The Pharmaceutical Market: Germany - new market report published

The Pharmaceutical Market: Germany ; Germany´s economy depends heavily on exports and was therefore hit hard by the global downturn. However, according to the Economist Intelligence Unit, the economy showed early signs of recovery in 2009 and GDP is expected to strengthen over the next five years. Working on its policies, the new coalition has stated that its main goal

is to deal with the consequences of the global economic crisis. Tax cuts have been planned in order to stimulate growth, but critics have warned that the country could build a huge debt if the government does not reduce spending concurrently. The government´s attempt to achieve a balanced budget by 2016 will affect the pharmaceutical industry in the form of price freezes.

The German pharmaceutical market is twice the size of Italy; in per capita terms, it is similar to Austria. Growth in recent years has tended to be uneven, as government reforms take effect on pricing and/or reimbursement. For the market as a whole, the projected CAGR for 2010-2015 in US dollar terms is low, and for prescription drugs it is even lower. Growth will be fastest in the specialist hospital market, which naturally uses the newest and most expensive products. The OTC market will continue to fall gradually due to increasing price competition. While overall expenditure is still growing, GKV expenditure, which accounts for around 80% of the market, is characterised by price reductions. These are due to tighter reimbursement rules, greater use of generics and downward pressure on generic prices due to the rebate system.

Reimbursement changes and greater use of substitution since 2004 have placed a lot of pressure on older branded drugs, and prescribers and patients have been given financial incentives to switch to generics. However, reforms have not been especially ´pro-generic´, so whilst generics will continue to be increasingly widely prescribed, their value share of the overall market will alter less rapidly. Generic drugs account for over a third of the prescription market by value. In volume terms, the generic market has continued to grow each year. In March 2010, Germany´s largest generic manufacturer, ratiopharm, was acquired by the Israeli manufacturer, Teva Pharmaceutical Industries. The acquisition will position Teva as the leading generic pharmaceutical company in Europe and the second largest generics player in the German market.