Boston, MA -- (SBWIRE) -- 04/09/2014 -- Most of Switzerland's demographic and economic indicators are favourable towards increased pharmaceutical and healthcare spending. The pensionable population proportion is high and growing, and this will translate into greater demand for drugs. Furthermore, the country's highly developed infrastructure means that access to healthcare is easy, further supporting the consumption of medicines.

Headline Expenditure Projections

- Pharmaceuticals: CHF7.19bn (US$7.76bn) in 2013 to CHF7.33bn (US$6.84bn) in 2014; +1.84% in local currency terms.
- Healthcare: CHF66.37bn (US$71.62bn) in 2013 to CHF67.81bn (US$63.26bn) in 2014; +2.2% growth in local currency terms.

Risk/Reward Ratings: In BMI's Q214 Risk/Reward Ratings (RRRs) for Western Europe, Switzerland stood in third position in the Western Europe matrix. Switzerland's score for the quarter stands at 71.7, well above the regional average of 67.4.

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Key Trends And Developments

The strength of the franc has hit many Swiss multinationals, with companies such as Roche and Novartis reporting lower revenues as a result of unfavourable currency effects. In 2013 the Swiss franc appreciated against some currencies, in particular the Japanese yen and US dollar, but weakened against the euro. The overall impact was negative on Roche's results expressed in Swiss francs compared to constant exchange rates, with impacts of 3-4 percentage points on sales, core operating profit and core EPS. Multinational drugmaker Novartis posted a 2% increase in sales in US dollar terms (4% inconstant currency terms) to US$15.08bn in Q413, up from US$14.83bn in Q313.

BMI Economic View: Following the intervention measures of the Swiss National Bank in response to the sharp 2008-2011 rally, the Swiss franc has been broadly stable over the course of 2012-2013. Though the CHF has weakened in recent weeks, on a historical basis the extent of depreciation is modest. Assuming that the eurozone economy picks up momentum in 2014 we expect further modest weakness over the coming quarters, though we do not expect to see the start of a major currency correction. Moreover, while the European Central Bank has recently upped its dovish rhetoric by indicating a willingness to provide monetary stimulus, for the time being policy remains relatively restrictive, which will play out in the EURCHF cross.

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