Boston, MA -- (SBWIRE) -- 02/12/2013 -- BMI View: While it is clear that drugmakers operating in Romania are far from happy with the latest revisions to the pharmaceutical claw-back tax, and the tax remains unfairly punitive, all things considered, the August 2012 amendments are a small improvement, though definitely not what producers would have wanted ideally. With part of the objective of the claw-back tax to improve the timeliness of payments for reimbursed medicines, which has been a major difficulty for drug producers and distributors over the last four years, there are some upsides to this mechanism working effectively. The tax remains most punitive for generic drugmakers with lower-value medicines and could lead to these cheaper medicines exiting the market. The tax continues to weigh on BMI's assessment of Romania's Pharmaceutical and Healthcare Risk/Reward ratings.

Headline Expenditure Projections:

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- Pharmaceuticals: RON12.76bn (US$4.18bn) in 2011 to RON13.52bn (US$3.78bn) in 2012; +6.0% in local currency terms and -9.7% in US dollar terms. Local currency forecast slightly down from Q412 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.
- Healthcare: RON30.17bn (US$9.90bn) in 2011 to RON32.07bn (US$9.86bn) in 2012; +6.3% in local currency terms and -9.5% in US dollar terms. Local currency forecast slightly down from Q412 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.
- Medical devices: RON1.61bn (US$527mn) in 2011 to RON1.69bn (US$471mn) in 2012; +5.0% in local currency terms and -10.6% in US dollar terms. Local currency forecast slightly down from Q412 on account of macroeconomic factors; US dollar forecast further impacted by exchange rate factors.

Risk/Reward Rating: Our Risk/Reward rating score for Romania's pharmaceutical market remains unchanged in Q113, at 55.3 out of the maximum 100 points. Despite operational improvements in recent years, Romania remains a challenging market, largely on account of low per capita incomes and spending on medicines, while the US dollar forecast for its pharmaceutical market continues to be negatively impacted by leu weakness. Regionally, Romania is again ranked sixth out of the 20 key markets surveyed in the Emerging Europe region.

Key Trends And Developments

- An estimated EUR85mn (US$110mn) is expected to be collected by the Romanian health ministry through the claw-back tax in 2012, supplementing the EUR33mn (US$43mn) recently allocated to the ministry by the government. The tax revenue, which will be transferred to the single health insurance fund, will be spent on hospitals, with priority given to regional network and emergency hospitals. Newly-launched drugs and medical supplies supervision programmes in Romania will reportedly also be allocated EUR880,000 (US$1.14mn).

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