BMI View: The free reign that New Zealand's Pharmaceutical Management Agency (PHARMAC) has over pharmaceutical spending will come under pressure. While the agency's stringent approach to listing medicines has helped to curtail drug spending, it has limited access to novel 'first-in-class' medicines. This in turn has created public pressure from both patient groups and politicians that could infringe upon PHARMAC's operations. The Trans-Pacific Partnership will also have ramifications on the agency as stronger biologic protection delays the introduction of biosimilars.
Headline Expenditure Forecasts
Pharmaceuticals : NZD1.48bn (USD1.0bn) in 2015 to NZD1.51bn (USD932mn) in 2016; 2.0% in local currency terms and -9.8% in US dollar terms.
Healthcare: NZD23.09bn (USD16.11bn) in 2015 to NZD23.63bn (USD14.58bn) in 2016; 2.4% in local currency terms and -9.5% in US dollar terms.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||1.203||1.033||0.932||0.887||0.945||0.966||0.987|
|Pharmaceutical sales, % of GDP||0.61||0.61||0.60||0.60||0.59||0.57||0.56|
|Pharmaceutical sales, % of health expenditure||6.4||6.4||6.4||6.4||6.4||6.3||6.3|
|Health spending, USDbn||18.718||16.107||14.580||13.912||14.868||15.234||15.614|
In BMI's Q2 2016 Pharmaceutical Risk/Reward Index (RRI), New Zealand dropped one place from its Q1 2016 standing, coming in at 10th out of 19 markets. With a score of 51 out of 100, the country is now ranked below the regional average of 52.3. A strong and predictable environment of low operating risks are weighed down by a small market and low potential for growth relative to other markets in the region.
In January 2016, the Pharmaceutical Management Agency was reported to be considering the option of listing Keytruda (pembrolizumab) following a second price offer from Merck & Co.
That same month, the Ministry of Health disclosed that there have 67 cases of the Zika virus in New Zealand since 2002. This follows the hospitalisation of one man due to the virus and the diagnosis of nine new Zealanders who had travelled overseas.
The Medical Workforce Survey for 2013/14 released in January 2016 also noted that the number of active doctors in the country has increased by 2.7% to 15,336 by 2014. Doctors were also found to be older with the average at 46 and the largest group of doctors aged between 50 and 54.
BMI Economic View
We expect the New Zealand dollar to face continued fundamental downside pressures as its fragile external accounts leave it exposed to capital outflows as real interest rates decline. New Zealand's Q215 real GDP growth figures showed that the economy remained weak, and we maintain our below consensus growth forecast of 2.4% and 2.5% for 2015 and 2016 as the dairy sector continues to suffer from depressed milk prices, while construction growth slows.
BMI Political View
The failure of New Zealand to obtain the concessions it sought for dairy and pharmaceuticals suggest that the ratification of the TPP will face opposition within the country. Reactions from politicians and the dairy industry have been mixed, and this uncertainty will further undermine the government's attempts at ratifying the treaty. As such, the process will require more time, and the agreement is unlikely to be ratified before 2017.
The New Zealand 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 New Zealand Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the New Zealand pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for New Zealand, to test other views - a key input for successful budgeting and strategic business planning in the New Zealand pharmaceutical and healthcare market.
- Target business opportunities and risks in the New Zealand pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in New Zealand.
- 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.