Netherlands Pharmaceuticals and Healthcare Report Q4 2012

BMI View: The Netherlands remains ranked top in the 2012 version of the Euro Health Consumer Index, which is compiled by Swedish company Health Consumer Powerhouse (HCP) based on access to novel drugs, e-health initiatives, waiting times and similar factors. The key to the country’s success is a healthcare system characterised by its minimal bureaucracy, improving access to services and patient empowerment. However, such factors will not translate into a growth of the Dutch pharmaceutical market values, which are expected to continue shirking over the coming years, as a result of downward pressures on prices, patent expirations and a wider climate of cost containment.
Headline Expenditure Projections 􀂃 Pharmaceuticals: EUR6.70bn (US$9.31bn) in 2011 to EUR6.51bn (US$8.27bn) in 2012; -2.8% in local currency terms and -11.2% in US dollar terms. Forecast slightly lower from Q312 on account of macroeconomic conditions.
􀂃 Healthcare: EUR62.94bn (US$87.49bn) in 2011 to EUR64.43bn (US$81.83bn) in 2012; +2.4% in local currency terms and -6.5% in US dollar terms. Forecast slightly lower from Q312 on account of macroeconomic conditions.
􀂃 Medical devices: EUR11.41bn (US$15.86bn) in 2011 to EUR11.72bn (US$14.89bn) in 2012; +2.8% in local currency terms and -6.1% in US dollar terms. Forecast slightly lower from Q312 on account of macroeconomic conditions.
Risk/Reward Ratings: In our latest Pharmaceutical Risk/Reward Ratings (RRRs) matrix for Western Europe, which ranks 10 key markets, the Netherlands remains seventh. Its composite score is unchanged from the previous quarter, comprising the below-regional average rewards score and a risk component that mirrors the average for the quarter.
Key Trends And Developments 􀂃 In the latest reference price adjustment in the Netherlands, carried out in March 2012, the prices of generic medicines fell by 0.9% – attributed almost entirely to the patent expiry of Lipitor (atorvastatin). Additionally, health insurance companies VGZ, CZ and Menzis stated that they were including generic atorvastatin in their preference policies. The prices of patented medicines fell by 1.5% in relation to their previous prices – pushed down by a decline in the price of Seretide (salmeterol + fluticasone), Symbicort (formoterol + budesonide) and Zyprexa (olanzapine). Overall, the price of prescription medicines suffered a 1.4% decline.
􀂃 The Netherlands remains of interest to international players in the clinical research field. For example, in June 2012, US-based clinical research organisation (CRO) PRA opened new facilities in the Netherlands and also in the UK, aiming to accommodate its growing staff and robust demand for its phase IIa-IIIb trial services. The new office in the Netherlands will focus on product registration trials in the region. The move aims to tap into the growing trend towards late-phase development, according to vice president and general partner Frank van de Wijngaert.
􀂃 In June 2012, Dutch consumer lifestyle products and healthcare solutions firm Philips was reported to be collaborating with three Russian research institutes on a five-year joint research and development programme into medical imaging technologies. The research institutes, St Petersburg State Polytechnical University, the Vavilov State Optical Institute and the Ioffe Physical Technical Institute, are leaders in the field of medical imaging technologies. Philips will invest around EUR2.5mn (US$3.12mn) in the programme, which features direct funding and inkind support, including research staff. The programme will primarily focus on improving the sensitivity of CT, PET and SPECT scanners, which are used in the diagnosis of cancer and cardiovascular diseases.
BMI Economic View: With the Netherlands expected to head deeper into recession, we have revised our 2012 real GDP growth forecast to -0.6%, from a previous forecast of -0.3%. The eurozone sovereign debt crisis is set to weigh on external demand, and the government''s commitment to fiscal austerity will hurt weak domestic demand. We forecast very tepid growth of 0.6% in 2013, and expect the Netherlands to remain in a low longer-term growth trajectory, which will also weigh down on the development of its pharmaceutical and healthcare markets, which are largely financed by public funds.
BMI Political View: The outcome of Dutch parliamentary elections scheduled for September 2012 is too close to predict. We expect the formation of a coalition government which will look to cut the country''s budget deficit below the EU-mandated 3.0% of GDP by 2013. However, this will be hard to achieve, and we instead forecast the budget deficit at a modestly wider 3.2% of GDP. Nevertheless, we believe steady progress along a path of fiscal consolidation will reassure investors of the Netherlands'' sovereign credentials, although we note that the stability of a new coalition is set to be tested.