BMI View: Reforms to Australia's drug approval process will be beneficial for both the pharmaceutical industry and for patient access to innovative medicines. In particular, the introduction of an expedited approval process will have the potential to be a paradigm shift in the market, accelerating the time taken for new active substances to be approved. Limiting these potential benefits for the industry and patients will be the tough listing process on Australia's Pharmaceutical Benefit Scheme, which continues to place a strong emphasis on cost effectiveness.
Headline Expenditure Projections
Pharmaceuticals : AUD13.9bn (USD10.4bn) in 2015 to AUD14.3bn (USD10.6bn) in 2016; +3.0% in local currency terms and +1.4% in US dollar terms. US dollar forecast revised due to significant exchange rate fluctuations.
Healthcare: AUD162.0bn (USD121.7bn) in 2015 to AUD168.9bn (USD124.9bn) in 2016; +4.3% in local currency terms and +2.6% in US dollar terms. US dollar forecast revised due to exchange rate fluctuations.
|f = BMI forecast. Source: National Sources, BMI|
|Pharmaceutical sales, USDbn||12.150||10.470||10.490||10.440||10.100||10.110||10.340|
|Pharmaceutical sales, % of GDP||0.84||0.86||0.86||0.85||0.83||0.81||0.79|
|Pharmaceutical sales, % of health expenditure||8.7||8.6||8.5||8.4||8.3||8.1||8.0|
|Health spending, USDbn||140.010||121.690||123.240||124.170||122.090||124.370||129.600|
In Q117 Australia remains ranked jointly with Taiwan as the second most attractive market to pharmaceutical investors in the Asia Pacific region (scoring 66.0 out of 100), after Japan (80.6). Australia's Risk/Reward Index score is driven by a relatively high drug spending per capita (scoring 7.2 out of 12), a large pensionable population (scoring 6.4 out of 8) and robust population growth (scoring 3.5 out of 5), but is dragged down by poor sector growth (sector value growth score of 0 out of 12).
In September 2016, local news sources note that almost 70% of Australians polled with private health insurance are considering the option of dropping or downgrading their private health insurance. Almost 80% also note they believe the health insurance firms are putting profits before patients. Conducted by ReachTEL, the study also noted that the average cost of premiums has risen by 35% since 2010, outpacing inflation.
That same month, the government accepted some of the recommendations put forth by the Expert Panel Review of Medicines and Medical Devices Regulation. Critically, the expert panel recommended the introduction of an expedited drug approval process which will accelerate access to new medicines - a plus for the industry and patients.
As a result of the Pharmaceutical Benefit Scheme Access and Sustainability Package reforms passed in 2015, more than 2,000 medicine brands will see a reduction in price by as much as AUD20 (USD15) per script. This stems in part from the decision to remove originator medicine prices in the calculation.
BMI Economic View
The RBA reduced its cash rate by 25bps to 1.50% at its August 2 monetary policy meeting, and following a total of 50bps worth of cuts since May, we expect the central bank to keep its key policy rate steady for the rest of 2016 as it looks to assess the impact of its accommodative monetary policy stance. That said, we forecast the RBA to cut interest rates further by another 25bps to 1.25% by H117 as the Australian economy weakens while below-target inflation persists.
BMI Political View
Australia's Liberal-National coalition formed the government for a second term, following the July 2 federal elections, but we believe that it will not be able to significantly improve the country's business environment and economic growth prospects over the coming years. The coalition's expected lack of majority in the Senate suggests that risks of policies being delayed and diluted are high. Additionally, the coalition's narrow margin of victory against the opposition Australian Labour Party is a significant setback for Prime Minister Malcolm Turnbull, and there is an increasing possibility that his leadership position might be challenged, which would create further uncertainty for businesses.
The Australia Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Australia Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Australia pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Australia, to test other views - a key input for successful budgeting and strategic business planning in the Australian pharmaceutical and healthcare market.
- Target business opportunities and risks in the Australian pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Australia.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.