Despite the negative effects from the government's price-cutting austerity measures, the major Spanish pharmaceutical companies have reported positive financial results during the first half.
IHS Life Sciences perspective | |
Significance | Grifols, Almirall, Faes Farma, Zeltia, and Rovi have reported growth during the first half of the year. |
Implications | The largest Spain-headquartered companies have reported good performance due to increased efforts to reduce their dependence on the domestic market. |
Outlook | The real effects of the new system of reference pricing are more likely to be reflected during the second half of the year. |
The major Spanish pharmaceutical companies have reported positive financial results for the first half (H1) of 2014, despite the negative effects of the government's price-cutting austerity measures, reports Spanish pharmaceutical news paper El Global. According to the source, the largest Spain-headquartered companies – Grifols, Almirall, Faes Farma, Zeltia, and Rovi – have reported good performance due to increased efforts in globalising their businesses.
The Spanish pharmaceutical company Grifols has reported 23% y/y revenue growth of EUR224.8 million (USD301 million) in the first half. The financial results show Grifols achieving a 23% year-on-year (y/y) increase in revenues, climbing from EUR182.8 million. Barcelona-based Almirall reported sales growth of 18.4% y/y, with first-quarter net profits of EUR10.6 million (USD14.5 million), a 3.9% y/y growth following a loss in the same quarter of 2013.
Faes Farma and Zeltia have also recorded positive results. The former enjoyed 10.6% growth in the second quarter to USD29 million and the latter reported net profits increased by 10% in the first half to EUR78 million. Finally, pharmaceutical group Laboratorios Rovi's operating revenue grew 6% y/y to EUR57.6 million in the first quarter of 2014.
Outlook and implications
Despite concerns that the cost-containment measures introduced by the Spanish government could have negatively affected the pharma industry, Spain-based pharmaceutical companies have reported positive results. Nevertheless, it is important to highlight that the negative impact of some of the recently introduced austerity measures, such as the new system of reference pricing and homogenous clusters of medicines (Royal Decree 177/2014), is yet to be felt as they only came into effect in July.
The real effects of these new regulations are more likely to be reflected in second-half company results. According to IMS forecasts, branded medicines would feel the majority (67%) of the negative impact of these measure that reduce some wholesale prices. The order has resulted in the inclusion of 14,526 medicines in the new reference price system, aimed at generating savings of about USD58 million, mainly affecting branded medicines. Additionally, experts argue that the decrease in healthcare expenditure after the promulgation of the new price regulation could be less than the official estimate of the MoH of EUR400 million.
Finally, it is important to take into account that new austerity measures are likely to be introduced as the Ministry of Finance presented an official proposal to introduce cost-containment measures aimed at decreasing the country's pharmaceutical expenditure at the end of July. Although it remains to be seen how many of those measures are approved and implemented in practice, they could also affect negatively the Spanish pharma market.
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