Boston, MA -- (SBWIRE) -- 08/08/2013 -- State-run insurers in Central and Eastern Europe are coming under increasing pressure to manage deficits as revenues decrease and liabilities rise on the back of ageing populations and increased incidences of lifestyle-related diseases. The Health Insurance Institute of Slovenia is faced with the choice of raising revenue or cutting back on spending; however, given the relative fragility of the macroeconomic outlook for Slovenia, increasing the tax burden on the public could worsen the recession in the country and the budgetary position. Similarly, cutting spending on healthcare will undoubtedly stretch facilities and may lead to workforce cuts. BMI believes that efficiency drives in the state health system and increasing the contribution base is the best compromise to meeting these challenges.

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Headline Expenditure Projections

- Pharmaceuticals: EUR738mn (US$949mn) in 2012 to EUR723mn (US$968mn) in 2013; - 2.1% in local currency terms and +2.1% in US dollar terms.
- Healthcare: EUR3.25bn (US$4.18bn) in 2012 to EUR3.24bn (US$4.34bn) in 2013; -0.3% in local currency terms and 3.9% in US dollar terms.

Risk/Reward Rating: Slovenia's Risk/Reward Ratings (RRR) score remains weak , scoring 53 out of a total of 100, just above the regional average score of 52. A combination of economic factors and the acknowledgement that the government may retain its focus on cost savings have resulted in a slightly less optimistic outlook for 2013.

Key Trends & Developments

- In April 2013, Krka Sverige, the Swedish subsidiary of Slovenian drug maker Krka, was sued by two subsidiaries of UK-based drug maker AstraZeneca in a Danish court. The subsidiaries accused Krka Sverige of patent infringement on the active substance esomperazole. The subsidiaries are seeking EUR9.6mn (US$12.55mn) in damages from Krka Sverige.
- In February 2013, the economic development and technology minister of Slovenia announced that he would continue to work towards preserving the state's 25% interest in local pharmaceutical firm Krka. The announcement came after Krka was classified by the government as a company eligible for sale. Krka's management and other parties have expressed concerns over the proposed divestiture

BMI Economic View: The new coalition government in Slovenia is desperately moving to try and avoid becoming the sixth EU state to request a bailout. Though its banking sector problems and public debt levels are not as bad as other crisis states, a complex political climate and fragile market sentiment makes a bailout the most likely end game.

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