Summary
Romania has benefited from the recent membership of the EU in terms of both a rise of foreign direct investment (FDI) ahead of EU accession as well as its increased attractiveness in the longer term. Given the improved operating environment for foreign firms, the share of locally made generics is likely to decrease to around 35% by the end of the forecast period, from the current 38%. However, their quality will be improved by compliance with EU legislation and foreign direction, which will allow for a rise in exports.
Overall, the Romanian pharmaceutical market is expected to record strong annual growth over the coming five years. By the end of forecast period, pharmaceutical expenditure at consumer prices is predicted to top US$2.96bn, up from an estimated US$2bn in 2006. Branded medicines will reap the benefits of an improvement in regulatory and intellectual property (IP) environments. In the meantime, the need to deal with accumulated hospital debts will prompt the government to shift more costs onto the consumer, which will in the longer term result in the development of an over-the-counter (OTC) market from its currently low base.
Romania has retained its top spot in BMI's adjusted Business Environment Rankings for Central & Eastern Europe (CEE), although this is shared with the Czech Republic, Bulgaria and Estonia, with Russia having moved down to the middle of the table. While disadvantaged by certain deficiencies of its intellectual property (IP) protection regime, Romania's wider operating environment offers considerable opportunities for foreign players. International presence is increasingly evident, with domestic sector threat consequently decreasing. In addition, the recent EU membership has pushed Romanian to improve its political and economic risk, in the face of strong competition from more developed local markets. Imported drugs have increased market share in from 45% in the mid-1990s to between 70% and 75% at present in value terms, despite accounting for only a fifth of the sales by volume. However, a marked increase in foreign ownership will somewhat shift the balance back into the hands of local production, some of which is targeting exports. To this end, local subsidiaries of Icelandic Actavis and Czech Zentiva are planning substantial sales and investment increase over the coming years. In the meantime, the pending privatisation of Antibiotice continues to receive much attention from a number of prominent European and overseas companies.
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