BMI View: Krka's exposure to Eastern European markets will continue to act as a drag on revenue growth. However, strong sales growth in Western Europe will mitigate the impact of revenue declines for the short term. We expect a continued focus on cost containment by European healthcare payers to moderate Krka's growth outlook over the longer term, unless the company looks to geographically diversify its exposure.
Headline Expenditure Projections
Pharmaceuticals: EUR675mn (USD896mn) in 2014 to EUR671mn (USD738mn) in 2015; -0.6% in local currency terms and -17.6% in US dollar terms. Forecasts unchanged compared to previous quarter.
Healthcare: EUR3.22bn (USD4.27bn) in 2014 to EUR3.23bn (USD3.55bn) in 2015; 0.3% in local currency terms and -16.8% in US dollar terms. Forecasts unchanged compared to previous quarter.
BMI Risk/Reward Index
Slovenia scores 50.4 out of a total of 100 in our Pharmaceutical Risk/Reward Index for Q116 - same score as in the previous quarter. This places the country 11th in our Index of 20 countries and slightly above the average for the region, which is 49.6.
Key Trends And Developments
In August, Slovenian generic pharmaceutical company Krka was named among the top three exporters of the country in terms of sales revenue generated overseas, according to a survey by daily Finance. Krka garnered EUR1.09bn (USD1.19bn) in revenues from product sales in foreign markets in 2014, a 2.5% increase compared with 2013. The share of exports in Krka's total revenue reached 95.7% in 2014. Energy companies Gen-I and HSE were also on the top three list, with foreign sales of EUR1.03bn (USD1.13bn) and EUR760mn (USD834mn) in 2014, respectively. The top three exporters are followed by automaker Revoz and another pharmaceutical company Lek.
Krka's first half results for 2015 were boosted by strong sales in Germany and other Western European markets, although this was offset by declines in sales within Russia and Ukraine. Krka's exposure to Russia and Ukraine continued to present headwinds to topline growth, owing to the impact of currency depreciation and the volatile economic conditions within both countries. Revenues in H115 were broadly flat y-o-y at EUR600mn (USD672mn) while net profit for Krka rose by 5% y-o-y to EUR112.3mn (USD125.8mn).
In September, pharmaceutical company Lek, owned by Swiss multinational Novartis, opened a EUR24m addition to its packaging centre in Lendava on Wednesday with PM Miro Cerar and Swiss President Simonetta Sommaruga attending the ceremony, according to medlines.org. Cerar said the project, which was co-financed with EUR0.5mn in public funds, was an 'excellent' example of cooperation between a foreign investor and local employees. Cerar said he had seen quite a few successful projects during the government visit to the region of Pomurje, which had led him to conclude that the region was reviving.
BMI Economic View
Slovenia's high government debt load and residual problems in the banking sector remain a persistent threat to fiscal stability in Slovenia, although ongoing fiscal consolidation plans should lead to a gradual reduction in public debt/GDP ratios.
BMI Political View
Slovenia is disproportionately exposed to the growing refugee crisis in Europe as the Western Balkan route becomes the most popular route to Europe for refugees arriving in Greece. Despite this, the political outlook for Slovenia remains relatively stable.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||0.933||0.896||0.738||0.726||0.761||0.821||0.890|
|Pharmaceutical sales, % of GDP||1.94||1.81||1.77||1.73||1.71||1.69||1.68|
|Pharmaceutical sales, % of health expenditure||21.7||21.0||20.8||20.8||20.9||21.0||21.1|
|Health spending, USDbn||4.291||4.270||3.551||3.489||3.650||3.911||4.213|
The Slovenia 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 Slovenia Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Slovenia pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Slovenia, to test other views - a key input for successful budgeting and strategic business planning in the Slovenian pharmaceutical and healthcare market.
- Target business opportunities and risks in the Slovenian pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Slovenia.
- 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.