Romanian Pharma Market Declines 5% in Q3, Decline of 10% Predicted in 2010

The value of the Romanian pharmaceutical market declined by 5% year-on-year (y/y) in euro terms in the third quarter, to 473.8 million euro (US$707.8 million), reports Romanian newspaper Business Standard, quoting data from the Romanian branch of pharmaceutical research organisation Cegedim. The volume of the market in the third quarter was reduced by 9.7% y/y. In Romanian lei terms, the pharmaceutical market grew by 12.1% y/y in the third quarter.

The areas of the pharmaceutical market that drove the decline in this period were hospital drugs, with the value of this market segment declining by 19.1% y/y in the third quarter, to 55.2 million euro, and over-the-counter (OTC) medicines, total sales of which declined by 17.5% y/y to 66 million euro. The retail pharmacy market declined by 2.8% y/y to 418 million euro, boosted by the only market segment to show any growth in this period—prescription drugs—sales of which grew 0.2% y/y to 352.6 million euro.

In the first nine months of 2009, the Romanian pharmaceutical market declined by 10% y/y in volume, and 3% y/y in value terms, reports Romanian business news provider Wall Street, quoting Cegedim Romania data.

Oncology is Second Largest Therapeutic Area

The cardiovascular therapeutic area remains the largest in terms of sales in Romania, with sales of 379 million euro in the year to the end-September 2009, representing y/y growth of 6%. However, the oncology therapeutic area moved into second place in terms of the value of sales in Romania, overtaking the digestive tract and metabolic areas. In the third quarter, the value of the oncology drug market in Romania reached 322 million lei (US$111.9 million), an increase of 59% y/y.

Top Players on Market Remain the Same

According to Cegedim Romania, quoted by Business Standard, Swiss pharmaceutical major Roche retained its position as the largest pharmaceutical company in terms of Romanian sales in the third quarter, holding an 8.6% market share, and achieving sales of 671 million lei in the year to end-September. The next three ranked companies on the Romanian market in terms of sales also remained unchanged, with Sanofi-Aventis (France), GlaxoSmithKline (U.K.), and Novartis (Switzerland) occupying second, third and fourth places on the market respectively, and all holding a market share of over 6%.

Decline of 10% Y/Y Predicted if no Improvement to Budget Situation

Cegedim expects that in 2009 as a whole, the Romanian pharma market will contract by 4% y/y, while in 2010, it could decline by as much as 10%, in euro terms, if the present situation continues, in which the Romanian state budget is unable to guarantee payments for prescription drugs in a timely and consistent manner. Another factor behind this prediction is the influence of the exchange rate, with the value of the leu declining; this is negative in terms of the pharma market in Romania, as it is 80% dependent on imports.

Outlook and Implications

The Romanian pharmaceutical market continued its decline in euro terms in the third quarter, following a second quarter that showed an even greater euro decline, due to the impact of the new drug pricing and reimbursement legislation introduced in Romania in April (see Romania: 15 September 2009: Price Cuts to Prescription Drugs Push Down Value of Romanian Pharmaceutical Market by 8.8% Y/Y in Q2). It is significant that the third quarter shows an increasing decline, of 5% y/y, in comparison with the decline in the first three quarters, estimated at 4% y/y.

The large decline of sales in the hospital drugs sector is likely to be related to the large debts of hospitals, which has already resulted in distributors cutting supplies to many of them (see Romania: 25 June 2009: Pharmaceutical Distributors Cut Supplies to Romanian Hospitals as Overall Hospital Debts Exceed US$331 mil.). Meanwhile, the decline in OTC sales is most likely the result of a sharp decline in discretionary spending, relating to the recession being experienced in Romania and the decline in salaries and growing unemployment. The shortfall in the Romanian National Health Insurance House's (NHIH's) funds for drug reimbursement recently resulted in the introduction of a major piece of emergency legislation, which considerably increased the length of time the NHIH had to reimburse pharmacies and distributors for reimbursable drugs (see Romania: 30 September 2009: Emergency Measures to Boost Healthcare Funds to Come Before Romanian Parliament, Including Clawback from Pharma Companies). This clearly is a negative development for pharmacies and distributors, and unless there is a distinct improvement in the country's economic condition and an increase in the amount of funds available for healthcare, a decline of 10% in the Romanian pharma market in 2010 is a distinct possibility.