BMI View: New Zealand's Pharmaceutical Management Agency (PHARMAC) will continue to leverage its dominant position as a central procurer of drugs in the country to drive cost savings. While the high standards used by the agency in its funding decisions will make the process difficult, PHARMAC does acknowledge innovation as reflected by the expedient approval of Opdivo (nivolumab). This accentuates the need for multinational drugmakers operating in New Zealand to ensure that their treatments substantially improve healthcare outcomes.
Headline Expenditure Forecasts
Pharmaceuticals : NZD1.42bn (USD1.1bn) in 2015 to NZD1.4bn (USD986mn) in 2016; 1.2% in local currency terms and -1.8% in US dollar terms. Slight downward revision based on new data while US dollar value is due to currency fluctuations of the New Zealand kiwi.
Healthcare: NZD27.4bn (USD19.1bn) in 2015 to NZD28.4bn (USD19.22bn) in 2016; 3.6% in local currency terms and 0.5% in US dollar terms.
|*figures rounded to two decimal places. f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||1.180||1.000||0.990||0.960||0.890||0.910||0.920|
|Pharmaceutical sales, % of GDP||0.60||0.58||0.58||0.57||0.55||0.53||0.52|
|Pharmaceutical sales, % of health expenditure||5.4||5.3||5.1||5.0||4.9||4.8||4.7|
|Health spending, USDbn||21.950||19.130||19.220||19.130||18.290||18.940||19.620|
In BMI's Q4 2016 Pharmaceutical Risk/Reward Index (RRI), New Zealand has climbed up one place from its Q216 position, coming in at ninth out of 19 markets. With a score of 51.0 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.
New Zealand's FY2016/17 budget released in May 2016 allocated NZD16.2bn (USD11.2mn) to healthcare, a 4% year-on-year rise. Measures announced together with the budget include plans to roll out a bowel cancer screening programme and additional funds to provide access to new treatments.
Starting from July 1 2016, the Pharmaceutical Management Agency will use the 'Factors for Consideration' to replace the Decision Criteria. This framework consists of four key areas of need, health benefits, costs and savings and suitability.
In August 2016, New Zealand's Pharmaceutical Management Agency announced that it will be funding Keytruda (pembrolizumab) starting from September 2016. According to the agency's operations director, Sarah Fitt, new information has emerged that gives them the confidence to proceed with the funding decision.
BMI Economic View
The RBNZ remains dovish, despite keeping its OCR unchanged at 2.25% at its April 28 monetary policy meeting, and we maintain our forecast for the central bank to reduce its official policy rate to 2.00% in 2016. We remain bearish on the New Zealand dollar trade-weighted index over the medium-term as the currency is still exposed to capital flight given its high level of external indebtedness amid weak dairy prices and a precarious property market.
BMI Political View
The release of the Panama Papers in April labelling New Zealand as a tax haven is unlikely to dim the country's attractiveness as an investment destination. The country continues to have a strong legal system and a strong business environment. In addition, the government's robust response to the scandal will minimise any fallout, ensuring the country's continued attractiveness as an investment destination.
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.