BMI View: While we view the Austrian pharmaceutical and healthcare market as relatively stable and insulated from sudden downgrades, we highlight that certain economic factors pose a risk to public spending in particular. The Austrian government budget deficit was calculated above 2% (2.4%) of GDP in 2014. In our view, this still should limit the ability of the government to increase current spending so as not to see the budget deficit widen further than the 3.0% of GDP limit set by the EU.
Headline Expenditure Projections
Pharmaceuticals: EUR4.45bn (USD5.96bn) in 2014 to EUR4.42bn (USD4.86bn) in 2015; -0.6% in local currency terms and -18.4% in US dollar terms. Forecasts unchanged from the previous quarter.
Healthcare: EUR35.93bn (USD48.15bn) in 2014 to EUR37.33bn (USD41.06bn) in 2015; +3.9% in local currency terms and -14.7% in US dollar terms. Forecasts unchanged from the previous quarter.
In our Q415 Pharmaceutical Risk/Reward Index (RRI) we have assigned Austria an RRI score of 64.7, same as in the previous quarter, which means that Austria ranks tenth in the region and scores below the Western European average of 66.9. Notably, Austria holds one of the highest RRI scores globally due to the inherent rewards and low risks that arise from an ageing population, high per capita spending and stable policy environment for drugmakers operating in the country.
Key Trends & Developments
In June ViraTherapeutics reported the first closing of a series A financing round, raising EUR3.6mn. The round was co-led by Boehringer Ingelheim Venture Fund and EMBL Ventures and included an investment from Austria Wirtschaftsservice (aws) through its Venture-Capital-Initiative. ViraTherapeutics was created in 2013 as a spin-out from the Medical University of Innsbruck. ViraTherapeutics will use these funds to advance its lead product VSV-GP through preclinical studies prior to clinical Phase Ib testing. VSV-GP is a highly potent oncolytic virus that carries the surface protein from the lymphocytic choriomeningitis virus.
In June AOP Orphan Pharmaceuticals announced the regulatory submission of tetrabenazine for the treatment of tardive dyskinesia in a decentralised procedure for several European countries, with the UK being reference member state. Tetrabenazine is a presynaptic dopamine depletor that is marketed in a number of countries, including Austria, Denmark, France, Germany, Ireland, Portugal and the UK, as well as in several Central Eastern European territories. It is approved for treatment of chorea associated with Huntington's disease.
In May AOP Orphan launched Lojuxta (lomitapide) in Austria; the product was authorised by the EMA in July 2013. Lojuxta is indicated in adult patients with homozygous familial hypercholesterolaemia (HoFH) as an adjunct to a low-fat diet and other lipid-lowering medications, with or without LDL apheresis. Under a distribution agreement with Aegerion Pharmaceuticals, AOP Orphan has rights to Lojuxta in Austria and in several Eastern European countries.
BMI Economic View
The slow building of economic momentum will see the Austrian recovery lag behind its peers in 2015. As external demand and investment pick up we expect growth to accelerate in 2016 in line with the broader economic pickup in the eurozone and Germany.
BMI Political View
The far-right Freedom Party has gained significant ground against the governing Social Democrats and People's Party in Austria's first two state elections of 2015. We expect similar gains for the FPO in the next two elections, as they look set to remain a prominent force in Austrian politics in the coming years.