Headline Expenditure Projections
- Pharmaceuticals: EUR6.09bn (USD8.04bn) in 2013 to EUR5.94bn (USD7.78bn) in 2014; -2.4% in local currency terms and -3.1% in US dollar terms.
- Healthcare: EUR74.69bn (USD98.59bn) in 2013 to EUR76.21bn (USD99.83bn) in 2014; 2.0% in local currency terms and -1.3% in US dollar terms.
The Netherlands continues to rank in the lower half of BMI's Pharmaceutical Risk/Reward Ratings (RRRs) for the 15 key Western European markets, falling one place to 11th in our ratings for Q314. The country fell from eighth in Q413. At an unchanged 66, its overall RRR score remains only slightly below the regional average of 67. This was the result of the rise of Finland and the incorporation of Denmark in our ratings system, both of which overtook 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
In April, The Dutch Health Performance Report had found that Dutch families spend up to a quarter of their incomes on healthcare. Families with an aggregate income of less than EUR50,000 (USD69,324) spent about EUR11,500 (USD15,944) on health costs in 2012 or around 23.5% of their incomes, the report stated. Of the EUR11,500 (USD15,944), around EUR6,000 (USD8,319) was spent on health insurance premiums, while the remaining EUR5,000 (USD6,932) was related to exceptional medical expenses, the report added. The figure relates to gross income and includes premiums and taxes, but not out-of-pocket payments.
The net loss of Netherlands-based biotechnology company Pharming Group narrowed to EUR14.8mn (USD20.37mn) in FY13 ended December 31 2013, compared with EUR24.1mn (USD33.18mn) in 2012. The company's turnover declined to EUR7mn (USD9.63mn) during the period, compared with EUR10.9mn (USD15mn) the previous year. The company's cash reserves increased to more than EUR19mn (USD26.15mn) as of late December 2013, compared with EUR6.3mn (USD8.67mn) in the same period the previous year.
In February, Lupin acquired the Netherlands-based firm, Nanomi. Lupin commented that the acquisition marked a foray into the technologically-intensive complex injectables sphere, adding that with the use of Nanomi's proprietary technology platform, Lupin would be able to make significant inroads into the niche area of complex injectables.
USDUSDUSDUSDBMI Economic View: The Dutch economy perked up during the tail end of 2013, with a robust 0.7% quarter-on-year increase in real GDP confirming that a recovery is underway. We expect growth to accelerate in 2014, underpinned by a recovery in fixed investment and exports. However, we stress that the Netherlands' double digit (in % of GDP terms) current account surplus, leaves the economy particularly vulnerable if the eurozone recovery fails to gain momentum. In addition, we warn of the risk posed by the correction in the property market, which could stymie a recovery in household spending this year.
BMI Political View: The Dutch eurosceptic Party for Freedom (PVV) stands a good chance of topping the polls at the European Parliamentary election in May. The PVVs populist leanings have gone down well with voters that have become disgruntled with the ruling coalition's austerity policies and the weak economic outlook. Even if the PVV do come out on top in May, we believe that a more eurosceptic presence in the EP will further complicate the process of European integration, rather than reverse it altogether.
Despite Netherlands' expectations for a return to positive economic growth in 2014, its government will continue with austerity measures to comply with EU budget criteria. Drugmakers have generally charged what the market will bear in both developed and emerging markets. With the advent of health economics, coupled with increasing budget deficits, there will be more caps on medicine expenditure in the near future, particularly on essential drugs. We therefore maintain that further restrictions on medicines prices will work to create a subdued outlook for patented and generic drugmakers operating in the country.