The Outlook for Pharmaceuticals in Western Europe

Date: August 31, 2012
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Publisher: Espicom Business Intelligence
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The Outlook for Pharmaceuticals in Western Europe
Market growth in the mature markets of Western Europe is assured over the coming years by the health needs of ageing populations, and will be driven by investment in innovative medicines, particularly in the hospital market. Growth, however, will be tempered somewhat by the effects of the global economic recession in the short term. The leading markets are projected to average a CAGR of 1.8% in US dollar terms up to 2017, to represent a combined pharmaceutical market value of over US$225 billion at retail prices.

What factors are affecting pharmaceutical market growth?

Demand for pharmaceutical products is set to increase over the coming years, in order to fulfil the health needs of the ageing population. Meanwhile, the trend towards generics is set to continue, with several major patent expiries coming up, and with more governments introducing or expanding generic substitution as a cost-containment measure.

Recent austerity measures, introduced to deal with the impact of the economic recession, have included drug price cuts or discounts in markets such as France, Germany, Greece, Italy and Spain. These price cuts will have an impact across Western Europe, as many other countries use a reference pricing system. These price cuts could limit market growth and there are also fears that lower prices could lead to higher levels of parallel exports. Austerity measures are set to continue with the onset of the eurozone crisis.

The hospital market is expected to be the main driver of growth in Western European markets, with increasing investment in expensive, innovative products to treat chronic diseases, such as cancer. The investment from hospitals into new drugs will offset the falling prices of mature drugs that are soon to go off patent. There are opportunities to further explore biotechnology advances and reformulations, which will drive the market forward in the long term.


The Outlook for Pharmaceutical Markets in Western Europe is a unique collection of management reports from Espicom Business Intelligence. Each report provides individual and highly-detailed analysis of each market, looking at key regulatory, political, economic and corporate developments in the wider context of market structure, service and access. The reports are available individually, or as a discounted collection. There are over 60 markets covered in the worldwide series.



France has one of the highest pharmaceutical per capita consumption levels in the world. The French pharmaceutical market is also one of the world’s largest. Overall pharmaceutical market growth has been comparatively low in recent years and growth is expected to remain low between 2012 and 2017, with government cost-containment programmes exerting downward pressure on reimbursable products. The hospital market has been much more dynamic with growth rates twice this figure in recent years, although growth rates are now falling due to greater regulatory controls in this sector and fewer innovative drugs coming to market. The underdeveloped generic market is undergoing rapid expansion, boosted by government incentives and the loss of patent protection for several high-volume products. The stagnating OTC market has also started to expand, as a result of government moves to end reimbursement for a wide range of products assigned a low medical value rating. In June 2011, the Minister of Health Xavier Bertrand announced a radical reform of the French regulatory procedure, following the controversy surrounding Servier’s drug Mediator.


The German pharmaceutical market is twice the size of Italy; in per capita terms, it is similar to France. OTCs represent more than 10% of the market and generics account for over a third. The market is predicted to increase at a low CAGR between 2012 and 2017. Growth in recent years has tended to be uneven, as government reforms take effect on pricing and/or reimbursement. A new law passed in November 2010 designed to bring down the average price of drugs is expected to dampen growth slightly over the next few years. The law reduces the power that pharmaceutical companies have in deciding what to charge for new prescription drugs. New, innovative drugs have been targeted as they were entirely responsible for the increase in drug spending in 2009. The German biologic market is expanding; biopharmaceuticals are expected to represent a fifth of the overall pharmaceutical market by 2020, according to Sandoz.


The size of the population and the provision of universal healthcare under the national health service (SSN) ensures that the Italian pharmaceutical market remains among the top five in Europe, despite the country’s economic crisis. The Italian population is ageing and the percentage over 65 years has already exceeded 20% and is set to rise still further with a corresponding increase in chronic and long-term medical conditions. This will inevitably increase demand for pharmaceutical products, placing additional financial strain on the working population to support those of pensionable age. However, cost-containment measures are restricting growth, particularly in the retail pharmacy market. A number of risk-sharing agreements have been initiated in the Italian hospital market in order to accelerate reimbursement, particularly for newly approved oncology drugs. These schemes are directly related to the effectiveness of the drug.


Between 2010 and 2012, the government has approved a number of urgent decrees that are expected to result in considerable savings for SNS pharmaceutical expenditure in the coming years. The pharmacy sector is expected to be more constricted than the hospital sector, but cost-containment policies will affect both sectors. As a result, FARMAINDUSTRIA has reported that a number of pharmaceutical producers will be incurring losses. Espicom projects a negative CAGR in both euro and US$ terms between 2012 and 2017. Nevertheless, the Spanish pharmaceutical market will remain the fifth largest in Western Europe. Pharmaceutical expenditure per capita is projected to rank the second lowest in Western Europe.


The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Deep public spending cuts are underway, with health expenditure experiencing very limited growth over the next few years. The Cancer Drugs Fund came into force in April 2011, providing £600.0 million (US$938.9 million) over three years to increase patient access to new cancer drugs. There are plans to introduce value-based pricing (VBP) in place of the PPRS when it expires in 2013, in order to promote innovation and ensure better access for patients to effective drugs. The government is planning to introduce a Patent Box, which will provide tax incentives to companies registering their intellectual property in the UK. Once the Patent Box has been successfully implemented, GlaxoSmithKline has confirmed that it will be making new investments of more than £500.0 million (US$762.5 million) in the UK.

Use these original and insightful reports to...
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  • Track the latest developments with the news service that is included for every country.
  • Understand the critical issues and drivers which are shaping the market.
  • Evaluate the environment for branded and generic operators and stay in touch with the fast growing biologic sector.
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  • Benchmark key market performance with Espicom’s standardised data.

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