Belgian pharmaceutical expenditure will continue to expand at a modest rate, into the forecast period. This growth will be restrained by the fiscal pressures imposed by the costly and unwieldy public provisions for healthcare typical of similarly mature western European markets. However, a marked lack of price transparency within the value chain will continue to produce structurally higher prices relative to most other markets, and see incumbent drug makers able to earn significant rewards from innovative pharmaceuticals in the country. Badly needed reforms to public healthcare, aggressively pushed through by current leadership are likely to become a notable source of political instability as fiscal tightening touches upon divisive social issues.
Headline Expenditure Projections
Pharmaceuticals: From EUR5.83bn (USD7.81bn) in 2014 to EUR5.85bn (USD6.43bn) in 2015; 0.33% in local currency terms and -17.6% in US dollar terms. Forecast revised downwards from previous quarter.
Healthcare: From EUR43.86bn (USD58.77bn) in 2014 to EUR44.96bn (USD49.46bn) 2015; +2.5% in local currency terms and -15.8% in US dollar terms. Forecast unchanged from previous quarter.
In BMI's Q415 Western European Risk/Reward Index (RRI), relative to other regional markets, Belgium remains weak with an unchanged score of 68.0 out of 100. As a result of Sweden's deteriorating score, Belgium rises to the 8th most attractive pharmaceutical and healthcare market out of 15 in the region, having relinquished 6th place to Norway in Q315. Despite sustaining slightly above average reward scores, Belgium is markedly outperformed by the value growth potential and relative political stability characteristic of pharmaceutical markets such as Switzerland, the UK and France. In particular, rising political instability, stemming from regional tensions continues to weigh on Belgium's Country Risk score thus checking improvement in the country's position.
Key Trends and Developments
In August 2015, Belgium's Superior Health Council (SHC) decided in favour of the decentralisation and demedicalisation of HIV screening tests, reported the Brussels Times. The SHC explained that this type of screening test was aimed especially at high risk populations that are reluctant to go to clinics for traditional tests. The SHC opinion came in response to a question from former Public Health Minister Laurette Onkelinx, and was based on the latest WHO recommendations on the subject and on the 'National HIV Plan' for 2014-2019.
In July 2015 the Belgian government and groups representing branded and generic pharmaceutical firms entered a four-year agreement which aimed to improve approval times and lower drug prices in the country. According to Health Minister Maggie De Block, the deal sought to make new drugs available to patients 'at least two months earlier' and ease the cost burden by saving up to EUR60mn (USD65.8mn) annually in the charges paid for prescription drugs. The deal hoped to expedite access to new drugs by cutting down the time Belgian drug evaluations took by making trials carried out in other countries more readily accepted as well as by granting wider access to registries of patient data.
In April 2015, the Belgian health ministry announced a programme that, in cooperation with the Netherlands, will organise for the joint purchase of treatments for 'rare' conditions - those affecting fewer than five in 100,000 people. The scheme will see arms of both countries' health services combine purchasing power in negotiations with drugmakers, in order to secure better pricing for a group of pharmaceuticals that due to the very limited market to which they distributed, are particularly expensive for patients.
BMI Economic View
Recovery in the Belgian economy is set to continue at a moderate pace. We expect private consumption to drive growth over the coming years, while increasing external demand helps Belgium catch up with the wider eurozone. We have upgraded our forecasts for Belgian real GDP growth to 1.3% and 1.5% in 2015 and 2016 respectively, from 1.0% and 1.3% previously. Q115 data shows that real GDP growth in Belgium was 0.9% y-o-y, in line with the steady but slow recovery following a significant slowdown in growth from 2012-2014. During 2015-2017 we expect domestic demand to be the primary driver of growth, particularly private consumption. The austerity measures being implemented by the current reform focused government will see government consumption make minimal contributions to growth over the next three years. Following a lull in 2015 we expect recovery in investment gather pace in 2016 as business conditions improve in line with the broader eurozone recovery. We expect Belgian economic growth to lag slightly behind that of the wider eurozone in 2015/2016 before eventually converging to a similar growth rate in 2017.
BMI Political View
The fiscal and economic concerns of the Belgian state will remain a key driver of government policy in coming quarters. Due to its focus on fiscal consolidation, we see little risk to investors from excess spending or increasing debt levels. We do, however, see risks to the overall business operating environment, as the continuing implementation of labour market, pension and economic reforms will potentially result in more industrial action from the country's powerful and highly active trade unions. This industrial action reached a peak in 2014 when Belgium lost over 760,000 working days due to industrial action, a twenty-year high according to statistics reported by the National Social Security Office.