BMI View: Private healthcare providers are to face an increasingly challenging business environment in Sweden. In October 2014, the newly elected government reached an agreement on initiatives aimed at imposing further restrictions on private companies engaged in publicly funded healthcare, care and educational services - and, as part of that limit, their right to distribute profits. This may result in reduced private investment in the country's healthcare sector and may potentially result in diminished innovation as well as capacity problems. In April 2015, the first regional council ordered its officials to find ways to limit the profits private companies can reap from running publicly-funded health services.
Headline Expenditure Projections
Pharmaceuticals: SEK36.41bn (USD5.31bn) in 2014 to SEK36.62bn (USD4.43bn) in 2015; +0.57% in local currency terms and -16.6% in US dollar terms.
Healthcare: SEK362.41bn (USD52.81bn) in 2014 to SEK371.80bn (USD44.94bn) in2015; +2.6% in local currency terms and -14.9% in US dollar terms.
Risk/Reward Index: We continue to view Sweden as a moderately attractive regional market. On the positive side, factors such as the country's high per capita incomes and strong regulatory foundations will continue to promote per capita spending on pharmaceuticals and healthcare in general. However, the downward pressure on pharmaceutical prices will continue to be acutely felt in this small market of fewer than 10mn people.
Key Trends And Developments
In April 2015, Swedish pharmaceutical firm Swedish Orphan Biovitrum (Sobi) received a preliminary takeover offer from an unnamed suitor, according to Head of Communications Oskar Bosson. A suitor for Sobi would most likely be interested in acquiring the firm due to its presence in the haemophilia drug market, where the company and Biogen have developed two new drugs under a partnership deal. Analysts noted that Biogen or Pfizer were the two most likely buyers but other big pharmaceutical companies looking to build up their portfolios of rare diseases could also be interested.
In April 2015, it was reported that Medivir is in talks with another company to license its hepatitis C drug candidate MIV-802. The drug has been selected as a candidate drug and entered non-clinical development in December 2014. 'It is almost unlikely that we will take it through a phase-II,' CEO Niklas Prager said, adding that the company is more likely to enter a partnership agreement for further development of the medicine. Medivir aims to deliver one drug candidate each year on average, and to maintain an average of one project in the first phase of clinical development.
Sweden is one of Europe's least obese countries but new research suggests its residents are catching up with other EU citizens struggling to keep their weights down. More than 25% of Swedish men will be obese by 2030 along with 22% of Swedish women, according to a World Health Organization (WHO) study revealed in May 2015.
BMI Economic View
We have raised our Swedish real GDP growth forecast for 2015 in the wake of surprisingly strong Q414 figures, though our overall outlook for modestly improving economic activity remains unaltered. A falling drag from net exports will play a key role in improved GDP growth. Policy risks are becoming increasingly prevalent on each of the monetary, fiscal, and macroprudential fronts.
BMI Political View
The near-collapse of the Swedish government following a failed budget vote in December 2014 marked a significant political crisis in a country with a history of stable governance. The situation was defused when the main parties made a pact to effectively freeze the anti-immigration Sweden Democrat party out of the governance process, but this outcome risks creating further divisions among the electorate and in Swedish civil society.