Following an update to our macroeconomic variables as a result of both the eurozone accession andglobal economic downturn, BMI now expects Slovakia’s pharmaceutical expenditure to grow toEUR2.06bn (US$2.62bn) by 2013. While this is below our previous expectations, it still represents ahealthy compound annual growth rate (CAGR) of 8.9% over the forecast period.
However, the short-term economic figures remain grim. According to data released by Slovakia’sStatistics Office, industrial output was down by 18.0% year-on-year (y-o-y) in March 2009, comparedwith a decline of 25.6% in February 2009. The market had expected a drop of 21.2% in March. Thepharmaceutical products market also fell by 15.1% y-o-y during March 2009. During Q109, overallindustrial production was down by 22.9% y-o-y. BMI estimates drug market expenditure in Slovakiashould increase from US$2.04bn in 2008 to US$2.60bn in 2013, a rise of 27.5%.
According to reports in the Slovak Spectator, the economic downturn is causing budgetary concerns atSlovakia’s largest state-owned health insurer, Vseobecná Zdravotná Poistovna (VsZP). For the first threemonths of the year, VsZP reportedly faces a shortfall of EUR25mn. By the end of the year, as theeconomic situation deteriorates and unemployment rises - thus reducing payroll contributions - theinsurer may fall EUR63mn behind its planned EUR2.07bn in revenue. As a result of the financial crisis,VsZP has implemented a number of emergency cost-containment measures and claims that its main focuswill be on securing the most urgent healthcare. However, there are concerns that waiting lists mayincrease as resources are squeezed, while some hospital budgets may be reduced in the second half of2009. Currently, VsZP’s contracts with healthcare providers only run until the middle of 2009, giving theinsurer the chance to re-negotiate terms in a few months - an option that it is likely to take.
Meanwhile, in January 2009, the Ministry of Health amended the reference price system in order toreduce pharmaceutical spending as a proportion of the total health budget. Under the new system, drugprices will be referenced against the six lowest-cost EU countries. It is estimated that Slovakia spends athird of its total health budget on medicines, with this total growing each year. In 2007, health insurersspent EUR892mn on pharmaceuticals. During the first nine months of 2009, the insurers had already paidout EUR706mn. In recent years, the main drivers of growth have been the arrival on the market of newand expensive treatments, coupled with the gradual ageing of the population, which is increasing demandfor treatment.
In the BMI Business Environment Ranking matrix for Q309, Slovakia scored 56.2for its overallpharmaceutical rating, lower than in Q209. The new score has placed Slovakia in 4th position, out of the20 markets surveyed in Central and Eastern Europe (CEE).
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