Industry Trend Analysis - Cost-Containment To Repress Patented Medicine Sales Outlook - OCT 2017

BMI View: Expenditure within Slovakia's pharmaceutical market will come under increasing scrutiny as healthcare funding remains insufficient . This will continue to create revenue challenges for multinational pharmaceutical firms. Increased rhetoric towards the use of OTC medicines and enforcement of generic substitution policies will limit patented drugmaker opportunities, leading to underperformance relative to its neighbours.

Pharmaceutical firms will face significant challenges in Slovakia despite the well-developed operating environment and pharmaceutical regulatory environment. We have obtained new pharmaceutical expenditure data from the Slovakian National Health Information Centre (NCZI) and as such have revised downwards our historical medicine sales data. Moreover, we have downgraded our pharmaceutical sales forecast to reflect the trends borne out through this data. This more closely aligns with our overarching view of the country's pharmaceutical and healthcare markets which will be principally driven by healthcare funding issues ( see ' Healthcare Funding To Remain A Prominent Issue ' , December 15 2016).

In light of the aforementioned challenges posed by insufficient healthcare spending, exemplified by the financial troubles facing the state-owned health insurer Vseobecna Zdravotna Poistovna (VsZP), we anticipate that medicine sales growth will gradually decelerate. BMI's Country Risk team are forecasting Slovakia's economy to remain on its robust growth outlook, bolstered by optimistic business and consumer sentiment ( see ' Investment Rebound To Support Strong Growth ' , March 31). However, we note that despite an expansionary budget for 2017, the Minister of Health stated that government healthcare funding was insufficient. In the European Commission (EC)'s Spring Forecast for Slovakia (published in May 2017), the inefficiency of healthcare expenditures was highlighted. Indeed, it was also highlighted by the EC in 2016. As seen across the globe, spending on pharmaceuticals is a popular target for healthcare cost-containment given the ability to push for increased use of low value medicines while it is also a politically favourable target as opposed to reducing hospital bed numbers for example.

Forecast Revision Highlights Growing Cost-Containment
Pharmaceutical Market Forecast
f = BMI forecast. Source: National Health Information Centre (NCZI), BMI

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