We continue to view Bulgaria as one of the less attractive pharmaceutical markets in the Emerging Europe region. For the Q410 update to our Business Environment Ratings (BERs), Bulgaria is ranked 15th of the 20 markets surveyed in the region, while – globally – it ranks 53rd out of the total of 77 markets assessed in our ever-expanding pharmaceutical universe. While the country’s regulatory environment is largely considered adequate, especially given the increased controls over prescribing and dispensing practices, the value of the pharmaceutical market will be limited by poor market dynamics, healthcare debts and prolonged economic difficulties.
Through to 2014, we expect the market to post a compound annual growth rate (CAGR) of 6.91% in local currency terms (but just of 2.27% in US dollars), reaching BGN2.44bn (US$1.42bn). Inflationary trends – we expect low and steady inflation to persist over the medium term – will contribute to this pattern, as will the fact that volume sales have been falling. Over the 2009-2019 forecast period, growth rates will average 5.47% and 3.16%, respectively. However, foreign direct investment (FDI) will remain conditional on demonstrable progress in tackling corruption in the country. To this end, the Bulgarian Competition Protection Commission (CPC) imposed a BGN30,000 (US$19,299) fine on the National Health Insurance Fund (NZOK) for abusing its monopoly position in July 2010, while a recent investigation into former Bulgarian health minister Bozhidar Nachev has revealed further offences made by the fund’s high-profile officers.
The share of generics in volume terms has been volatile as older, cheaper medicines have been withdrawn from the market and newer branded generics have been introduced. Nevertheless, the generics market is still calculated to be five times larger than the patented sector by volume. Value-wise, penetration is low compared with many regional markets, despite the country’s reference pricing system. In fact, in June 2010, Mila Vlaskovska, Bulgaria's national pharmacology consultant, stated that the value of generic medicines is 30-60% lower than the originator products. By 2014, and despite low prices, we expect the patented market to account for 35% of the total market by value, due to patent expirations and general climate of cost-containment.
Nevertheless, the constraints of the domestic market continue to push domestic players to expand abroad. In fact, in June 2010, novinite.com reported that major pharmaceutical companies in Bulgaria registered a 14% year-on-year (y-o-y) increase in combined turnover to BGN154.2mn (US$96.92mn) in Q110. The six Bulgarian companies – Sopharma, Medica, Sevtopolis, Momina Krepost, Unifarm and Septona – have attributed the strong performance to exports to Balkan countries, Russia and Ukraine. In Bulgaria, however, Sopharma and eight other companies are being investigated by the country’s anti-trust watchdog, over allegations of cartel formation.
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