Summary
The French drug market was worth US$31.3bn in 2006 and BMI forecasts that it will reach a value of US$37.3bn in 2011. However, as examined in our recently published France Pharmaceuticals & Healthcare Report Q307, growth may be affected by stringent cost cuts as the government reacts to a serious budget overspend, with pharmaceutical prices, perhaps unfairly, being a major scapegoat. The Government has forecast that the social security budget deficit will be EUR12bn (US$16.3bn) in 2007. This is around 50% higher than the provisional forecast of EUR8bn (US$10.88bn), which in itself was considered 'unsustainable' by national health insurer Caisse Nationale d'Assurance Maladie (CNAM). The authorities had aimed to cut the healthcare budget deficit to EUR3.9bn (US$5bn) in 2007 from a figure of EUR6bn (US$7.7bn) in 2006 by promoting cheaper generic drugs, encouraging even fewer prescriptions, cutting reimbursement for certain products and combating fraud. CNAM, anticipating the overspend, even proposed EUR1.4bn (US$1.9bn) of additional cuts for this year, however, these appear to have had little short-term impact.
As a result of the dramatic overspend France is to launch a new round of price cuts that will specifically focus on high cost pharmaceuticals, causing some downside to the prescription drugs sector. BMI now expects this sector to reach a value of US$34.2bn by 2011, while increased generic substitution is also on the cards. However, BMI questions whether pharmaceuticals are too blame for the budget overshoot. We forecast that in 2007, drug expenditure will only increase 3.5% over 2006 levels. This is far smaller than the 7.4% increase witnessed between 2003/2004 and suggests that cost containment measures are having the intended impact. Meanwhile, we envisage a CAGR of just 3.48% leading up to 2011 for the drug sector in total.
Elsewhere, France is in 2nd place in BMI's Business Environment Ranking for the Western European Region. The country's composite score fell by one point after we reduced the score for Regulatory Barriers due to pressure on top-end prescription drugs. However, the country still has much going for it such as traditionally high consumption levels and strong long-term political and economic indicators.
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