Romania’s Pharmaceutical Market Doubles In 2004-2012

A look back over these years reveals a change of leader in the pharmaceutical industry in 2009 when Zentiva’s takeover put Sanofi on the top spot, best-selling products trading places and a significant rise in the average price of a pack of pills from 8 lei (almost EUR2) to RON22.9 last year.

The increase in price was mainly possible because of the higher funds allocated by the CNAS in each of these years. Allocations for fully and partly subsidized drugs stood at RON1.13 billion in 2004 and reached RON3.45 billion last year.

The pharmaceutical market (both paid for by the government and by patients in cash) stood at EUR960 million in 2004 only to reach EUR2.6 billion in 2012.

Companies in the industry are not that happy about the significant rise in sales, saying that some of the drugs only pass through Romania and are resold to other countries (the so-called parallel trade).

“The pharmaceutical market in Romania constantly grew and developed but also suffered significant changes during that period (2004-2012 i.e.). Steps were taken until 2009 to ensure a certain amount of market decentralization and growth, and in the last few years a number of regulations were introduced, which somewhat restrict the growth of the pharmaceutical market (i.e. a reconsideration of how products are reimbursed, the clawback tax), said Dan Zamonea, general manager of Roche Romania.

“To us, the most important developments of that period are the price decline and the emergence of parallel trade, and the limitation of patients’ access to treatment by not updating the list of fully and partly subsidized drugs,” Zamonea added.

Other important developments, according to him were “the priority given to generics, introduction of the clawback tax and unfortunately, the lack of predictability and continuity in the system.”

Roche was the second leading pharmaceutical company in Romania in 2004, a position it still holds. Zamonea is one of the managers with the longest track record in this business. Roche recruited him for country manager in 2001.

Pharmaceutical companies say that despite the growth in the last few years, business was difficult because growth was actually on paper, as the companies would get their money from the government after 300 days.

“Pharmaceutical spending per capita is about EUR80 a year, while the EU countries right ahead of us (Hungary, Slovakia, Slovenia and Czech Republic) spend EUR160-EUR170 per capita and the countries at the core of the EU spend EUR700 to EUR800 a year,” Dan Zaharescu, chief executive of the Romanian Association of International Medicine Manufacturers (ARPIM), said a little while ago on ZF Live.

“We are far from meeting the real medicine needs of the people. Spending will constantly increase, as will the people’s need for pharmaceuticals. We are seeing a much slower growth compared with the other EU countries, and gap widens every year instead of narrowing. We should see growth of 15% every year until 2020. The market has slowed down to 5% to 7% growth after the financial crisis.”

Once sales increased, the average pill pack price increased, too. From RON8.2 in 2004 it rose to RON22.9 last year. On the other hand, the Health Ministry cut the price of the prescription drugs (the Ministry sets the prices of prescription drugs and revises them every year depending on the leu exchange rate trend) on several occasions.

If the price went up, how did the market grow? It grew as a result of an increase in the share of expensive drugs in the total sales. Companies focused on promoting and selling expensive drugs, which come with higher margins.

The year 2009 saw a change of leader when Sanofi took the top spot after buying Zentiva, a position it still holds. Hoffmann La Roche was in the lead for one year after GlaxoSmithKline (GSK) spent a decade as the number one of the market. Both Sanofi and GSK got the top spot as result of takeovers, while Roche was the only one to grow organically (without buying companies with a strong position in Romania that is).

“The positions of the top players vary with the ranking cited. Mergers and acquisitions in the last few years have generated the most important changes in these rankings, because, as far as we can tell, promotion budgets have not changed. These rankings may change after the list of fully and partly subsidized drug list is updated, considering it hasn’t been since 2008,” Roche’s Dan Zamonea said.

A look at the ranking of the main actors in this industry in 2004-2012 shows AstraZeneca to have climbed to seventh by 2012 while in 2004 it was not even among the top twenty companies.

Although a world giant in the pharmaceutical industry, AstraZeneca kept a rather low profile in Romania until 2005. The former chief executive of the group told ZF in a 2011 interview that pharmaceutical giants had generally concentrated on major markets and saw the potential of other areas only after 2000.

The 2004-2012 also saw a change of best-selling drugs. Whereas antibiotics were the top sellers in 2004, they have since been replaced by cardiovascular drugs. Right after the fall of the communist regime, demand for medicines, and especially antibiotics, surged, and companies starting out at the time would focus on this niche. As the market reached saturation, cardiovascular drugs became the top sellers, because cardiovascular problems are the most frequent conditions and the main cause for mortality in Romania.

(English version by Loredana Fratila-Cristescu)

Top 10 pharmaceutical companies in 2004

Source: ZF archive using Cedegim data        

Top 10 pharmaceutical companies in 2012            

Source: Cegedim