Bulgaria Pharmaceuticals & Healthcare

Summary

Bulgaria's pharmaceutical market stagnated in 2005, with growth of only 1.1% in the last 12 months. Nevertheless, BMI forecasts high single digit growth return in 2006, with annual market growth averaging between 7- 9% through to the end of the forecast period, when the market is expected to reach US$1.08bn. Generics presently represent around 30% of the market by value, but are likely to gain market shares as the government struggles to contain healthcare debt through cost-containment. The over-the-counter (OTC) market is underdeveloped, accounting for an estimated 15% share of the total in 2005 and mirroring the historical reliance on public healthcare system for medicines. However, as more pharmaceutical costs are shifted from the public to the private sector, OTCs are forecast to account for 25% of the total market by value in 2010.

Pharmaceutical growth is likely to be stimulated by accession to the EU in 2007, but it may be thwarted by undesirable transition periods and other conditions. The country's stance on intellectual property may also hamper market expansion. Indeed, the industry association PhRMA requested that Bulgaria be placed on the 'Special 301' Watch List for 2006 because multinational companies operating in the country face market access barriers, including a lack of transparency in government pricing and reimbursement procedures. The Bulgarian reimbursement system constitutes a major barrier for R&D-based pharmaceutical firms, and prevents patient access to modern therapeutics: in Bulgaria delays for reimbursement can be between 275 and more than 800 days - one of the longest timeframes in Europe.

Compared to its Central & Eastern European neighbours, Bulgaria ranks joint 11th (with Slovakia) out of 14 countries on BMI's Business Environment Rankings, down two places on the previous quarter's ranking. The rationale behind this placement is the country's relatively small market and the fact that the government provides comparatively low levels of reimbursement. Perhaps the most worrying aspect of the Bulgarian healthcare industry is the sizeable medicine debt accumulated by hospitals. During 2005, it became apparent that hospitals had lost control of pharmaceutical spending, with debts to medicine wholesalers amounting to BGN220mn (US$135.4mn). Fiscal austerities were implemented and, by the time of this report's publication, debt growth had been arrested and measures to reduce the burden had been implemented.

Despite these problems, Bulgaria remains attractive to outsiders. Foreign drugmakers continue to make gains on their Bulgarian peers, both in terms of sales volumes and value. The number of drug packages sold in Bulgaria by foreign firms increased by 12mn units to 65mn in 2005, while the amount of packs sold by local companies fell from 99mn to 92mn. According to BMI's forecasts, foreign firms will out-sell domestic manufacturers in 2007.

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