BMI View: Strong pharmaceutical sales growth in 2015 will be moderated over the medium term by cost containment measures. Healthcare payers in Central and Eastern Europe will become increasingly assertive in using their purchasing power to demand discounts from drugmakers in order to contain rising healthcare costs. The announcement of a joint procurement drive with Romania will increase pricing pressures on pharmaceutical manu facturers over the long term.
Headline Expenditure Projections
Pharmaceuticals: BGN2.53bn (USD1.72bn) in 2014 to BGN2.71bn (USD1.52bn) in 2015; -7.0% in local currency terms and -11.5% in US dollar terms. Forecast revised upwards from Q 3 15.
Healthcare: BGN6.16bn (USD4.18bn) in 2014 to BGN6.38bn (USD3.58bn) in 2015; -3.7% in local currency terms and -14.2% in US dollar terms. Forecast revised upwards from Q315.
Risk/Reward Ratings: In Q4 2015, Bulgaria's Risk Reward Index (RRI) score (48.2) has fallen below the regional average (49.3). However, given that regional scores on the whole have fallen relative to Bulgaria, Bulgaria's ranking has risen from 12th to 11th in our Risk Reward Index.
Key Trends And Developments
In July 2015, Bulgaria's National Health Insurance Fund (NHIF) announced that it will raise the reimbursement levels for outpatient drugs and cancer treatment in 2016. The NHIF's supervisory council has approved amendments to Ordinance No. 10, which provides the procedure related to the drugs' reimbursements. The amendment will force marketing authorisation holders (MAHs) to offer discounts to the NHIF in case their products are reimbursed.
In July 2015, Bulgarian Health Minister Petar Moskov withdrew a set of legal amendments allowing the privatisation of hospitals.
In June 2015, the Bulgarian healthcare minister Petar Moskov announced that Bulgaria and Romania are to jointly begin procuring high-value pharmaceuticals by the end of 2015. The two health ministers are planning exchanges between staff to identify common areas of medicine procurement.
In June 2015, the Bulgarian government formed a central public body for the procurement of reimbursed drugs for hospitals. The health minister will lead the newly formed Central Body for Public Procurement Awards in Healthcare, which will prepare and hold public procurement procedures as well as sign framework contracts on behalf of hospitals.
In May 2015, MPs in Bulgaria declined a proposal related to an agreement between the National Health Insurance Fund (NHIF) and the pharmaceutical industry under which drugmakers would be required to share the responsibility for overspending on medicines by the NHIF. Under the proposal, drugmakers would agree to refund the excess public money spent to the NHIF.
BMI Economic View
The boost to Bulgarian household purchasing power from low global oil prices and strong real wage growth will enable consumer spending to support modest headline growth rates over the next two years. However, an over-valued currency, a highly indebted private sector and a weak capital stock will remain considerable hindrances to growth.
BMI Political View
Bulgaria's minority coalition government is proving more stable than we had initially anticipated, and has ushered in a much-needed period of relative political stability. While this will help to anchor governance reforms, we do not see Bulgaria making concrete progress in converging with EU living standards.