Despite the transfer of the financial burden of healthcare from the state to the patient going against the aim of most developed-state governments to provide social welfare, BMI believes the success of the measures in reducing public expenditure on drugs in Spain's pharmacy sector will mean the Spanish government implements more policies to reduce its contribution towards the cost of medicines. Furthermore, it is our view that ongoing public hospital debt issues will lead to the government enforcing further price erosion mechanisms on medicines in order to contain costs.
Headline Expenditure Projections
- Pharmaceuticals: EUR24.99bn (US$31.74bn) in 2012 to EUR24.08bn (US$32.03bn) in 2013.
- Healthcare: EUR99.62bn (US$126.51bn) in 2012 to EUR99.09bn (US$131.79bn) in 2013; -0.5% in local currency terms and 4.2% in US dollar terms.
In BMI's Pharmaceutical Risk/Reward Ratings (RRRs) for Q413, Spain is ranked 11th out of the 13 countries surveyed in Western Europe. While Spain offers investors positive factors, such as its large drug market, it also has problems, such as the government's focus on cost containment, low population growth, cumbersome bureaucracy and provincial differences regarding drug regulations and reimbursement.
Key Trends And Developments
Highlighting the Spanish government's success at containing pharmaceutical expenditure, according to industry association Farmaindustria, between June 2010 and May 2013, rebates paid by manufacturers for medicines dispensed at pharmacies reached a value of EUR1.4bn (US$1.8bn).
The British Medical Journal (BMJ) has stated that austerity measures enforced by the Spanish government could lead to the dismantling of large parts of the country's healthcare system, with potentially detrimental effects on the health of the country's population. The research warns that if no corrective measures are implemented, there is a risk that HIV and tuberculosis rates will experience an increase, as has been seen in Greece. There is also the risk of a rise in drug resistance and spread of disease. As part of their analysis, the researchers conducted interviews with 34 doctors and nurses across Catalonia.
BMI Economic View: Although real GDP growth will remain sluggish for some time to come, Spain's economy will begin a modest recovery towards end-2013, driven by robust exports and the country's growing tourism sector. We forecast real GDP to contract by 1.7% in 2013 and to grow by 0.3% in 2014, stressing that a faster economic recovery will be prevented by weak private consumption, ongoing fiscal consolidation and falling fixed capital formation over the next few quarters.
BMI Political View: The ruling People's Party (PP) recent slush-fund scandal is unlikely to result in the resignation of Prime Minister Mariano Rajoy for the time being, due largely to the party's sizeable parliamentary majority and the unpopularity of the opposition Socialist Party (SP). However, the scandal will dramatically reduce the chances of an outright PP victory in the 2015 parliamentary elections, and will further undermine the party's attempts to convince the Spanish public to tighten their belts to tackle the country's debt crisis.