How the Eurozone crisis saved Spain’s pharma industry

A new report on Spain’s pharmaceuticals industry claims that beyond the woes of the Eurozone crisis, the country’s pharma community has remained pragmatic – and in fact, is in stronger, more sustainable shape than it was pre-crisis.

The 'Healthcare and Life Sciences Review', which is available on PharmaBoardroom.com for free download, finds that the recession in the Eurozone has helped to reshape the Spanish pharma industry. The authors and contributors believe this was a necessary shift, stating that for years, Spain's pharmaceutical industry had been growing at a rate that would eventually become unsustainable.

“Spain was living in a bubble-like dream in many ways, above what the country and its economic capabilities could deliver,” said Juan López-Belmonte, CEO of Laboratorios Rovi, a Spanish laboratory that has achieved significant growth during the economic downturn.

“Despite the crisis, Spain is still the fifth biggest European market, and the general conditions to invest are favourable to the pharmaceutical industry,” said Humberto Arnés, Director General of Farmaindustria, the country's association for research-based pharmaceutical companies. This, the report finds, is evidenced by recent investments in Spanish clinical trials, research, biotech and manufacturing from the likes of Amgen, Celgene, GSK, Leo Pharma, Lilly, Merck, MSD, Novo Nordisk and Roche.

The breaking point was reached in May 2010, when public pharmaceutical expenditure reached an all-time high. At that point, "Spain had a similar market size to the UK and Italy with a significantly smaller population," said Humberto Arnés of Farmaindustria. "It would have been impossible to maintain that situation, and an adjustment of our market was absolutely necessary. But after this adjustment that has already been made, further reductions to the pharmaceutical industry are not possible, without causing irreversible harm to patients and companies."

The Ministry of Health, under the administration of Prime Minister Mariano Rajoy, introduced a series of austerity measures in 2011 designed to curb costs following a series of similar measures made in 2006 and 2007. Most notably, these measures included a 7.5 percent price reduction for all patented medicines financed by Spain's National Health System (SNS), mandatory prescription by active ingredient, the de-listing of over 400 medications for minor conditions, and the introduction of a ten percent copayment for pensioners and increases of up to 60 percent for employees. As a result of these measures, pharmaceutical expenditure contracted 19 percent for the total market and a staggering 38 percent for the public market. As a country whose pharmaceutical expenditure is 80 percent public, the impact this had on the industry, as a significant contributor to Spanish GDP, was immense.

“The old Spanish healthcare system has disappeared as it had proven to be unviable and unsustainable,” said Luis Cruz, general manager of Spain and Portugal at CSL Behring. “Now we are in the process of switching to a new system that has yet to be formalised. We are trying to keep up with everything, but the process of defining this new system is not an easy one.”

The report investigates the environment in Spain today, speaking to the country's pharma giants to uncover what the situation is on the ground. “This country enjoyed good market growth before the crisis,” said Eduardo Sanchiz, CEO of Spain's flagship pharmaceutical company Almirall, but he believes it is still behind other markets when it comes to creating an environment for national champions. “There needs to be some strategic support from the state towards moving in that direction. I think we need to have a much more stable and predictable healthcare environment before such a push can occur.”