Boston, MA -- (SBWIRE) -- 01/07/2014 -- The Spanish government's multifaceted strategy to contain expenditure on prescription medicines by targeting patients, companies and the healthcare sector in general highlights the challenge companies face selling their products in the country. While lobbying the government to ease up on measures targeting the pricing of drugs may work to ease pressures on revenues, we believe the complexity of the cost-containment measures will inevitably continue to work against companies.
Headline Expenditure Projections
- Pharmaceuticals: EUR24.99bn (US$31.74bn) in 2012 to EUR24.08bn (US$32.03bn) in 2013; -3.6% in local currency terms and -0.9% in US dollar terms.
- Healthcare: EUR99.61bn (US$126.51bn) in 2012 to EUR98.91bn (US$131.54bn) in 2013; -0.7% in local currency terms and 4.0% in US dollar terms.
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In BMI's Pharmaceutical Risk/Reward Ratings (RRRs) for Q114, Spain is ranked 11th out of the 14 countries surveyed in Western Europe. While Spain offers investors positive features, 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.
Key Trends And Developments
In December 2013, Spain's largest drugmaker Almirall announced that it is to restructure its European workforce, which will see the loss of 250 jobs in its home market of Spain, equivalent to 15% of the local workforce. Approximately half of the company's workforce is employed in Spain.
On November 11, Novartis announced a definitive agreement to divest its blood transfusion diagnostics unit to Spanish company Grifols for US$1.675bn. The blood transfusion diagnostics unit formed part of Novartis Vaccines and Diagnostics. Not included in the sale was the Novartis Companion Diagnostics unit, or the Genoptix business. This sale forms part of a wider strategic review that was put into action following the appointment of new Chairman Joerg Reinhardt, who was appointed in August. The company is aiming to create a scalable businesses with the potential to compete globally.
BMI Economic View: We forecast Spain's economy to return to growth and expand by 0.7% in 2014, on the back of steady export growth. Nevertheless, fiscal austerity and weak investment spending will drag on the recovery, while dire labour market conditions stifle private consumption.
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