French Pharma Association Forecasts 2% Y/Y Growth in Sales of Reimbursable Medicines in 2010, 2011

According to the latest set of figures published by the pharma industry body LEEM, France's pharmaceutical sector grew 2.7% year-on-year (y/y) in 2009 to reach 26.9 billion euro (US$33.4 billion; in ex-factory prices). Demand for drugs in retail pharmacies saw a 2.4% y/y gain in turnover at 21.4 billion euro, while sales of drugs in the hospital market grew 4.1% y/y to 5.5 billion euro. By comparison, the retail market increased 1.9% y/y and 4.1% y/y in 2008 and 2007, respectively. In the retail sector, an increase of 2.2% y/y and a growth of 3.6% y/y was respectively recorded for sales of reimbursable and non-reimbursable medicines, which reached total turnover of 19.5 billion euro and 1.9 billion euro, respectively.

Meanwhile, in 2009, generics and off-patent drugs garnered sales of 3.9 billion euro in France. Within this, 1.6 billion euro was generated by off-patent drugs and 2.3 billion euro by generic versions. Generics and off-patent drugs accounted for 26% of sales of reimbursable drugs in 2009. While the year 2010 should see the generic market largely expand with the entry of generic versions of Plavix (clopidogrel, Sanofi-Aventis, France), the year 2009 has been affected by a set of price-cutting measures passed during 2008. This includes the obligation for drug makers to price generics 55% below their originators (against 50% previously) as well as additional price cuts on both generics and originators. Generic versions are, as of January 2009, subject to a 7% price cut after 18 months of commercialisation, whereas a 12.5% cut on prices of originator drugs is imposed after the same period of time (against previous price cuts of 10% for originators and 4% for generics after 24 months of commercialisation). Another legislation passed in April 2009 gives general practitioners the possibility to receive financial incentives in exchange for achieving generic prescription targets to complete the generic substitution scheme agreed each year with retail pharmacists across the country.

Outlook and Implications

Pro-generics measures will continue to contain growth of reimbursable medicines in 2010 and 2011 as the pharma association body expects a modest 2% y/y growth, in line with the slowdown observed in recent years. The successful generic substitution policy in place in France aims at achieving a national substitution rate of minimum 80% in 2010. The continued success of this policy was again demonstrated in 2009 as it yielded savings of approximately 1 billion euro for the public health insurer CNAM (see France: 16 December 2009: Generic Substitution in France Creates Total Savings of 1 bil. Euro in 2009, Generic Penetration to Reach 80% in 2010). In 2010, agreements inked with pharmacists and more recently with general practitioners are set to put further pressure on off-patent drugs in France, where their share in value fell to 41.2% of the off-patent market in 2009, down from 78.5% in 2000.

But the French government is also putting significant pressure on the reimbursement front as it re-introduced a 15% reimbursement rate, which had already led to reimbursement cutbacks in 2005 to accommodate drugs from the 35% reimbursement level that were due to be removed from the reimbursement list in March 2006 and January 2008. The 10%-20% rate, made law in April 2010, has already translated into reimbursement cuts for approximately 170 drugs of low therapeutic value and is likely to see further drugs being entitled to a lower reimbursement rate if they are granted a poor SMR rating (therapeutic value; Service Médical Rendu) by the French Transparency Commission (HAS). Moreover, the pharmaceutical industry is set to further help slash the galloping healthcare deficit in 2010 as the French government announced they will contribute 100 million euro through pharmaceutical price cuts this year. This came as the Alert Committee estimated that the national expenditure target (ONDAM) will be surpassed by 600 million euro, while the healthcare deficit could reach a never-attained level of 13.1 billion euro (see France: 10 June 2010: French Public Health Insurer Faces 13.1-Bil.-Euro Deficit in 2010 After Gap of 10.6 Bil. Euro in 2009). Price cuts, expected for September 2010, should on average exceed 10% for angiotensin II receptor antagonists, erythropoietins, anti-TNF alpha antibodies and highly-dosed statins, according to Noël Renaudin, president of the French economic pricing committee, CEPS (Comité Economique des Produits de Santé).

Outlooks remain modest for the reimbursable pharma market in France as pro-generic measures, price cuts as well as change in reimbursement regulation are set to contain growth in future. On the contrary, the non-reimbursable market is likely to expand as a number of products could, in IHS Global Insight's view, be removed from the reimbursement list to allow maintenance of funding of drugs of higher therapeutic value.