ratings: In BMI's Pharmaceutical Risk/Reward Ratings (RRRs) for Q213, Spain is ranked eighth out of the 10 countries surveyed in Western Europe. While Spain offers investors positive factors, such as its large drug market, it also has problems, such as the government's focus on cost containment, low population growth, cumbersome bureaucracy and provincial differences regarding drug regulations and reimbursement.

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Key Trends And Developments

- Spanish drugmaker Almirall reported full-year 2012 revenues of EUR900.2mn (US$1.17bn), a 3.1% increase from 2011 revenues of EUR873.1mn (US$1.14bn). This is positive in comparison with the 12.9% decline in revenues in 2011. Co-development agreements, co-promotion agreements and product promotion collaboration for drugs including Eklira (aclidinium bromide), Actonel (risedronate), Cipralex (escitalopram), Conbriza (bazedoxifene), Libertek (roflumilast) and Xarelto (rivaroxaban) resulted in a 107.6% increase in 'other income'. This rose from EUR104.7mn (US$135.5mn) in 2011 to EUR217.3mn (US$282.8mn) in 2012, ultimately boosting Almirall's revenues. However, we note that in 2012 the company's net sales declined by 11.1% (to EUR682.9mn, US$888.7mn), following the 12.6% decline in net sales in 2011 (to EUR768.4mn, US$1.00bn). This reveals Almirall's exposure to the Spanish government's austerity measures and the impact of patent expirations - estimated to amount to EUR136.9mn (US$177mn) in lost sales.
- On January 16 2012, the European Court of Justice ruled that Spain's decision to cut value-added tax on medical devices and some substances used in the production of medicines was illegal. The ruling means that cuts made two years ago to bring VAT to 4-10% will have to be reversed to the standard level of 21%.

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