Industry Trend Analysis - Government To Remain Committed To Restricting Pharmaceutical Spending - NOV 2017

BMI View : While the CDU will remain the driving force in the Jamaica coalition, the policy aims of the two smaller parties could result in some significant disagreements within government , including tensions with regards to policy matters ranging from immigration to the car industry. With regards to the pharmaceutical industry, it is our view that the incoming German government will remain focused on controlling pharmaceutical expenditure. A rising demand for pharmaceuticals will necessitate the continued enforcement of cost containment measures, creating a challenging business environment for drugmakers.

Angela Merkel is set for a fourth term as Germany's chancellor after the Christian Democratic Union/ Christian Social Union (CDU/CSU) won 33% of the vote in federal elections, making it the largest party in the Bundestag with an estimated 218 seats. However, the Social Democratic Party (SPD) slumped to just over 20% and stated that it would not renew its grand coalition with the CDU but head into opposition. The Alternative for Germany/Alternative fur Deutschland (AfD) made a historic breakthrough, winning 13.5% of the vote and a projected 87 seats and becoming the first nationalist party to sit in the Bundestag in 60 years. This leaves the only feasible coalition for Merkel - a three-party tie up between the CDU/CSU, the pro-business Free Democratic Party (FDP) party who scored 10%, and the Greens, who won 9% - the black-yellow-green Jamaica coalition.

This three-party coalition already governs at the state level in the northern Lander of Schleswig-Holstein, and did so in Saarland between 2009 and 2012, but there has never been a three-party coalition government at the federal level (taking the CDU and CSU as one bloc) in re-unified Germany. The prospect of the three parties governing at the federal level will certainly be more difficult and potentially cumbersome than at the state level, where three-party coalitions are relatively commonplace (five of Germany's 16 Lander have governing coalitions formed of three parties).

The Largest Pharmaceutical Market In Europe
Germany Pharmaceutical Market Forecast
f = BMI forecast. Source: The Federal Health Monitoring System (GBE-Bund), BMI

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