BMI View: While Greece will, despite significant political brinksmanship linked to members of the ruling party Syriza, reach a deal with its creditors and avoid a Eurozone exit, the political and economic uncertainty of the interim will continue to hamper the modernisation of the health sector and the expansion of pharmaceutical spending and public access to health services. Greece will continue to lose attractiveness as a market for drugmakers as already high and rising operating costs are exacerbated by repayment issues that have led many firms to threaten ing to cut off the supply of treatments.
Headline Expenditure Projections
Pharmaceuticals: EUR4.96bn (USD6.64bn) in 2014 to EUR4.85bn (USD5.34bn) in 2015 -2.1% in local currency terms and -19.6% in US dollar terms. Forecast unchanged from Q 2 15 .
Healthcare: EUR16.17bn (USD21.66bn) in 2014 to EUR15.38bn (USD16.92bn) in 2015 -4.9% in local currency terms and -21.9 in US dollar terms. Forecast down from Q 2 15 .
In BMI's Q315 Pharmaceutical Risk/Reward Index (RRIs) Greece falls to fifth place out of the 20 markets in the Central and Eastern European (CEE) matrix with a RRI score of 55 out of 100; down from fourth place and a score of 56.2 in Q215. The Greek pharmaceutical market has been characterised of late by mandated price reductions, state intervention in the trade of pharmaceutical goods, regressive revenue taxes, unpaid debts and drug shortages. Moreover, the government has increasingly shifted some of the burden of healthcare spending onto its citizens, requiring increasing co-payments for expensive drugs.
Key Trends a nd Developments
In June 2015 International pharmaceutical firms faced a dilemma of whether or not to cut off supplies of life-saving medicines to Greece, as the cash-strapped nation owed more than EUR1.2bn (USD1.3bn) in debts to drugmakers. European Federation of Pharmaceutical Industries and Associations members have not received money owed to Greek hospitals and the National Organization for Healthcare Provision (EOPYY) since December 2014, according to the association's Director General Richard Bergstrom. The companies discussed options with EU officials on the measures to be adopted were Greece to default on its debt or exit the Eurozone. Were the firms agree to continue supplying drugs for a period without payment, the scheme would require approval from the European Commission as it would conflict with EU competition rules. Such exceptional supply measures would need to include steps to deal with spillover effects on other markets, including controlling re-exports of drugs and a block on other governments referencing Greek prices to set their own drug prices.
In June 2015 the government of Greece set strict new prescription limits for physicians in the country based on specialty and region. Under these new rules, each physician would have to prescribe a minimum percentage of generic drugs. Failing to meet this target by 5% or more a month for three consecutive months would lead to the physician being called to justify their prescriptions to the National Organisation for Healthcare Provision. Caps were to be finalised based on an appraisal of the doctor's specialisations, the number of patients they have, seasonality, among other things.
In June 2015 Greece's Health and Social Insurance Minister Panagiotis Kouroumblis asked multinational pharmaceutical companies to invest in the country. In his statement at a conference titled 'Shaping the Future of Healthcare in Greece' he suggested that 'every company should produce in Greece its two drugs with the highest consumption in the country'. Kouroumblis added that his intention was to develop a stable framework for the pharmaceutical sector and amendments in the ministry's policy, which include using a fairer rebate model.
BMI Economic View
A nascent economic recovery will be delayed until at least 2016 in Greece, as uncertainty surrounding the country's bailout negotiations destroys consumer and business confidence. Long-term growth will remain constrained by punitive fiscal austerity, a lack of fixed investment, and dire labour market conditions.
BMI Political View
Greece and its creditors will 'muddle through' and reach a compromise that allows bailout funds to be dispersed and the country to remain in the eurozone. Nevertheless, the lack of progress so far in talks means that the risk of an accidental 'Grexit' is growing. The Syriza government is unlikely to survive in its current form until the end of 2015.