Romanian Pharma Market Declines in Value by 1.7% in 2009, New Pricing System Set for Change

Romania's pharmaceutical market declined in value by 1.7% year-on-year (y/y) in euro terms in 2009 to reach a value of 1.91 billion euro (US$2.62 billion), according to data from the Romanian branch of pharmaceutical market research organisation, Cegedim, quoted by Pharma Poland News. Contrastingly, in local currency terms, the Romanian pharmaceutical market grew by 13.1% y/y in 2009, according to Cegedim, to reach a value of 8.10 billion lei (US$2.71 billion). Cegedim's data for the Romanian pharmaceutical market in 2009 are different to those provided by IMS Health, as the methodology of calculation is different: Cegedim data is based on pharmacy purchase prices, reports the source (see Romania: 3 February 2010: Romanian Pharmaceutical Market Growth Rate Slows to 3.2% in Euro Terms in 2009, Roche Remains Leader). Breaking down the Romanian market into sectors, it can be seen that there was a particularly steep decline in the hospital sector, the value of which declined by 12.2% y/y in euro terms, and grew only 0.9% y/y in lei terms. The over-the-counter (OTC) sector declined 9.6% y/y in euro terms in 2009, while the one sector which saw growth in euro terms was the prescription market, which grew by 2.3% y/y according to Cegedim, reaching a value of 1.38 billion euro.

Pharmaceutical Market Volume Declines 9.1% Y/Y in 2009

In volume terms, the Romanian market declined more steeply than in terms of value in 2009, according to Cegedim's data, and the market as a whole declined by 9.1% y/y. The largest volume declines were seen in the OTC and hospital sectors, with falls of 15.6% y/y and 13.7% y/y respectively. In terms of market share by volume, the prescription drug market accounted for 65.4% of the total market, with the OTC sector making up 34.6% of the market. Hospital drugs accounted for a mere 6.4% of the total Romanian pharma market in 2009.

Market Decline to Intensify in 2010, Up to 75% of Pharmacies and Drug Retailers Under Threat

Cegedim is predicting that the value of the Romanian pharma market will decline by between 2% and 3% y/y in euro terms in 2010, while in volume terms, it is predicting a decline of 10% y/y. As a result of the consistent delays in drug reimbursement payments from the Romanian National Health Insurance House (NHIH), up to 75% of pharmacies and drug retailers could be threatened with bankruptcy, according to Cegedim, reported by Pharma Poland News.

New Drug Pricing System, Announced in January, to Be Modified

Meanwhile, the Romanian Association of International Pharmaceutical Manufacturers (ARPIM) has been in negotiations with the Romanian Ministry of Health (MoH), as a result of which, the new drug pricing regulations, announced by the MoH in early January, are to be modified, reports Romanian pharmaceutical news provider, Pagina Farmacistilor (see Romania: 11 January 2010: Changes to Regulations on Setting Drug Prices in Romania Favour Generic Producers).

The ARPIM, represented by Dan Zaharescu of the Romanian subsidiary of Swiss pharma major, Roche, is quoted by the source as saying—in connection with these negotiations—that innovative producers are willing to freeze the price of medicines which are already on the Romanian market, but that in the case of medicines being launched on to the market, price increases should be possible, otherwise the producers would incur losses on international markets. ARPIM members stated that the price of innovative medicines in Romania should reflect their real price.

In the meantime, the legal Order relating to the change of the drug pricing system in Romania has been removed from the Romanian MoH's website, and the change to the international reference-pricing system which was introduced under this Order has been reversed, according to Pagina Farmacistilor. Under the new system, announced in January, the price of innovative drugs in Romania was to be set at a rate lower or equal to the average price of the three lowest priced markets of Romania's reference basket of 12 countries. The reversal means that the present system, under which the price of innovative drugs in Romania is set at equal to or lower than the price in the lowest priced market from the basket of 12 reference countries, is maintained.

Outlook and Implications

With Cegedim's data on the Romanian pharmaceutical market reflecting more closely the actual reality of retail pharmacy sales in Romania, it can be seen that the country's pharmaceutical market went properly into decline in 2009, in euro terms, following some years of dynamic growth. Although the global financial crisis and the recession experienced in Romania can be blamed in part for this, the most important factor behind the market's decline is the very limited budget dedicated to healthcare, and consequently to drug reimbursement in Romania. Many sources have reported that there have been no payments from the Romanian National Health Insurance House to pharmacies for reimbursed drugs since mid-2009, which is the reason why so many pharmacies are threatened with bankruptcy. In such a situation, it is impossible for the pharmaceutical market to grow. Cegedim's predictions that the market's value will decline by 2–3% y/y in euro terms in 2010 appear to be conservative, considering the fact that there is, essentially, virtually no money for drug reimbursement in the 2010 budget, as money destined for 2010 was used to shore up the budget for drug reimbursement in the last quarter of 2009. It is more likely that the value of the Romanian pharma market will decline more steeply in 2010.

Meanwhile, the changes to the new drug pricing system announced in January—and specifically, the reversion to the original international reference-pricing system—returns the Romanian market to the situation of being one of the lowest priced markets in Europe, with all that is implied by this—including the proliferation of parallel exports and the loss of profitability among pharmaceutical retailers and wholesalers, particularly smaller ones. However, the full implications of this change will become known in due course.