The Outlook for Pharmaceuticals in Western Europe

Abstract

Market growth in the mature markets of Western Europe is assured over the coming years by the health needs of ageing populations, and will be driven by investment in innovative medicines, particularly in the hospital market.

Growth in the mature pharmaceutical markets of Western Europe will be tempered somewhat by the effects of the global economic recession in the short term, but nevertheless the leading markets are projected to average CAGR of 4.6% to 2014.

Demand for pharmaceutical products is set to increase over the coming years, in order to fulfil the health needs of ageing populations. Meanwhile, the trend towards generics is set to continue, with several major patent expiries coming up, and with more governments introducing or expanding generic substitution as a cost-containment measure. Tightening healthcare budgets will also lead to further price controls, and as a result pharmaceutical companies will need to price their products carefully, particularly as reference pricing is used across Western Europe.

The hospital market is expected to be the main driver of growth in Western European markets, with increasing investment in expensive, innovative products to treat chronic diseases, such as cancer. The investment from hospitals into new drugs will offset the falling prices of mature drugs which are soon to go off patent. There are opportunities to further explore biotechnology advances and reformulations, which will drive the market forward in the long term.

The Outlook for Pharmaceutical Markets in Western Europe is a unique collection of management reports from Espicom Business Intelligence. Each report provides individual and highly-detailed analysis of each market, looking at the key regulatory, political, economic and corporate developments in the wider context of market structure, service and access. The reports are available individually, or as a discounted collection, and prices include 4 completely updated reports sent quarterly, together with a comprehensive statistical appendix. There are over 60 markets covered in the worldwide series.

• Austria
• Belgium
• France
• Germany
• Ireland
• Italy
• Netherlands
• Portugal
• Spain
• Switzerland
• United Kingdom

Highlights from the region

GERMANY

Germany represents the largest pharmaceutical market in Europe. Pharmaceutical expenditure is largely funded through the GKV. Germany has been grappling with ways to rein in its healthcare expenditure since the 1990s. In the pharmaceutical field this is ongoing and has taken various forms: stricter reimbursement criteria, reference pricing and negotiation of discount contracts with generic manufacturers. The net effect of all this is a reduction in GKV prices. The German pharmaceutical manufacturing sector has lost ground in the face of US competition, but retains a handful of major multinational companies, headed by Bayer Schering, Boehringer Ingelheim and Merck Serono. Sanofi-Aventis, though based in France, retains significant capacity in Germany.

FRANCE

Overall pharmaceutical market growth has been comparatively low at around 5.0% per annum and is expected to average 2.7% in the medium term with government cost-containment programmes exerting downward pressure on reimbursable products. The hospital market has been much more dynamic with growth rates twice this figure in recent years, although growth rates are now falling due to greater regulatory controls in this sector and fewer innovative drugs coming to market. The underdeveloped generics market is undergoing rapid expansion boosted by government incentives and the loss of patent protection for several high-volume products. The stagnating OTC market has also started to expand as a result of government moves to end reimbursement for a wide range of products assigned a low medical value rating.

UNITED KINGDOM

The UK is one of the largest pharmaceutical markets in the world. Between 2004 and 2008, the number of prescriptions written in the UK increased by 22.1% to an estimated 1,025.7 million, while the value of prescriptions increased by 3.4% in the same period to £10.3 billion (US$19.0 billion). The leading therapeutic areas in 2008 were the cardiovascular system, in terms of the number of prescriptions written, and the central nervous system, in terms of value. The UK is one of the leading pharmaceutical producers and exporters. The UK is home to two of the sector' s largest companies; GlaxoSmithKline and AstraZeneca. Behind these, there are a large number of smaller companies specialising in R&D and biotech products.

ITALY

Being initially based on the NHS-model of the UK, the Italian health service is also facing similar scenarios, most notably efforts to restrain rising costs. Cost containment measures are restricting growth in the pharmaceutical market, particularly the retail pharmacy market. The self-medication market continues to stagnate despite the liberalisation of the pharmacy sector, which has enabled non-prescription medicines to be sold outside pharmacies. The generics market is set to undergo a major expansion following the expiry of patents on several high volume products in 2007 and 2008. Italy has a well established pharmaceutical manufacturing industry.

AUSTRIA

Austria has a stable, mature economy but will nevertheless be affected by the global economic downturn. Healthcare expenditure has continued its steady growth in recent years. The pharmaceutical market is expected to grow by a CAGR of 7.5% between 2009 and 2014. Cardiovascular drugs are market leaders both in terms of value and volume. The share of generics in the pharmaceutical market is low, but it is rising. The main challenge facing the Austrian pharmaceutical system is rising costs. The main reason for this is an ageing population and the uptake of new, more expensive pharmaceuticals.