BMI View: The Austrian pharmaceutical and healthcare sectors are well developed and stable, offering some of the most attractive opportunities in the region. Nevertheless, our pharmaceutical and healthcare expenditure growth expectations remain resiliently subdued over the next few years, which prompted us to make downward revisions and caused a decline in Risk/Reward Index.
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 have been revised downwards 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 have been revised downwards from the previous quarter.
In our Q315 Pharmaceutical Risk/Reward Index we have assigned Austria an RRI score of 64.7, a downward revision from the previous quarter, which means that Austria ranks tenth in the region falling from the fifth position and scores below the Western European average of 66.8. 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
Nabriva Therapeutics has successfully completed a USD120mn series B financing. The financing was led by new US-based investors Vivo Capital and OrbiMed. This large financing round indicates how biotech firms with promising antibacterial candidates are fuelling the innovation behind the antibiotic revival, placing them as targets for acquisition. The renewed worldwide attention to antibiotic resistance has created an unmet medical need for the pharma industry to commercialise and big pharma and investors alike are flocking towards firms such as Nabriva Therapeutics with novel treatments.
Austrian pharmacies are to be allowed to dispense prescription drugs over the internet from June 25 2015, and regulations to this effect are currently being assessed by the country's health ministry, reports Tiroler Tageszeitung Online. The regulation will be based on European forgery policy that has already been implemented in the Austrian Medicines Act. The regulation will define the requirement for pharmacies and will seek to strictly allow only permitted pharmacies to sell drugs online. Pharmacies would be required to report to the Federal Office for Safety in Health Care (BASG). Standard guidelines and the sale of prescription drugs only through pharmacies will ensure consumers stay protected from counterfeit medicines, according to Health Minister Sabine Oberhauser.
Approximately 457,000 people in Austria are dependent on nursing care, according to the Ministry of Social Affairs. The state provides various types of allowances to dependent people and their families. The allowance is independent of income and is paid monthly. However, the amount of allowance is dependent on the care requirements, ranging from Level 1, for which EUR154.2 (USD167.5) is payable, and up to Level 7, where the state grants EUR1,655.80 (USD1,798.5). Also, the cost of nursing homes vary and the state allows the usage of social welfare only under certain conditions. The ministry currently does not provide financing for private nursing courses. Patients who cannot be cared for at home, have the option to move into a retirement or nursing home. The costs greatly vary depending upon province and whether care is availed in public or private places.
BMI Economic View: Austrian economic growth will not see a significant acceleration until 2016 as lower external demand continues to weigh on industrial production, investment and headline growth. Private consumption will remain the key driver of growth in the coming quarters.
BMI Political View: Austria's governing coalition will adopt an increasingly tough stance on religious regulations, integration of Muslims, and immigration over the coming years. This will be driven by attempts to curb robust support for the far-right Freedom Party.