Boston, MA -- (SBWIRE) -- 02/04/2013 -- BMI View: While the patent cliff and the consequent availability of generic drugs, as well as price cuts on generic medicines and their increasing affordability, will work towards increasing the consumption of generic medicines in Switzerland, BMI believes the government needs to do more to alter patients' attitudes towards these drugs as this is the main growth deterrent.

Headline Expenditure Projections

- Pharmaceuticals: CHF6.77bn (US$7.63bn) in 2011 to CHF6.58bn (US$7.00bn) in 2012; -2.8% decline in local currency terms and -8.3% in US dollar terms.
- Healthcare: CHF65.30bn (US$73.8bn) in 2011 to CHF67.56bn (US$71.87bn) in 2012; +3.5% growth in local currency terms and -2.6% in US dollar terms.
- Medical devices: CHF4.77bn (US$5.38bn) in 2011 to CHF4.76bn (US$5.06bn) in 2012; -0.3% growth in local currency terms and -5.9% in US dollar terms.

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Risk/Reward Ratings: In BMI's Q113 risk/reward ratings (RRRs) for Western Europe, Switzerland has maintained its position as the top market in the Western Europe matrix, above the UK and France. Switzerland's score for the quarter stands at 70.9, well above the regional average of 65.8. However, BMI anticipates that Switzerland may slip down the world rankings in the medium to long term as large, highgrowth emerging markets such as Brazil and China become more alluring to multinational drugmakers.

Key trends and developments in the sector:

- Roche's 9M12 group sales reached CHF33.7bn (US$35.9bn), a 7% year-on-year (y-o-y) increase in local currency terms (0% in US dollars and +4% at constant exchange rate), from CHF31.5bn (US$35.8bn) in 9M11.
- Noavrtis' Q312 group sales reached US$13.8bn, a 7.0% decrease in US dollar terms and a 2% decrease in constant currency terms (cc) from US$14.8bn in Q311. The decline in group sales was contributed by the decline in sales from all business units: pharmaceuticals, the Alcon and Sandoz subsidiaries, the consumer health segment, and vaccines and diagnostics.

BMI Economic View: Having languished in deflationary territory for nearly a year, the Swiss consumer price index appears to be turning a corner. Some let-up in the eurozone debt crisis following a bold policy response from the European Central Bank, coupled with ultra low policy rates and a potential increase in domestic food prices, would support a return to inflation in 2013. We warn, however, that risks remain to the downside, with potential for a renewed flare up in the eurozone or a hard landing in China, in turn spurring foreign demand for the franc and pushing up the real effective exchange rate.

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