This report profiles and analyzes the pharmaceutical sector in Romania, with trends through November 2013 and future outlook. The report also reviews corporate news for firms including GlaxoSmithKline, Gedeon Richter, Ropharma, and the UK’s Alliance Boots, among others.

The pharma market continued to be affected by the drawback of public support in Q3 2013, when quarterly medicine sales declined y/y in RON terms for the first time in the past seven years. Pharmaceutical sales dropped by 3.3% y/y in local currency (by 1.6% y/y in EUR terms) over the quarter, driven by the 8.2% y/y drop in hospital sales and the 3.6% y/y decline of subscription-based medicines in the retail segment. Compared to the sales performance in the past five quarters, in Q3 2013 the pharma market recorded annual decline not only in value terms, but also in volume and days of treatment.

The prospects for the future performance of the pharma market remain cautious under the current market circumstances. Forecasts see the full-year advance at around 0.7% y/y in RON terms in 2013, yet the 2.7% y/y growth projections for 2014 might be adjusted at the year-end, as the update of the reimbursed drug list is still not confirmed. In addition to this, we expect budget constraints to further negatively impact sales through hospitals. On the upside, we note that the pharmaceutical market is currently facing deterrents related to public spending rather than demand-side drawbacks. Demand for treatment is expected to continue increasing in 2013–16, according to our QuERi database forecasts.

Key Points:

• In corporate news, UK-based medicine producer GlaxoSmithKline (GSK) received several offers from international and domestic companies for the Europharm plant in Brasov. The sales of Hungarian-based drug manufacturer Gedeon Richter on the Romanian market rose by 11.1% y/y to EUR 107.8mn in Jan-Sep 2013, backed by the distribution and retail arms.

• In retail and distribution, pharmaceutical group Ropharma plans to expand its pharmacy chain by 24 units to a total of 150 pharmacies by end-2014. And British pharmaceutical group Alliance Boots increased its stake in drug distributor Farmexpert to 100%.

• OTC sales were the only segment to record positive annual performance in Q3 2013. The share of OTC drugs in total medicine sales increased by 0.8pps compared to Q3 2012, but their stake in the total remains low, namely 14.2%. The advance of the OTC segment is not surprising, as pharmaceutical companies started to pay more attention to the segment, which is not subject to price regulations and enjoys higher margins.

• The ranking of the top 10 pharma companies remained roughly unchanged in the 12 months ending Sep 2013 compared to the previous year. Sanofi, La Roche and Novartis maintained the leading positions, though all three of them recorded revenue decline and decreasing market share over the period.

• The cumulated market share of the top 10 players reached 50.9% in the 12 months ending Sep 2013, down by 3.9pps compared to the same period in 2012.