The pharmaceutical market of Central & Eastern Europe is estimated at US$63.6 billion at retail prices in 2011; it is expected to reach US$104.2 billion by 2016. The market is expected to expand by a moderate CAGR in US dollar terms between 2011 and 2016, as the region’s economies recover from the global economic crisis.
Dominance of generic medicines
Generic medicines represent around half of the total CEE pharmaceutical market in value terms and almost three quarters in volume terms. Generics have retained their strong position in the region due to the demand for affordable drugs and the fact that some governments favour generics when selecting products for reimbursement, as they are usually cheaper than imported products and help to keep costs down. Although rising incomes have led to increased sales of branded products, recent financial difficulties are likely to have forced patients towards purchasing cheaper generics.
Central & Eastern Europe is home to a large number of generic companies, including Gedeon Richter, Krka, Polpharma and Zentiva, which have traditionally focused on the production of generics. Pharmstandard, Russia’s leading generic company, has a small number of original drugs in its portfolio, but many companies lack the funding that is required for extensive R&D. Branded generics are particularly common in CEE, especially in Russia, due to the tradition of self-medication, which has encouraged companies to produce pharmaceuticals with recognisable names and the erroneous belief that pure generics are unsafe.
Different IP protection levels
Much of the pharmaceutical legislation within the region has been harmonised with that of the EU. However, the level of IP protection remains an international concern. Problems that are commonly raised include a lack of transparency in IP procedures and the lack of effective enforcement.
Highlights from the report
The Polish pharmaceutical market ranks second in CEE and is twice the size of the Czech Republic; in per capita terms, the market is similar to Latvia. Imports supply around two thirds of the market in value terms. The market is predicted to expand by a high CAGR in US dollar terms over the 2011-2016 period, driven by a relatively strong economy, import growth and the ageing population. The demand is currently for modern, innovative drugs, which are seldom developed by local manufacturers as most domestic producers do not have the resources to fund research into new molecules. Until local investments in R&D grow, overseas manufacturers have the opportunity to cover the areas that are currently overlooked.
The Romanian pharmaceutical market will rank fourth in CEE in 2016. Romania’s market size is comparable to Hungary; in per capita terms, the market is similar to Bulgaria. The market is expected to expand by a considerably high CAGR over the 2011-2016 period. Imports represent a large proportion of the market. The expansion of the market is largely driven by import growth. The growth rate of the pharmaceutical market may be affected by slow economic recovery. Whilst the large population creates demand for pharmaceuticals, the low GDP per capita means that patients are unlikely to be able to afford the most expensive drugs and will settle for cheaper alternatives.
The Russian pharmaceutical market is the largest in CEE, and accounts for two-fifths of the total CEE pharmaceutical market, due to its large economy and population. However, Russia has one of the smallest per capita pharmaceutical spending, comparable to Romania. The Russian pharmaceutical market is projected to expand at a double-digit CAGR in US dollar terms between 2011 and 2016. It will continue to be driven by import growth; imports registered a double-digit CAGR between 2006 and 2010. In fact, a heavy reliance on imports has resulted from the lack of locally-manufactured innovative pharmaceuticals. A strategy for encouraging growth in the Russian pharmaceutical industry for the period up to 2020 envisages the government helping local producers to cover the costs of the R&D that is required to boost production of innovative pharmaceuticals.
The Ukrainian pharmaceutical market is small in per capita terms but growth is strong. In per capita terms, pharmaceutical expenditure ranks the lowest in the CEE region, but growth is expected to be the strongest in the region over the next few years. The market is predicted to expand by a double-digit CAGR in US dollar terms. The market is driven by strong import growth; imports rose by a double-digit CAGR between 2006 and 2010. Import growth is expected to remain strong due to a lack of locally-manufactured innovative products. The pharmaceutical market could also grow more rapidly if the government manages to implement an effective health insurance system.
THESE REPORTS ANALYSE THE ISSUES
The The Outlook for Pharmaceuticals in Central & Eastern 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.
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