BMI View: Germany's macroeconomic environment will continue to be favourable for drugmakers and he althcare operators through 2016. B uoyant private consumption and higher pu blic expenditure, brought about by migrant /refugee accommodation and social security payments , will appeal to multinational drugmakers . Furthermore, i n order to mitigate Germany's dire demographics and growing social security spending brought about by an agei ng population, there has been a broader trend in the introduction of novel and costly therapies in Germany, lead ing us to revise upwards our pharmaceuticals market forecast for 2016.
Headline Expenditure Projections
Pharmaceuticals: EUR46.50bn (USD51.15bn) in 2015 to EUR47.10bn (USD50.40bn) in 2016; 1.3% in local currency terms and -1.5% in US dollar terms. Forecast revised upwards from last quarter.
Healthcare: EUR326.08bn (USD358.69bn) in 2015 to EUR335.11bn (USD358.56bn) in 2016; +2.8% in local currency terms and -0.04% in US dollar terms. Forecast broadly in line with last quarter.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||59.375||51.150||50.398||52.502||55.643||58.891||59.802|
|Pharmaceutical sales, % of GDP||1.52||1.56||1.54||1.52||1.49||1.47||1.44|
|Pharmaceutical sales, % of health expenditure||14.0||14.3||14.1||13.8||13.6||13.4||13.2|
|Health spending, USDbn||425.396||358.691||358.564||379.261||408.417||439.409||453.752|
In Q216 we have revised upwards Germany's Risk/Reward Index (RRI) score to 72.2 from 69.2 in the last quarter (out of 100). The score revision was mainly driven by higher industry rewards indices. However, Germany has shifted down two ranking positions to sixth out of 15 markets in Western Europe in terms of market attractiveness to pharmaceutical investors, lagging behind other regional peers' score improvements. While high market expenditure indices and risks scores are illustrative of Germany's relative attractiveness and favourable operating environment, potential industry rewards are capped by burdensome reimbursement and pricing regulation.
French drugmaker Sanofi and German-based Boehringer Ingelheim entered into exclusive negotiations to swap businesses, which will imply an exchange between Sanofi's animal health business (Merial) with an enterprise value of EUR11.4bn (USD12.4bn) and Boehringer Ingelheim's consumer healthcare (CHC) business (excluding business in China) with an enterprise value of EUR6.7bn (USD7.3bn), including a gross cash payment from Boehringer Ingelheim to Sanofi of EUR4.7bn (USD5.1bn).
Japanese drugmaker Daiichi Sankyo is planning to close down its German antibody subsidiary U3 Pharma and transfer its operations to a research unit in Japan as part of the firm recent focus aimed at increasing efficiency and streamlining processes (BioSpace).
In a bid to cut debt after the recent acquisition of Sigma-Aldrich, German drugmaker Merck KGaA is reportedly planning to divest its allergy business unit, Allergopharma, which could draw interest from drug companies as well as private-equity firms, reports Bloomberg.
Merck KGaA completed its USD17bn acquisition of Sigma-Aldrich, meaning Merck will have around 50,000 employees in 67 countries, working at 72 manufacturing sites worldwide, while the firm's combined pro forma full-year life science sales will rise from EUR4.6bn (USD5.2bn) in 2014 to an estimated sales of around EUR12.7bn (USD14.3bn) in 2015.
BMI Economic View
The strengthening German economy will continue rebalancing towards domestic demand in 2016 and 2017, amidst strong private consumption growth and increased government spending on the migrant/refugee crisis.
BMI Political View
Having weathered an extremely challenging 2015, Chancellor Angela Merkel will cope with any potential threats to her leadership and stem declining support for the Christian Democratic Union (CDU) over the coming quarters.
The Germany Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Germany Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Germany pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Germany, to test other views - a key input for successful budgeting and strategic business planning in the German pharmaceutical and healthcare market.
- Target business opportunities and risks in the German pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Germany.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.