Boston, MA -- (ReleaseWire) -- 03/20/2014 -- The downward pressure on generic medicine prices, as a result of tenders raising the level of competition and the ultimate commoditisation of off-patent medicines, draws attention to the inherent challenges for generic drugmakers looking to profit from the government's focus on cost containment in the healthcare sector. The German pharmaceutical market used to be dominated by branded medicines and reasonable profit could be realised. However, over the past few years, the government has sought to contain healthcare costs in light of the emergence of more chronic diseases and ageing population. The health insurance companies, the krankenkassen, award bulk tenders to drugmakers that charge the least for their products, resulting in a decline in the prices of off-patented medicines.
Headline Expenditure Projections
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- Pharmaceuticals: EUR40.02bn (US$52.82bn) in 2013 to EUR40.10bn (US$50.92bn) in 2014; 0.2% in local currency terms and -3.6% in US dollar terms.
- Healthcare: EUR296.31bn (US$391.13bn) in 2013 to EUR304.73bn (US$387.01n) in 2014; +2.8% in local currency terms and -1.1% in US dollar terms.
Risk/Reward Rating: In BMI's Q214 Pharmaceutical Risk/Reward Ratings, Germany is ranked the most attractive pharmaceutical market in the Western European region, which covers 15 key markets.
Key Trends And Developments
Aligning with BMI's view that health technology assessment and reimbursement decision-making bodies will take an increasingly hard line in 2014 when determining whether a new drug provides added value to patients in comparison with existing therapies (Germany's Institute for Quality and Efficiency in Healthcare (IQWiG) has started the new year with the publication of the results of four new assessments of medicines under the Pharmaceutical Market Restructuring Act (AMNOG)) stating that only one drug out of the four provides a minor additional benefit.
In January 2014, it was reported that Germany is seeking to employ foreign doctors to overcome a shortage of doctors. However, language barriers are complicating the delivery of healthcare. A number of healthcare groups are demanding more stringent language tests for foreign medical professionals coming into the country to facilitate better communication between doctors and patients. The percentage of foreign doctors working in the country increased to around 15% in 2012, from about 5% in 2007, according to figures from the German Medical Association.
BMI Economic View: German domestic demand will recover from a poor Q413 in early 2014, despite weaker external demand from emerging markets. We maintain our above-consensus real GDP growth forecast of 1.9% for this year, but expect growth to slow to a tepid 1.5% by 2015.
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