Industry Trend Analysis - Czech Republic - Q4 2017 - SEPT 2017


Research-Based Industry

Although most innovative drugmakers are present in the Czech market, their manufacturing presence is limited. The vast majority of multinationals import drugs for retail, with a small number of manufacturers, such as GlaxoSmithKline, licensing production to local companies. The Czech Republic has been a challenging market for businesses involved within the production, distribution and retailing of pharmaceutical goods in recent years. The impact of the eurozone recession, anaemic macroeconomic activity and reconciling healthcare spending with affordability has applied significant pressure to market participants. Given the high-value nature of innovative and patented drugs, sales have shifted towards the low-value generic medicines.

However, strong economic expansion and healthcare sector growth fundamentals, including high underlying demand for healthcare and rising expenditure per capita, are expected to provide improved commercial opportunities to drugmakers over the next few years. Furthermore, the lack of currency depreciation in 2015, with respect to almost all other CEE neighbours, meant that the Czech Republic was sheltered from the huge price hikes for imported foreign medicines. It has such been seen as one of the most attractive markets for multinational pharmaceutical firms within the region. In the long term, the broader European economic recovery will continue to act as a tailwind to high fixed investment rates in the export-intensive Czech Republic's economy, which will benefit pharmaceutical producers.

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