IHS Global Insight Perspective | |
Significance | The increase in the value of pharmaceutical sales against a background of declining sales volume would suggest a significant increase in the price of pharmaceuticals in the first half compared with the same period of last year. |
Implications | The implementation of a ban on prescribing by international non-proprietary name (INN) in April 2008, and its subsequent cancellation in April of this year, is unlikely to be behind this market trend in the first half. Most likely, the current dynamics are being caused by the exchange rate on imports fixed by the Romanian government. |
Outlook | Sales in the pharma market in volume terms are expected to rebound for the remainder of the year, as the effects of the fixed exchange rate diminish when year-on-year (y/y) periods are considered going forward. Meanwhile, the return to prescribing by INN is also going to have a positive impact on the volume of sales and a possible adverse effect on the market growth rate in value terms as a switch to cheaper products takes effect. |
Romanian pharmaceuticals sales for the first six month of 2009 reached 1 billion euro (US$1.4 billion), according to the latest figures from IMS, as quoted by Rompres news agency. The increase in the value of sales was 3.8% y/y, according to the report. The increase in value terms was accompanied by a 7.2% y/y decline in the volume of sales.
Cardiovascular medicines—accounting for 196 million euro in sales in the first half—posted a 3.9% y/y drop in sales in the first half. Meanwhile, sales of oncology treatments reached 120 million euro, while those of respiratory medicines totalled 67.5 million euro in the first half, according to the report.
Roche (Switzerland) retained its leadership position in the Romanian market, followed by Sanofi-Aventis (France), Novartis (Switzerland), GlaxoSmithKline (U.K.), Servier (France), Pfizer (U.S.), Zentiva (now part of French company Sanofi-Aventis), Ranbaxy (now part of Japanese company Daiichi Sankyo), Astra Zeneca (U.K.), and Schering Plough (U.S.).
Outlook and Implications
Normally the decline in volume of sales and simultaneous increase in the value of sales would suggest a price increase per unit. To some extent this is the case: following Romania's implementation of a ban on INN prescribing there was an increase in the prescribing of more expensive originator medicines, with an accompanying adverse effect on the sales of generics in Romania.
However, looking at this specific period—the first half of 2009—and the comparison period (the first half of 2008) it is unlikely that the INN prescribing change is solely responsible for the value versus volume market dynamics. The ban on INN prescribing came into effect on 1 April 2008 (half way through the base review period). It was abolished exactly one year later, on 1 April 2009 (again exactly half way through the current review period). Both the first half of 2009 and the comparison period have had exactly one quarter with a ban on INN prescribing in place, thus negating each other's effect for comparison purposes.
The increase in the value of sales for this specific period of time is more likely to be due to the positive change in the exchange rate applied by the Romanian government to pharmaceutical exports. As the exchange rate was fixed at a fairly low level in 2008 and then increased to more realistic levels in 2009, there was a resulting increase in the price of imported pharmaceuticals in the first half of 2009 compared with the same period in 2008.
If the growth trend in value of sales is maintained for the remainder of the year, the Romanian pharmaceutical market is likely to be worth somewhere in the range of 2 billion euro for the full year—on a par with the 2-billion-euro value recorded in 2008. The growth in pharmaceutical sales in 2008 was 9.7% y/y, but is likely to be lower in 2009. The abolition of the ban on INN prescribing, coupled with the effects of the current economic slowdown, will promote a shift towards consumption of cheaper generics at the expense of originator drugs. Thus, we expect growth in the value of pharmaceutical sales to slow down and remain in low single digits, while the volume of sales is likely to stabilise and even return to growth for the remainder of 2009. There is already evidence of a slowdown in the rate of pharma market growth in value terms when first half results are compared with those for the first five months of 2009 (see Romania: 23 July 2009: Romanian Pharmaceutical Market Grows 20% in January-May).