As a result of the high and increasing average age in the Netherlands, our outlook for healthcare expenditure in the country is broadly positive. On the other hand, we maintain that the pharmaceutical sector in the Netherlands will not see a return to positive growth until 2016. Despite expectations for a return to positive economic growth in 2014, the government will persist with austerity measures to comply with the EU's budget criteria. We therefore maintain that further restrictions on medicines prices under the Medicines Prices Act, increased uptake of generic drugs, insurers' preference policies will work to create a subdued outlook for drugmakers operating in the country.
Headline Expenditure Projections
- Pharmaceuticals: EUR6.88bn (US$8.74bn) in 2012 to EUR6.81bn (US$9.06bn) in 2013; -1.0% in local currency terms and 3.7% in US dollar terms. Forecast unchanged from previous quarter.
- Healthcare: EUR73.27bn (US$93.05bn) in 2012 to EUR74.48bn (US$99.06bn) in 2013; 1.6% in local currency terms and +6.4% in US dollar terms. Forecast revised upwards from previous quarter.
The Netherlands has continued its descent in BMI's Q114 Risk/Reward Ratings (RRRs) for the 14 key Western European markets. The country now weighs in at 10th in our ratings, having fallen from eighth in Q413. At an unchanged 66, its overall RRR score remains only slightly below the regional average of 67. This is due to the rise of Finland, and the incorporation of Denmark in our ratings system - both of which have overtaken the Netherlands. While the country offers drugmakers a relatively low-risk operating environment, poor market prospects - due to pressures on pricing and reimbursement and the market's maturity - will continue to weigh down the country's overall standing.
Key Trends And Developments
- Contrary to a 2012 coalition accord, in September 2013, NIS News Bulletin reported that healthcare costs will not become income-dependent after all. This is a departure from the government's previous decision to limit insurance policies for reimbursement from 2015. This would push more of the financial burden onto the patient, but clearly reduce insurance expenditure, with the authorities aiming to save as much as EUR1.3bn per annum. The coalition government has also decided to scrap the so-called levy discount (hefingskorting) for people who earn more than 55,991 euros per year. All citizens will continue to pay the first EUR350 of health costs themselves (except those for general practitioners, obstetricians and maternity care).
- The Netherlands' Foundation For Pharmaceutical Statistics (SFK) reported that October 2013 saw medication prices fall under the Medicines Prices (WGP) Act. On October 1, the new maximum price for drugs fell by almost 2%. SFK notes that medicine prices are now more than 37% lower than they were in October 2007.
- In October 2013, the Aspen Group (Aspen Pharmacare) finalised the acquisition of an active pharmaceutical ingredient (API) manufacturing facility in Oss, the Netherlands, from Merck Sharp & Dohme (Merck & Co). This formed part of a larger series of transactions with MSD that were announced on June 18. Alongside the API business, Aspen also agreed to purchase a portfolio of 11 branded finished dosage form molecules from MSD for a total consideration of ZAR10bn (US$1bn). The terms of the transaction specify that Aspen will continue to supply APIs to MSD under a 10-year supply contract.
BMI Economic View: The Dutch economy is still stuck in the mire, with few signs at present of a turnaround in activity, suggesting that the Netherlands could be lagging behind the wider eurozone. We still expect to see a return to positive economic growth in 2014, predicated in part on a recovery in international trade, but we warn that the surge in unemployment and fall in house prices remain key sources of stress in the economy.
BMI Political View: The deepening economic recession in the Netherlands is making it increasingly difficult for the government to persevere with fiscal austerity. However, given the government's role in promoting public finance reform across the eurozone, the coalition is unlikely to change course for the time being and will respond to missed fiscal targets with further budget savings. A return to positive economic growth in 2014 as we expect would provide some cover for the government's austerity agenda, but if the recession deepens then we would warn of potential escalation in social tensions as has been seen elsewhere in Europe in recent years.