2014 - Pharmaceuticals and Healthcare Q214 Round Up (BMI)

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JUN 2014
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PHARMACEUTICALS & HEALTHCARE Q214

ROUND-UP
ISSN
Published by:Business Monitor International
Pharmaceuticals & Healthcare
Q214 Round-Up Jun 2014
Published by: Business Monitor International
Copy deadline: June 2014
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All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as
to the accuracy or completeness of any information hereto contained.
Pharmaceuticals & Healthcare Q214 Round-Up Jun 2014
CONTENTS
BMI View .............................................................................................................................. 7

Global Industry Overview ........................................................................................................................... 7
Table: Global Pharmaceutical Market (USDbn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Western Europe ................................................................................................................... 9

Q214 Round-Up ........................................................................................................................................ 9
Table: Western Europe Pharmaceutical Market (USDbn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Central & Eastern Europe ................................................................................................. 14

Q214 Round-Up ...................................................................................................................................... 14
Table: Emerging Europe Pharmaceutical Sales (USDbn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Americas ............................................................................................................................ 18
Q214 Round-Up ...................................................................................................................................... 18
Table: LATIN AMERICAN PHARMACEUTICAL MARKET (USDBN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Asia Pacific ........................................................................................................................ 22

Q214 Round-Up ...................................................................................................................................... 22
Table: Asia Pacific Pharmaceutical Market (USDBN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Middle East & Africa .......................................................................................................... 30

Q214 Round-Up ...................................................................................................................................... 30
Table: Middle East And Africa Pharmaceutical Market (USDbn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
© Business Monitor International Page 5

BMI View
Global Industry Overview
BMI View: Protectionist pharmaceutical policies are increasingly being implemented in emerging markets.
Governments see the pharmaceutical manufacturing sector as strategically important as it is non-cyclical,
ensures supplies of medicines to the local population and generally employs individuals on above average
incomes. Multinational drugmakers are establishing and expanding fixed capital investments in emerging
markets to circumvent these protectionist policies.
Set For Rebound

Global Pharmaceutical Market (USDbn)
1,500
1,000
500
0
2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Africa - Sub-Saharan Africa pharmaceutical sales, USDbn
Asia - Asia-Pacific pharmaceutical sales, USDbn
Europe - Western Europe pharmaceutical sales, USDbn
Europe - Emerging Europe pharmaceutical sales, USDbn
Latin America - Latin America pharmaceutical sales, USDbn
Middle East - MENA pharmaceutical sales, USDbn
North America - North America pharmaceutical sales, USDbn
f = BMI forecast. Source: BMI
The global pharmaceutical market is experiencing slow but accelerating growth. Combined sales of
prescription drugs and over-the-counter (OTC) medicine are forecast to increase from USD1,094bn in 2013
to USD1,265bn in 2018, representing a compound annual growth rate (CAGR) of 3.0%. The
pharmaceutical market of sub-Saharan Africa (+11.4% CAGR) will expand the fastest, followed by Latin
America (7.6% CAGR), Asia Pacific (7.0% CAGR), Middle East and North Africa (6.8% CAGR), Central

and Eastern Europe (4.0% CAGR) and North America (0.6% CAGR). Western Europe's pharmaceutical
market will meanwhile contract over the next five years (-2.0% CAGR).
Table: Global Pharmaceutical Market (USDbn)
Country Indicator 2012 2013 2014f 2015f 2016f 2017f 2018f

Africa Sub-Saharan Africa pharmaceutical sales, USDbn 11.5 11.6 12.0 14.0 16.0 17.9 19.9
Asia Asia-Pacific pharmaceutical sales, USDbn 276.6 274.1 288.7 313.5 336.1 361.5 384.7
Europe Western Europe pharmaceutical sales, USDbn 251.8 253.2 241.0 231.9 226.5 227.0 229.2
Europe Emerging Europe pharmaceutical sales, USDbn 72.0 77.5 71.9 75.9 81.2 87.6 94.4
Latin America Latin America pharmaceutical sales, USDbn 79.1 81.9 83.9 88.8 98.2 108.8 118.0
Middle East MENA pharmaceutical sales, USDbn 27.0 29.8 29.2 31.7 34.8 38.0 41.4
North America North America pharmaceutical sales, USDbn 368.8 365.8 367.3 367.0 369.2 373.2 377.7
f = BMI. Source: BMI

Western Europe
Q214 Round-Up
BMI View: Against a backdrop of rising R&D costs, price sensitivity amongst payers, a tenuous global
economic recovery and ever-more burdensome regulatory hurdles, large pharmaceutical companies,
including several from Western Europe, have engaged in a flurry of mergers and acquisitions in recent
months. The M&A activity is attributed to a paradigm shift wherein companies are trimming down to focus
on what they do best, or acquiring assets that are in alignment with their core business areas in order to
deliver better returns to shareholders and return to meaningful growth.
The Western Europe regional pharmaceutical market is contracting. Combined sales of prescription drugs
and over-the-counter (OTC) medicines are forecast to decline from USD254.57bn in 2013 to USD228.65bn
in 2018, representing a five-year compound annual growth (CAGR) of -2.12%. The sub-region of Southern
Europe consisting of Spain, Portugal, Italy, Greece, Cyprus and Malta will decline the fastest (-4.36%
CAGR), followed by the sub-region of Northern Europe consisting of Denmark, Finland, Iceland, Norway
and Sweden (-1.37% CAGR). The core bloc of Western Europe consisting of Austria, Belgium,
Switzerland, Germany, France, the UK, Ireland, Luxembourg and the Netherlands will experience the
slowest decline (-1.29% CAGR).

A Declining Pharmaceutical Market

Western Europe Pharmaceutical Market (USDbn)
300
200
100
0
2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Europe - Western Europe pharmaceutical sales, USDbn
BMI
Key Developments In Q214
The Core Bloc Of Western Europe
Belgium
In April 2014, Belgian drugmaker UCB reported a 5% increase in sales in for the months of January,
February and March to EUR840mn (USD1.16bn).
Highlighting revenue earning pressures for generic drugmakers selling their products in Belgium, in January
2014, the prices of generic medicines in Belgium fell by 2.5% - resulting in a 19% decline in the prices of
off-patented medicines in the country over a period of three years.
In May 2014, Germany's cost-effectiveness evaluator, the Institute for Quality and Efficiency In Healthcare
(IQWiG), delivered a blow to Gilead's pricing strategy for Sovaldi (sofosbuvir) in Europe by questioning
Gilead's clinical basis for charging almost USD68,000 for the drug in Germany.

In February 2014, it was reported that the strength of the franc had hit many Swiss multinationals, with
companies such as Roche and Novartis reporting lower revenues as a result of unfavourable currency
effects.
As of January 1 2014, pharmacists in France have been legally permitted to substitute a biosimilar for an
originator biological medicine.
In March 2014, it was reported that French pharmaceutical company Sanofi had joined the bidding process
for US-based Merck's over-the-counter health products unit.
In March 2014 it was reported that Novartis had decided to close its research site in Horsham, the UK, by
the end of 2014. The move will result in 400 job losses.
In March 2014, recognising that the authorisation process for medicines in the UK is often lengthy, the
government stated that it is to accelerate access to ground-breaking drugs for chronic diseases without
adequate treatment options under an Early Access to Medicines scheme.
In February 2014, it was reported that health insurance premiums are rising rapidly in Ireland. State-
run VHI Healthcare announced a 3% hike on some of its health insurance policies in the week ended
January 1 2014, following which Laya Healthcare also increased its premiums by 10%.
In April 2014, the Dutch Health Performance Report had found that Dutch families spend up to a quarter of
their incomes on healthcare - families with an aggregate income of less than EUR50,000 (USD69,324)
spent about EUR11,500 (USD15,944) on health costs in 2012 or around 23.5% of their incomes.
In February 2014, Lupin acquired the Netherlands-based firm, Nanomi.
Northern Europe
In April 2014, it was reported that private equity firms have cut down on new investments in public service
provision in Sweden following scandals that led to calls for more state control, leading to questions as to
who will meet the increasing cost of the ageing population.
In April 2014, Swedish company Meda rejected Mylan's takeover bid by Mylan.

In May 2014, Finland was included in the PhRMA submission to the 2014 Special 301 report by the US
Trade Representative (USTR). Key concerns for Finland included poor intellectual property protection for
drugs, reimbursement delays and downward price pressures on medicines.
In May 2014, Danish biotech company Serendex Pharmaceuticals announced that it is seeking to launch
an initial public offering (IPO) on the Oslo stock exchange in June 2014.
In May 2014, Danish drugmaker Novo Nordisk announced that it is increasing its drug development
capacity by investing DKK 550mn (US$100mn) in a new research and development facility in Bagsværd,
Denmark.
In March 2014, BMI stated that Norway will continue to rely on pharmaceutical imports. While most major
multinational pharmaceutical companies have a presence in Norway, including Algeta, Amgen, Takeda,
Prime Pharma and Novartis, only a few drugmakers have established their own manufacturing units in the
country.
On January 20 2014, Aviator Acquisition, a subsidiary established by Bayer Nordic for the purpose of the
acquisition of Algeta, commenced a public takeover offer for all the shares of Algeta at a price of NOK362
per share in cash.
Southern Europe
In March 2014, Spanish industry association Farmaindustria stated that both the number of and value of
prescriptions dispensed in the country has declined, with public pharmaceutical expenditure data (for
Spain's pharmacy sector) showing that the average cost per prescription has declined from EUR13.50
(USD18.77) (between 2007-mid 2010) to EUR10.7 (USD14.8) (for the majority of 2013).
In April 2014, the president of the European Generic medicines Association (EGA) Nick Haggar stated that
he was seeking to collaborate with the Italian government on the sustainability of the healthcare sector and
ensuring a reliable business environment in Italy for high-quality generic and biosimilar drugs by removing
barriers such as patent linkage, and by re-shaping the current claw-back system
In March 2014, Italy's antitrust regulator, the Italian Competition Authority, imposed a total fine of
EUR182.5mn (USD250.6mn) on Swiss drugmakers Novartis and Roche for allegedly colluding to increase
sales of their jointly marketed age-related macular degeneration (AMD)
treatment Lucentis (ranibizumab injection)

In January 2014, Portuguese Health Minister Paulo Macedo stated that he aims to continue a six-year for-
pay programme, deploying Cuban doctors to smaller towns in the southern rural regions of the country that
lack primary care services.
Table: Western Europe Pharmaceutical Market (USDbn)

Western Europe
pharmaceutical sales,
Europe USDbn 252.9 254.6 246.3 233.9 226.3 226.7 228.7
Source: BMI

Central & Eastern Europe

Q214 Round-Up
BMI View: The 5-year outlook for pharmaceutical and healthcare spending in Emerging Europe is highly
correlated with economic growth and local development. CIS states are expected to experience continued
rapid growth, albeit from a low base and largely due to demand from Russia. Within Central and South
Eastern Europe, price containment and cost-controlling measures will continue to prevail. And lastly,
Central Asia will see slow growth owing to currency volatility.
The Central and Eastern Europe pharmaceutical and healthcare market is set to experience a period of
steady growth over the next 5 years. Underlying factors driving growth in spending include ageing
populations, economic development, a prioritising of healthcare by regional governments and growth in
consumer incomes. In a large proportion of Central and Eastern European countries, consumers are the
primary payers of pharmaceuticals and also healthcare, therefore, the outlook for pharmaceutical and
healthcare spending in Central and Eastern Europe is highly correlated with economic development.
CIS States To Deliver Most Growth In Emerging Europe

Emerging Europe Pharmaceutical Sales (USDbn)
150
100
50
0
2012 2013 2014f 2015f 2016f 2017f 2018f
CIS States pharmaceutical sales, USDbn
Baltic States pharmaceutical sales, USDbn
Central Europe pharmaceutical sales, USDbn
Central Asia pharmaceutical sales, USDbn
South Eastern Europe pharmaceutical sales, USDbn
BMI

Combined sales of prescription drugs and over-the-counter medicines are forecast to increase from
USD71.9bn in 2014 to USD94.4bn in 2018, growing at a compound annual growth rate (CAGR) of 4.0%.
The CIS sub-region in Emerging Europe will grow at the fastest CAGR (+6.1%), followed by the Baltic
States (+3.9%), Central Europe (+4.8%), South Eastern Europe (+2.0%) and lastly Central Asia (+1.8%).
South Eastern Europe
The Romanian Ministry of Health withdrew two draft amendments that would have increased the
reimbursement budget and enabled favourable pricing structures for drugmakers, drawing criticism from the
local drugmakers' association.
The Bulgarian NHIF has revised its policy of reviewing drugs for inclusion on its reimbursement list. The
review will now take place annually instead of every six months. The Ministry of Health also plans to raise
tariffs and fees on marketing authorisation holders, increasing the cost of drug registrations in the country
per drug molecule.
The Turkish government is aggressively amending laws and introducing incentives to boost localisation of
R&D within the country. The government is hoping to reduce the country's considerable trade deficit by
establishing itself as an export base and R&D hub.
In April 2014, the Croatian health insurer, HZZO, revised its primary reimbursement list, including new
drugs but also revising the recommended prices downwards.
In February 2014, Serbia's Republic Fund Of Health Insurance (RFZO) saved around RSD2.91bn (US
$34mn) from the centralised public procurement of medicines, in which it bought 166 of the most expensive
medicines for hospitals and health facilities in 2014.
Slovenia's system of basing the price of a patented medicine on a group of medicines in the same
therapeutic class, including generics, was highlighted in the Pharmaceutical Research and Manufacturers of
America's Special 301 submission to the United States Trade Representative in April 2014.

In March 2014, the Greek government decided to contain healthcare expenditure and drug spending to
EUR2bn (US$2.72bn) in Greece in 2014.The move has increased speculation that 2014 will be a difficult
year for patients, with less funding set aside for medicines.
CIS States
Kazakhstan will provide equal funding for primary healthcare across all regions in the country in 2014,
according to Kazakh Prime Minister Serik Akhmetov.
In March 2014, Italy-based Indena moved into Romania and Moldova with Azelis, saying that despite the
small size of the markets, the potential remained as high as that in Poland 20 years ago.
Currency selloffs across emerging markets threaten to impact revenues and earnings of subsidiaries of
foreign companies operating in Russia.
Russia's preferential treatment rules in government procurement have been expanded to include Belarusian
exports. Two unnamed Indian companies have reportedly begun preparations to localise production of
generics in Belarus, according the Belarusian ambassador to India.
In October 2013, four Slovenian drugmakers were accused of forming a drug cartel to manipulate wholesale
drug prices in the country. The Competition Protection Agency (AVK) ruled
that Kemofarmacija, Salus, Farmadent and Hopharm had colluded on the tender for the supply of drugs to
public institutions and procurement of medicines for public pharmacy institutes.
In January 2014, Turkistan press reported that Uzbekistan registered an almost two-fold increase in exports
of pharmaceutical products in 2013. In the same month the Uzbek government entered a joint venture (JV)
with China's Kunming Pharmaceutical to build a pharmaceutical facility to produce drugs for the treatment
of respiratory disease in the 'Angren' special industrial zone of the country's Tashkent region.
Central Europe
Poland-based biotechnological company Bioton has collaborated with US-based pharmaceutical

company Merck Sharp & Dohme (MSD) to distribute four medicines manufactured by the latter in Poland.

The Association of Innovative Pharmaceutical Manufacturers (IGYE) called on the Hungarian government
to increase funding for innovative drugs, describing the current system for gaining reimbursement as among
the most bureaucratic and complex in the world.
In March 2014, Czech Health Minister Svatopluk Nemecek said he will focus on stabilising the financial
condition of the health sector. Nemecek said that from a long-term perspective the country's healthcare will
be underfunded, with the possibility of increasing contributions to health insurance ruled out.
In February, the Slovak health ministry introduced a new drug reimbursement list, under which 2,529 drugs
from the list (51%) will be offered to patients at no cost or for a symbolic fee of up to EUR1 (US$1.37).
Around 1,771 drugs, or one third of the medicines on the list, will require no co-payment from the patient.
Baltic States
Pharmaceutical companies and the Lithuanian government have affirmed their commitment to improve
patients' access to innovative drugs.
Latvian drugmakers reported excellent growth in exports amidst regional tensions between Russia and the
West.
In December 2013, Prime Minister Andrus Ansip of Estonia reiterated the country's commitment to see
research and development (R&D) spending reach 3.0% of GDP by 2022, from 2.1% in 2012, already well
above Central and Eastern European averages.
Table: Emerging Europe Pharmaceutical Sales (USDbn)

Europe CIS States pharmaceutical sales, USDbn 31.1 34.2 33.8 35.7 38.8 42.2 45.9
Europe Baltic States pharmaceutical sales, USDbn 1.4 1.5 1.5 1.5 1.6 1.7 1.7
Europe Central Europe pharmaceutical sales, USDbn 18.6 18.6 18.2 19.5 20.8 22.0 23.4
Europe Central Asia pharmaceutical sales, USDbn 3.6 4.8 3.1 3.5 3.8 4.3 4.8
Europe South Eastern Europe pharmaceutical sales, USDbn 19.6 20.9 18.1 18.9 19.9 21.4 23.1
BMI

Americas
Q214 Round-Up
BMI View: Local market leaders with a significant presence in the Latin American pharmaceutical and
healthcare industry will become increasingly attractive to multinationals. Strong market growth and an
improving regulatory regime will continue to provide excellent revenue-generating opportunities for
drugmakers - despite the regional challenges of price controls, currency devaluations and generic
competition.
The Latin America regional pharmaceutical market is expanding rapidly. Combined sales of prescription
drugs and over-the-counter (OTC) medicines are forecast to increase from USD81.9bn in 2013 to
USD118.0bn in 2018, representing a five-year compound annual growth (CAGR) of 7.6%. The sub-region
of Andean states consisting of Bolivia, Colombia, Ecuador, Peru and Venezuela (+9.1% CAGR) will
expand fastest, followed by the Pacific Alliance members consisting of Mexico, Chile, Peru and Colombia
(+8.0%). Mercosur members consisting of Argentina, Brazil, Paraguay and Uruguay will grow at a +6.4%
CAGR during the same period. Central American countries consisting of Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua, Panama and Belize will experience the slowest growth (+5.6% CAGR).

Strong Growth Forecast

Latin American Pharmaceutical Market (USDbn)
150
100
50
0
2009 2012 2013 2014f 2015f 2016f 2017f 2018f
Latin America - Latin America pharmaceutical sales, USDbn
Pacific Alliance Member States
In May 2014, Abbott Laboratories announced to acquire Chilean drugmaker, CFR Pharmaceuticals, for
approximately USD2.9bn.
In March 2014, Chile's Health Minister, Helia Molina, planned to reform Chile's private insurance system,
Isapres (Instituciones de Salud Previsional).
In January 2014, Bupa's Spanish subsidiary, Bupa Sanitas, launched an initial public offering (IPO) to buy
a controlling stake in a Chilean private healthcare company, Cruz Blanca Salud.
In March 2014, Mexico's Federal Commission for Protection Against Health Risks (COFEPRIS) reduced
the pre-approval time for clinical trials from three months to one month.

In March 2014, Indian drugmaker Lupin revealed its acquisition of a 100% equity stake in Mexican
drugmaker, Laboratorios Grin.
In March 2014, Genomma acquired a 50% interest in Marzam Commercial and Industrial Group for
MXN600mn (USD45.15mn).
In March 2014, GlaxoSmithKline Mexico stated that the company had accelerated product registration in
Mexico since November 2012.
In February 2014, Mexico's secretary of Health planned to reduce out-of-pocket spending on healthcare and
improve the quality of service through Seguro Popular.
In March 2014, Peru's ministry of Health published a list of 399 'rare or orphan' diseases and classified them
into four groups.
In February 2014, the Colombian government published the final list of medicines subject to price controls
and announced that it planned to save over CLP90bn (USD160mn) from the scheme.
Mercosur Member States
In April 2014, Brazil created the 'Alliance for Clinical Research in Brazil' to promote clinical research and
reduce approval times in the country.
In April 2014, the ANVISA office of pharmaceutical drug market regulation (CMED), fixed the average
price increase of medicines to a maximum of 3.35% for 2014 - the lowest price increase approved by
CMED in the last five years.
In March 2014, Bain Capital, a US-based private-equity firm, invested BRL2bn (USD880mn) to acquire
the Brazilian health-insurance operator Grupo Notre Dame Intermedica.
In March 2014, the board of Brazil's National Economic Development Bank (BNDES) approved funding of
BRL 250.8mn (USD108.5mn) for Libbs Farmacutica to construct a new biopharmaceutical production site
in Sao Paulo.
In February 2014, Eli Lilly planned to invest around BRL15mn (USD6.4mn) over the next two years in
Brazil.

In February 2014, Argentina's Minister of Economy and Public Finance finally announced an average
increase of 4% in medicine prices after the Secretariat of Commerce entered an agreement with the industry
chambers representing laboratories.
Andean states
In April 2014, the Foreign Exchange Administration Agency (CADIVI) in Venezuela reported that local
authorities allocated USD2.9bn to the health sector in 2013, 21.3% lower than that of 2012 and 34% down
from the USD4.4bn budget in 2011.
In February 2014, the shortage of drugs in Venezuela was reported to increase by more than 10% in two
weeks time and exceeded 50%.
Central America
In April 2014, the Costa Rican social security administration (CCSS) reported that antineoplastic drugs and
biologics had the highest revenue growth in the CCSS pharmaceutical procurements.
In February 2014, Sanofi launched Genfar's affordable and quality therapeutic treatments in Panama.
Caribbean Countries
In February 2014, Puerto Rico's Senate planned its investigation of the sudden rise in the cost of generic
drugs in the country.
In January 2014, Mexican drugmaker Neolpharma established the new Development and Innovation
Center (CEDIPROF) for new pharmaceutical products in Puerto Rico.
Table: LATIN AMERICAN PHARMACEUTICAL MARKET (USDBN)
Latin America Central America minus Mexico health spending, 15.3 17.0 18.2 19.4 20.8 22.4 23.9
USDbn
Latin America Mercosur pharmaceutical sales, USDbn 35.9 36.6 35.9 37.9 41.5 45.4 49.9
Latin America Andean pharmaceutical sales, USDbn 17.5 17.5 18.9 19.6 22.2 25.6 27.0
BMI

Asia Pacific
Q214 Round-Up
BMI View: The fragmented nature of the Asia Pacific region will continue to provide unequal commercial
opportunities for pharmaceutical firms looking to invest in the region. Key drivers of growth in the region
include ageing populations across many Asia Pacific countries, an expanding and increasingly affluent
middle-class and various governments' commitment to improving healthcare access.
The Asia Pacific regional pharmaceutical market is expanding rapidly due to a rising, affluent, middle-class,
and governments' push for healthcare reforms. Combined sales of prescription drugs and over-the-counter
(OTC) medicines are forecast to increase from USD276.6bn in 2013 to USD384.7bn in 2018, representing a
five-year compound annual growth (CAGR) of 7.0%. It is worth noting that by 2018, overall
pharmaceutical sales in Asia Pacific is expected to exceed overall drug sales in Western Europe and the US
combined. The sub-region of Greater China consisting of China, Hong Kong, Macau and Taiwan (+11.7%
CAGR) will expand fastest, followed by South Asia (Bangladesh, India, Pakistan and Sri Lanka (+10.5%)),
South East Asia (Japan, South Korea, Australia and New Zealand (+9.4%)) and Developed Asia Pacific:
Australia, New Zealand, South Korea and Japan (+2.3%).


Asia Pacific Pharmaceutical Market (USDbn)
750
500
250
0
2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Asia-Pacific pharmaceutical sales, USDbn
South East pharmaceutical sales, USDbn
Greater China pharmaceutical sales, USDbn
South Asia pharmaceutical sales, USDbn
Source: BMI
Greater China
In May 2014, Beijing Genomic Institute (BGI) unveiled it plans to expand the operations of its Tai Po
research centre in a bid to meet the company's expected business growth.
In May 2014, Taiwan-based active pharmaceutical ingredient firm ScinoPharm Taiwan, and Hong Kong-
based Lee's Pharmaceutical Holdings, announced two collaboration agreements for China. The firms
commented that the collaboration would capitalise on their respective strengths and abilities, and the
products are expected to offer competitive advantages upon entering the Chinese high-end generic drug
market.
In May 2014, GlaxoSmithKline's (GSK) senior vice president Mark Reilly was accused by the Chinese
police of scheming to bribe Chinese doctors and hospitals. Reilly reportedly ordered his staff to pay

hundreds of millions of US dollars in bribes to help promote sales of the company's medicines to Chinese
hospitals.
In April 2014, eight departments of the Chinese government, namely the National Health and Family
Planning Commission (NHFPC), National Development Reform Commission (NDRC), China Food and
Drug Administration (CFDA), Ministry of Finance (MOF), Ministry of Industry and Information
Technology (MIIT), Ministry of Human Resources and Social Security (MHRSS), and the Ministry of
Commerce and State Administration of Traditional Chinese Medicine (SATCM), released a statement
announcing a policy that will secure the supply of commonly used low-price drugs, essentially allowing free
pricing of selected essential drugs in low supply.
In April 2014, China's National Development and Reform Commission (NDRC) and the National Health
and Family Planning Commission with the Ministry of Human Resources and Social Security jointly issued
a circular to encourage more development in the private healthcare sector.
In April 2014, Concord Medical Services Holdings announced plans to establish a premium cancer
hospital - Shanghai Concord Cancer Hospital (Shanghai Concord) - at the Shanghai New Hongqiao
International Medical Centre in Shanghai.
In April 2014, Valneva granted vaccine manufacturer Adimmune certain exclusive rights to its Japanese
encephalitis (JE) vaccine in Taiwan. Adimmune will be entitled to register and commercialise Valneva´s JE
vaccine under a local trade name and to develop, manufacture and commercialise the vaccine from bulk
product delivered by Valneva.
In March 2014, US-based digital contract research organisation Clinipac Worldwide announced a merger
with Hong Kong-based Choice Pharma. The merger will provide Clinipac Worldwide with access to more
Asian countries including Taiwan, China, Hong Kong, South Korea, Vietnam, Singapore and Malaysia.
In March 2014, Bayer announced plans to invest approximately EUR100mn (USD138mn) to expand
production capacity at one of its existing plants in Beijing, China.
In February 2014, Bayer acquired China-based Dihon Pharmaceutical, which specialises in over-the-
counter (OTC) and herbal traditional Chinese medicine (TCM) products.

South East Asia
In May 2014, DKSH Holdings Malaysia announced plans to establish a new 130,000-square-feet
healthcare distribution centre on the Hicom Industrial Estate in Shah Alam, Selangor, Malaysia, in a bid to
expand the presence of its healthcare arm.
In May 2014, Myanmar deputy Minister of Finance Dr Maung Maung Tein stated that the government is
working to launch a pilot run of its first health insurance service this year, and that there will be a study of
insurance premiums and reimbursements.
In May 2014, the Government of Singapore Investment Corporation (GIC) reached an agreement to
acquire a stake in the hospital unit of Philippines-based investment firm Metro Pacific Investments
Corporation (MPIC). Under the terms of the collaboration, GIC will invest PHP3.7bn (USD84mn) for an
initial 14.4% interest in MPIC subsidiary Neptune Stroika Holdings.
In May 2014, Singapore's state-owned investment firm Temasek Holdings invested around USD1.2bn into
US healthcare stocks in Q114 as part of its strategy to meet the demands of its ageing population. The
company purchased 5.3mn shares valued at USD634mn in the US-based manufacturer of scientific
instruments and chemicals Thermo Fisher Scientific, 1.6mn shares valued at USD106mn in US-based
BioMarin Pharmaceutical, and an almost twofold increasing its stake in biopharmaceutical company
Gilead Sciences to 12.6mn shares valued at USD891mn.
In April 2014, Indonesia-based Kimia Farma announced plans to build the country's first pharmaceutical
salt plant in partnership with salt producers Garum. While Indonesia has a relatively established domestic
pharmaceutical sector, 95% of its demand for raw pharmaceutical materials is fulfilled by imports.
In April 2014, Cambodia's National Social Security Fund (NSSF) launched a new insurance scheme to
provide health insurance to Cambodian workers. However, the proposed scheme is facing opposition from
business groups such as the Garment Manufacturers Association in Cambodia which says the initial
estimate of the health insurance cost is overpriced.
In April 2014, Malaysian healthcare company Pharmaniaga Bhd partnered with Saudi Arabia-based
Modern Group to set up a 50:50 joint venture (JV) in Saudi Arabia. As part of the JV, which will be
finalised by May 2014, Pharmaniaga Bhd has assigned 60mn (USD18.26mn) as capital outlay to establish a
manufacturing unit in Saudi Arabia.

In March 2014, Vietnam's Prime Minister Nguyen Tan Dung approved a proposal to create a national
committee to manage medicine prices in Vietnam. Vietnamese Deputy Prime Minister Vu Van Ninh
previously recommended that the finance ministry should establish caps on medicine prices, while the
health ministry should manage detailed prices of all medicines sold in the country.
In March 2014, Philippines-based Metro Pacific Investments announced its plans to acquire four hospitals
in 2014 to expand its portfolio. The hospital chain is also moving to improve its business model by
introducing new methods of healthcare delivery, such as mall-based clinics and telehealth.
In February 2014, the Singapore Ministry of Health was allocated SGD7.1bn (USD5.6bn) in the 2014
budget; a 22.5% increase from the revised expenditure of SGD5.8bn (USD4.6bn) in 2013. The considerable
increase in the healthcare budget highlights Singapore's commitment to provide better, more affordable
healthcare services to its population, particularly the elderly.
South Asia
In May 2014, Bangladesh-based Square Pharmaceuticals submitted a proposal to the drug office to set up
a commercial blood plasma fractionation plant. The plant will separate blood components along with
plasma factors.
In May 2014, Philips India, the Indian subsidiary of Netherlands-based technology company
Royal Philips, announced that it intends to set up 30 'sleep labs' in Bangladesh in the coming five years to
spread awareness about sleep related disorders in the country.
In May 2014, as part of its expansion strategy India-based hospital management company Fortis is planning
to establish 500-600 new beds a year. The hospital plans to increase the number of beds over the coming
two- to three-years.
In April 2014, India-based Lupin Pharmaceuticals entered a joint venture agreement with Japan-based
Yoshindo. The joint venture, YL Biologics (YLB), will focus on the clinical development and
commericalisation of certain biosimilars in Japan.
In April 2014, Daiichi Sankyo agreed to sell its stake in Ranbaxy Laboratories to
Sun Pharmaceutical Industries. For every share held in Ranbaxy, each shareholder will receive 0.8 shares
in Sun Pharmaceutical.

In April 2014, the Drug Administration of Vietnam found that pharmaceuticals manufactured by several
Indian companies are Not of Standard Quality (NSQ), and banned these firms from supplying products to
Vietnam. According to news source DNA India, at least 45 Indian pharmaceutical firms, such as Medley
Pharmaceuticals, Marck Biosciences, UMedica Laboratories and Marksans Pharma, are now unable to
supply their products to Vietnam.
In March 2014, The Bangladeshi government announced its intention to collaborate with Sri Lanka to
establish a biosimilar pharmaceutical joint venture. The government will support the production of
biosimilar pharmaceuticals, such as insulin, in Sri Lanka, and finalise them to finished product levels with a
guaranteed cold chain, according to Bangladeshi Health Secretary MN Neaz Uddin.
In March 2014, Danish drugmaker Novo Nordisk announced that it is to invest in several training and
education programmes in Pakistan in an effort to improve diabetes awareness.
In a bid to address the issue of drug resistance in India, from March 1 2014, a total of 46 drugs will be
classified in India under a new category called 'Schedule H1'. Medicines listed on Schedule H1 can only be
dispensed by a pharmacist with a prescription given by registered medical practitioners. Drugs that are
listed by Schedule H1 include third and fourth generation antibiotics and anti-tuberculosis medicines.
Developed Asia Pacific
In May 2014, healthcare in Australia is expected to undergo an overhaul following the announcement of a
tough federal budget by the government on May 13 2014. An audit of the Australian economy by the
National Commission of Audit identified healthcare as the country's most serious long-term fiscal
challenge.
From May 2014, Australia has established a new manufacturing facility, called Australian Nuclear
Science and Technology, which is worth AUD168mn (USD157mn). The new unit, which will triple
production of nuclear medicine molybdenum-99 (Mo-99), will enable Australia to become a major global
supplier of radiopharmaceuticals.
In May 2014, South Korean firm Samsung is to invest about USD2bn in biopharmaceuticals, including
biosimilars, as it aims to become a major player in the biotechnology industry. The company plans to sell its
first biosimilar version of Amgen's arthritis therapy Enbrel (etanercept) in 2016 in Europe and a version of
Johnson & Johnson's Remicade (infliximab) treatment for autoimmune diseases in 2017.

In April 2014, New Zealand's Pharmaceutical Management Agency (PHARMAC) announced its plans to
test a contestable fund for high-cost drugs for rare disorders. The agency is seeking commercial proposals
from pharmaceutical companies by end-2014, following which funding could begin in early 2015.
In April 2014, Bristol-Myers Squibb and Samsung BioLogics announced that they will increase the scope
of their existing manufacturing agreement in which Samsung will manufacture commercial drug substances
and products for several BMS biologic medicines at its Incheon, Korea, manufacturing site.
In April 2014, Takeda Pharmaceutical was selected as a recipient of a supplemental subsidy from the
Japanese Government for approximately JPY7.2bn (USD70.7mn). Takeda applied for this subsidy in
February to expand production capacity for pandemic influenza vaccines at its Hikari plant.
In March 2014, Northern Ireland-based Almac Group established regional hubs in Singapore and Japan as
part of its aim to address the growing need to conduct clinical trials in Asia and/or manage global trials from
the region.
In March 2014, in its FY2014 (April 2014 - March 2015) medical fee revision briefing, Japan's Ministry of
Health, Labour and Welfare (MHLW) announced changes to its strategy for generic drug promotion,
through which it seeks to increase generic drug use in the country. In its FY2014 revision, rather than give
more points for a similar volume of generic drugs dispensed, the MHLW proposed to only award points to
pharmacies that dispense a higher volume of generic drugs than previously.
In March 2014, the Australian government announced that, with effect from April 1 2014, the
Pharmaceutical Benefits Pricing Authority (PBPA) will cease to operate in a bid to reduce the time taken to
list medicines on the Pharmaceutical Benefits Scheme (PBS). The removal of the PBPA will allow new
medicines to be listed on the PBS at least four weeks earlier than previously, as well as giving drugmakers
more time to finalise their pricing submissions.

Table: Asia Pacific Pharmaceutical Market (USDBN)
CIndicator 2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Asia-Pacific
pharmaceutical
sales, USDbn 192.8 219.4 259.4 276.6 274.1 288.7 313.5 336.1 361.5 384.7
South East
pharmaceutical
sales, USDbn 14.3 16.6 18.5 19.5 20.4 21.6 23.9 26.4 29.1 31.9
Greater China
pharmaceutical
sales, USDbn 41.7 51.3 64.9 78.6 92.8 106.7 119.8 133.4 147.2 161.2
South Asia
pharmaceutical
sales, USDbn 14.6 17.4 19.6 19.7 19.7 21.9 24.5 26.9 29.5 32.5
Developed Asia
Pacific
pharmaceutical
sales, USDbn 121.679 133.481 155.634 157.991 140.803 135.466 144.236 148.2 154.269 157.538

Middle East & Africa

Q214 Round-Up
BMI View: The current trend of greater investment by pharmaceutical companies in manufacturing
facilities in the Middle East and Africa will benefit the key stakeholders of patients, shareholders and
governments. Local production lowers distribution costs and can result in cheaper medicines for
consumers. It is generally facilitated by state-mandated incentives, which enhances return on investment.
Economies are diversified and boosted by the presence of high-value industrial complexes.
The Middle East and Africa regional pharmaceutical market is expanding rapidly, albeit from a low base.
Combined sales of prescription drugs and over-the-counter (OTC) medicines are forecast to increase from
USD41.2bn in 2013 to USD61.3bn in 2018, representing a five-year compound annual growth (CAGR) of
8.3%. The sub-region of East and Central Africa (+12.8% CAGR) will expand fastest, followed by Southern
Africa (+12.4%), North Africa (+10.8% CAGR), West Africa (+10.2%) and the Middle East (+5.2%).

MEA Pharmaceutical Market (USDbn)
75
50
25
0
2009
2010
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Middle East - North Africa pharmaceutical sales, USDbn

Middle East - Middle East pharmaceutical sales, USDbn
Africa - East and Central Africa pharmaceutical sales, USDbn
Africa - West Africa pharmaceutical sales, USDbn
Africa - Southern Africa pharmaceutical sales, USDbn

Middle East
In April 2014, GlaxoSmithKline was investigating allegations that offered bribes, free samples and travel
benefits to doctors and officials in Jordan and Lebanon to encourage them to use its medicines.
In March 2014, GSK Vaccines signed a manufacturing agreement with local companies Arabio and Glaxo
Saudi Arabia Limited (GSAL) to develop vaccine manufacturing capability in Saudi Arabia.
In March 2014, Saudi Arabia's Ministry of Health halted free government treatment for nationals working in
the private sector without health insurance.
In March 2014, residents of the Central Region of Sharjah, the UAE, complained that certain pharmacists
were selling drugs at higher prices than others.
In February 2014, all healthcare providers in Qatar were asked to implement the mandatory unified coding
system, ICD-10-AM, by the country's Supreme Council of Health (SCH) to make the national health
insurance scheme more accessible to larger segments of the population.
In February 2014, the government of Oman clarified its intention to reduce reliance on imported medicines
and develop the local industry.
In February 2014, a member of parliament for Iraq's Citizen Bloc demanded the Council of Ministers draft a
medical insurance law and send it to parliament for approval.
In January 2014, Bahrain's National Health Regulatory Authority (NHRA) released a new medicines price
list confirming a series of medicine price reductions.
In January 2014, the price of a vital cancer drug in Lebanon, Nexavar (sorafenib), was found to be
approximately twice that of what it is abroad, according to a source close to the Health Ministry.

North Africa
In January 2014, the production of approximately 700 medicines was suspended in the country according to
Awad Gabr, chairman of the Export Council of Medical Industries. Gabr added that around 30% of drug
prices in Egypt must change so that local drugmakers continue to produce them.
In April 2014, Saidal Group and Servier Laboratories signed an agreement allowing Saidal to produce
Servier Laboratories' originator drugs under licence, while Servier will transfer technology and knowledge
of the production process to Saidal.
In March 2014, it emerged that Hikma Pharmaceutical intended to set up a new drug manufacturing plant
in Sidi Abdallah, Algiers, according to a national and international invitation tender reported by the Algeria
Press Service.
East And Central Africa
In January 2014, the Integrated Regional Information Networks reported that Cameroon is cracking down
on more than a thousand illegal clinics and medical training institutions.
In February 2014, Zanzibar's President Ali Mohammed Shein urged Indian pharmaceutical companies to
establish plants and warehouses in Tanzania in order to boost the local production of generic medicines.
In March 2014, the GAVI Alliance said that it would support national vaccination programmes against
cervical cancer, which will be rolled out in 1.5mn girls between the ages of 10 and 12 in 2015. The
countries involved are Uganda, Rwanda and Uzbekistan.
In April 2014, Kenya's largest telecoms operator Safaricom partnered with the insurance companies
Britam and Changamka to launch a health insurance product in the country, specifically targeting the
micro-insurance sector.
West Africa
In February 2014, Ghana was set to launch a Centre for Bio-equivalent and Bio-pharmaceutical Research
(CBBR) in a bid to support local manufacturers of pharmaceuticals, importers and wholesalers to improve
the quality of their products.

In April 2014, Nigeria-based Neimeth International Pharmaceuticals started construction of its new
Pharma Complex in Anambra State.
Southern Africa
The government of Mozambique had aimed to ensure that all health centres had cervical and breast cancer
screening and treatment services in Manica, Mozambique, by late Q114.
In its 2014 budget, Zambia's government stated that it will continue to develop regional hubs to decentralise
the storage and distribution of medical drugs and supplies to ensure they reach more people.
In April 2014, Namibia was reported by the Ministry of Health and Social Services as having reached polio-
free status, after a nationwide outbreak was eradicated.
In March 2014, the International Congress of Angolan Physicians has recommended the expansion and re-
classification of Angola's healthcare network.
In February 2014, the Department of Health stated it was considering changing the mechanism for
determining price increases for private sector medicine sales i.e. the annual single exit price adjustment, to
help support local drugmakers hit by the recent depreciation of the rand, which makes imported ingredients
more expensive.
Table: Middle East And Africa Pharmaceutical Market (USDbn)

Africa East and Central Africa pharmaceutical sales, USDbn 2.2 2.3 2.6 3.0 3.4 3.7 4.2
Africa West Africa pharmaceutical sales, USDbn 3.8 3.7 4.1 4.5 4.9 5.4 6.0
Africa Southern Africa pharmaceutical sales, USDbn 5.5 5.4 5.3 6.4 7.7 8.7 9.7
Middle East Middle East pharmaceutical sales, USDbn 19.4 21.7 20.2 21.9 23.9 25.8 27.9
Middle East North Africa pharmaceutical sales, USDbn 7.6 8.1 8.9 9.8 10.9 12.3 13.5
BMI

2014 - Pharmaceuticals and Healthcare Q214 Round Up (BMI)

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IMPORTANT NOTICE:

PHARMACEUTICALS & HEALTHCARE Q214

Published by: Business Monitor International

Copy deadline: June 2014

Business Monitor International © 2014 Business Monitor International

BMI View .............................................................................................................................. 7

Western Europe ................................................................................................................... 9

Central & Eastern Europe ................................................................................................. 14

Asia Pacific ........................................................................................................................ 22

Middle East & Africa .......................................................................................................... 30

© Business Monitor International Page 5

Set For Rebound

f = BMI forecast. Source: BMI

© Business Monitor International Page 7

Table: Global Pharmaceutical Market (USDbn)

Country Indicator 2012 2013 2014f 2015f 2016f 2017f 2018f

f = BMI. Source: BMI

© Business Monitor International Page 8

© Business Monitor International Page 9

A Declining Pharmaceutical Market

Key Developments In Q214

The Core Bloc Of Western Europe

© Business Monitor International Page 10

In February 2014, Lupin acquired the Netherlands-based firm, Nanomi.

© Business Monitor International Page 11

© Business Monitor International Page 12

Table: Western Europe Pharmaceutical Market (USDbn)

Country Indicator 2012 2013 2014f 2015f 2016f 2017f 2018f

© Business Monitor International Page 13

Central & Eastern Europe

CIS States To Deliver Most Growth In Emerging Europe

© Business Monitor International Page 14

Key Developments In Q214

South Eastern Europe

© Business Monitor International Page 15

Poland-based biotechnological company Bioton has collaborated with US-based pharmaceutical

© Business Monitor International Page 16

Table: Emerging Europe Pharmaceutical Sales (USDbn)

Country Indicator 2012 2013 2014f 2015f 2016f 2017f 2018f

© Business Monitor International Page 17

© Business Monitor International Page 18

Strong Growth Forecast

f = BMI forecast. Source: BMI

Key Developments In Q214

Pacific Alliance Member States

© Business Monitor International Page 19

Mercosur Member States

© Business Monitor International Page 20

Table: LATIN AMERICAN PHARMACEUTICAL MARKET (USDBN)

Country Indicator 2012 2013 2014f 2015f 2016f 2017f 2018f

© Business Monitor International Page 21

© Business Monitor International Page 22

Strong Growth Forecast

Key Developments In Q214

© Business Monitor International Page 23

© Business Monitor International Page 24

South East Asia

© Business Monitor International Page 25

© Business Monitor International Page 26

Developed Asia Pacific

© Business Monitor International Page 27

© Business Monitor International Page 28

Table: Asia Pacific Pharmaceutical Market (USDBN)