BMI View: Finland ' s growing and ageing population will drive pharmaceutical demand. Despite being relatively small in size compared to some of its Western European counterparts, the market is boosted by high GDP per-capita, ensuring continued spending on high-value drugs in the medium - term. However, rising healthcare costs will place a heavy burden on government finances, requiring patented drug makers to prove the cost-effectiveness of their medicines over less expensive generic drugs.
Headline Expenditure Projections
Pharmaceuticals: EUR3.04bn (USD4.08bn) in 2014 to EUR3.10bn (USD3.41bn) in 2015;+1.9% in local currency terms and -16.4% in US dollar terms. Forecast in line with last quarter .
Healthcare: EUR18.88bn (USD25.30bn) in 2014 to EUR19.63bn (USD21.59bn) in 2015; +4% in local currency terms and -14.7% in US dollar terms. Forecast revised upwards from last quarter.
Finland's Risk/Reward Index score is unchanged from last quarter at 68.8 out of 100. This places the country seventh in our index in terms of attractiveness to investors, just above Denmark (68.1) and Belgium (68.0). Finland's strong emphasis on the regulatory environment is an appealing feature of the market, although a major factor affecting the business environment for drugmakers is its small overall market size. Combined with increasing cost-containment measures, this negatively affects the industry rewards score in particular. Nevertheless, high per capita drug expenditure means that companies operating in the country can see substantial incomes.
Key Trends And Developments
The Finnish city of Oulu has one of the worlds' most advanced e-health programmes which has helped the city overcome healthcare inflation. The digital platform which was introduced in 2008 enables patients to make appointments, refill prescriptions and exchange messages with doctors from their home computers. The system, called Self Care, now caters to around 70,000 residents. Operating the system costs the city around EUR350,000 (USD390,000) annually but it has also already saved it 'tens of millions of euros,' according to Deputy Mayor Sinikka Salo. (Bloomberg).
Health insurance costs in Finland have surged 32% in the last five years, reports the Helsinki Times. The rise in health insurance costs has been attributed to increased use of private healthcare services and increased costs of treatment, according to insurance firms. The use of private healthcare services has increased especially due to the expansion of operations by the service providers. The prices of health insurance policies provided by If P&C Insurance have increased at an average annual rate of 10% in recent years, according to the Head of products Timo Harju. According to the Finnish Competition and Consumer Authority (KKV), price hikes are partly caused by the difficulties in comparing the costs of complicated insurance policies which discourages competition.
Pharma Industry Finland (PIF) has collaborated with European lobby organisations in building a Europe-wide database to follow the series of medicines from production to the users in an effort to stop the spread of counterfeit medicines. Medicine packages will have features, such as seals or strip packaging, which will reveal any tampering in the supply chain. The move forms part of a joint project to eliminate counterfeit drugs from circulation, which is being pursued through Europe-wide co-operation in the pharmaceutical industry. The new safety markings and the database is expected to be operational by 2019.
BMI Economic View
Finland's economy remains mired in stagnation as the contraction in industrial production deepens. We maintain our downbeat outlook towards the Finnish economy both over the short-term and from a structural perspective. We hold to our below-consensus forecast for real GDP growth in 2015 of -0.1%.
BMI Political View
The opposition Centre Party won a plurality in the Finnish parliamentary election (49 of the 200 seats). Its incoming prime minister and telecoms magnate, Juha Sipila, is likely to maintain the hard line stance towards Greece and its bailout programme as the previous administration due to its likely reliance on right-wing support in parliament.