In 2010, foreign drug producers had 16 subsidiaries in Romania, which generated total sales of 3.8 billion lei (EUR851 million) and added value of almost RON1 billion, employing 2,249 people. The sale of most drugs sold in Romania is brokered by these subsidiaries, according to the research.
According to a 2009 competition watchdog report, the top 20 local drug producers controlled 78% of the market. More recently, the market has become more concentrated, in the wake of international acquisitions and mergers between the largest players.
The most important transactions were Schering Plough’s acquisition by Merck & Co, Wyeth being bought by Pfizer, and Solvay’s acquisition by the Abbott Group. Labormed also purchased the portfolio of Ozone, in 2009.
Drug retail grew quickly before the crisis. In 2010, pharmacies produced total added value of RON2.2 billion, almost as much as drug producers.
The pharmacy networks employ 34,438 people, mostly skilled. Rising demand for pharmaceutical products, coupled with higher prices on the prescription drug segment, was the main factor helping this form of retail in recent years. In addition, the transfer of drugs issued through the national healthcare programs exclusively through hospitals to retail pharmacies has boosted their sales, the study found.
Before the crisis, in 2002-2007, the value of the Romanian drug market increased constantly, with a compound annual growth rate of 25%, stimulated by the rapid economic growth, which multiplied public and private financial resources. Starting in the second half of 2007, the drug market’s sales in euro began three years of stagnation, because of the recession’s effects on the healthcare sector.
Medicine sales as expressed in lei kept growing in 2007-2009, over a rapid depreciation of the exchange rate. In 2010, drug sales grew by 19.6% on the year, despite relatively unchanged volumes.
In the first half of 2011, the pharmaceutical market slowed down substantially, growing by only 2.9% on the year in euro (3.6% in lei), according to research company Cegedim. The growth forecast for the entire 2011 remains low, 4.8% in lei. However, drug sales might post even weaker growth, if the government arrears to pharmaceutical companies persist or if the new clawback tax is implemented starting in the first quarter of 2011.
The share of prescription drugs (RX) in total retail sales has risen from 79% in 2005 to 84% in 2011, to an estimated value of EUR1.9 billion. Most RX sales are of antibiotics and drugs for the digestive tract. Plans to revise the public healthcare sector may drive the share of RX drugs down, if insurance packages are limited.
Over-the-counter (OTC) drugs have lost market share compared with RX drugs, standing at EUR0.35 billion total estimated sales in 2011, equivalent to a 16% share of retail sales. Medicine for cold and flu (14%), painkillers (13%), vitamins and minerals (11%) had the largest contribution to the total sales of OTC drugs.
Innovative products account for more than 70% of the total value of sales and only 25% of the sold volume. Generic drugs make up 30% of the total market by value and 75% of the total by volume. In Europe, Romania stands fifth by the market share of generic drugs, after Poland, Slovakia, Germany and Slovenia.
The research also shows that pharmaceutical imports are the main source for the internal consumption of medicine. In 2010, imports were worth EUR2.1 billion and mainly originated in Hungary (16%), Germany (15%), Switzerland (12%) and France (11%). Exports were worth only EUR590 million, going to Russia (13%), the United Kingdom (11%), France (6%) and Bulgaria (5%). Still, in 2007-2010, exports grew almost seven times, while imports grew only 1.5 times.
Drug producers create added value of RON2.5 billion, most of which is used in the Romanian economy, the study says. The pharmaceutical industry’s contribution to the state and local budgets was RON1.7 billion in 2010, around 20% of the total value of drugs sold on the market.
The industry’s direct contribution to the GDP and to employment is relatively modest (0.33%), since most pharmaceutical products are imported and only a few major producers have facilities in Romania. Nevertheless, the large volume of imported drugs is a source of significant tax earnings for the state budget.
The taxes paid for pharmaceutical products make up 1.14% of the total tax collections in the economy. This means the drug industry is the 23rd largest contributor to the state’s tax income, out of a total of 103 economic sectors. (EUR1=RON4.4369)