"United Kingdom Pharmaceuticals & Healthcare Report Q2 2011" now available at Fast Market Research

May 2, 2011 - PRLog -- BMI View: We expect the UK to introduce regulatory mechanisms to reduce sales recorded by multinational drugmakers. Although the country possesses the two main characteristics associated with introducing medicine price cuts - significant state involvement in pharmaceutical purchasing and a large fiscal shortfall - it is unlikely to introduce explicit controls. This is because the government is acutely aware of the importance of the pharmaceutical industry to the UK economy. Any short-term monetary gain from reduced spending on medicines would be negated by large drugmakers - such as GlaxoSmithKline or AstraZeneca - shifting fixed capital investment, principally research and development (R&D) facilities, elsewhere.

Headline Expenditure Projections

* Pharmaceuticals: GBP19.74bn (US$29.70bn) in 2010 to GBP19.88bn (US$33.40bn) in 2011; +0.7% growth in local currency terms and +14.5% in US dollar terms. Our forecast has been revised up moderately from Q111 due to analyst intervention.
 * Healthcare: GBP145.46bn (US$225.46bn) in 2010 to GBP150.51bn (US$257.38bn) in 2011; 3.5% growth in local currency terms and 14.2% in US dollar terms. Our forecast has been revised up moderately from Q111 due to macroeconomic factors.
 * Medical devices: GBP6.35bn (US$9.58bn) in 2010 to GBP6.56bn (US$11.21bn) in 2011; 3.2% growth in local currency terms and 17.0% in US dollar terms. Our forecast has been revised down moderately due to analyst intervention.


Business Environment Rating: In BMI's Business Environment Ratings for Q211, the UK is placed third out of the 10 Western European markets surveyed. The ratings criteria serve to reinforce our estimation of the country's potential, due to a stronger emphasis on the regulatory environment, which we see as a major factor affecting the business environment for drugmakers. However, while it is one of the most developed pharmaceutical markets in the world, emerging and pressing economic and political issues, as well as its strict pricing and reimbursement regimes, could harm the country's pharmaceutical market. Still, given the existing high per-capita drug expenditure levels, medicines will continue to bring in substantial income for companies operating in the country.

Key Trends & Developments

* In February 2011, US pharmaceutical company Pfizer, the largest foreign investor in the sector, announced its decision to close its R&D centre based in Sandwich, Kent, which employs 2,400 people. This is a sign of weakening drug company sentiment towards the country as a location for operations. The company plans to exit the site over the next 18-24 months as part of its global programme.
 * Delivering another blow to the local pharmaceutical industry, in March 2011, Novartis announced its decision to reduce its drug development and manufacturing operations in the UK. The Swiss company said it had begun consultations likely to lead to the closure of its factory in Horsham, West Sussex, and a reduction in its development unit. The site employs 950 full-time equivalent staff, set to fall to 400 within two years.


BMI Economic View: Despite a mixed start to 2011, we believe that the UK economy is on course to post stronger growth this year, with scope for a significant rebound in industrial production. Having endured the paralysis of the transport network due a number of extreme weather events in 2010, as well as the eurozone debt crisis, we warn of further headwinds that will challenge the resilience of the recovery this year.

BMI Political View: The UK faces its most uncertain period in at least a generation, as the Conservative- Liberal coalition presses ahead with fiscal cutbacks and constitutional reform - both of which will test their ability to work with one another. We see a variety of scenarios ahead, ranging from rapidly shifting governments to stable coalitions, and the possibility of electoral reform. Regardless of which party holds power, the government will have to enact spending cuts it if wishes to avoid a fiscal crisis this decade.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.