The pharmaceutical market in Central and Eastern Europe is dominated by generic drugs. This subdivision was worth €17.2bn in 2008 and is expected to develop by around 14% per annum between 2009 and 2011.

The growth rate of the innovative drug market, which was worth €12.4bn in 2008, will be slower, according to the latest report from PMR, a research and consulting company, entitled “Generic and innovative drugs market in Central and Eastern Europe 2009. Comparative analysis, reimbursement policies and development forecasts for 2009-2011″.

Generics to account for 60% of the market in 2009

According to PMR estimates, the generic drug market (including non-branded generics, traditional products and other products which have never enjoyed patent protection) in Central and Eastern Europe  was worth €17.2bn in 2008, in contrast to a market value figure of €12.4bn for innovative drugs. Generic drugs therefore accounted for around 58% of the pharmaceutical market in the region in terms of value (taking into account both pharmacy and hospital sales).

The CAGR for generics will reach as much as 14% between 2009 and 2011, whereas that of innovative drugs will be much lower. “As a result, the share of generic drugs will constantly increase and in 2009 generics will account for around 60% of the pharmaceutical market in Central and Eastern Europe”, according to Agnieszka Stawarska, Pharmaceutical Market Analyst at PMR and a co-author of the report.

Although the innovative drug market in Central and Eastern Europe will develop at a slower rate than that of generic drugs between 2009 and 2011, the growth rate of original medicines for the whole region will be positive. It has, for the time being, been compromised by the cost-containment policies of the CEE countries, which have been stepped up during the global financial crisis. However, in the medium term PMR expects an improvement in health awareness and the modernisation of healthcare systems, including the development of private health insurance and the establishment of health insurance and drug reimbursement systems, similar to those in European countries, in Russia and Ukraine, to be drivers of the innovative drug market in the CEE countries. An additional driver will be the aging of the population in the region.

Local companies are generic-oriented…

There are few innovative pharmaceutical companies of local origin in Central and Eastern Europe. Most companies based in the region are generic drug manufacturers. “The largest players of this kind include Gedeon Richer, Krka, Egis and Zentiva. These companies have a presence in most CEE countries and they are well-established there” Monika Stefanczyk, Head Pharmaceutical Market Analyst at PMR and a co-author of the report, explains. For such companies, the region of Central and Eastern Europe is usually the main area of their activities.

The second group of companies consists of global generic players. Their presence differs from one CEE country to the next. For example, Dr. Reddy’s, an Indian generic manufacturer, concentrates on Russia, which is one of the company’s key markets worldwide. Actavis, an Iceland-based manufacturer, is at its strongest in Bulgaria and Russia. Ranbaxy’s key markets in the region are Romania and the CIS countries (Russia and Ukraine in particular). Stada has a strong presence in Russia, particularly after the acquisition of two Russian companies (Nizhpharm and Makiz-Pharma); and at the beginning of 2009 the company entered Poland and Bulgaria by establishing subsidiaries there.

A number of consolidation processes recently took place in the generic arena, which were of great importance for Central and Eastern Europe. For example, Teva gained a strong presence in the region through the acquisition of Barr in July 2008, which included one of the largest local generic drug producers ? the Croatian company Pliva. In June 2008, Mylan, a US generic manufacturer, acquired the CEE generics businesses of Merck KGaA, the prominent German drug manufacturer. The deal includes Merck’s operations in Poland, Hungary, Slovakia, Slovenia and the Czech Republic. In March 2009 Zentiva, one of the leading generic players in the region, was bought by Sanofi-Aventis. In May 2009 Novartis acquired the generic cancer drug production division of the Austria-based EBEWE Pharma.

…whereas innovation is the domain of global concerns

The innovative drug market in the region is dominated by multinational pharmaceutical concerns. Such companies have representative offices in most of the Central and Eastern European countries, but, as they are active all over the world, the region is not, in most cases, their main market. However, innovative drug producers often choose Central and Eastern Europe as a place in which to locate clinical trials, because of the low costs, high population and limited access to innovative therapies in such countries.
Today innovative companies face a crisis associated with the loss of patent rights pertaining to their most important products, which is expected to affect their sales performance in Central and Eastern Europe also, as many players of domestic origin may launch the generic equivalents of their drugs on the market.

After the dramatic slump in early 2009, the mood prevailing within the construction industry in Poland is starting to gradually turn more upbeat.

Construction companies are more optimistic in their assessments of the market situation and the condition of their enterprises than they were six months ago. Driven by the rising implementation of civil engineering projects, construction and assembly output will see a rise of not less than 5% in 2009, expanding to approx. 8% in 2010.

Rising optimism in the construction sector
A survey conducted by research and consulting company PMR for the needs of the “Construction sector in Poland, H2 2009 – Comparative regional analysis and development forecasts for 2009-2012″ report reveals certain improvement in the mood among the larges construction companies operating in Poland. However, construction firms are still very far from optimism levels seen in 2006-2008 regarding market situation.
Over one-fifth of the largest construction companies assess the situation in the Polish construction sector as positive, whereas six months ago, a mere 9% of respondents shared this view. Likewise, companies’ predictions about the development of the construction market situation in the next 12 months demonstrate stronger optimism than in March 2009 – 42% of companies surveyed predict that the market situation will improve, while a paltry 14% expect that it will continue to deteriorate.

Polish construction companies’ assessment of portfolios of orders has improved to some extent as well – 39% of respondents provided positive assessment of the current number of orders (compared with 31% six months earlier); 30% of companies surveyed held the opposite view. Additionally, companies are more optimistic about the future size of their order portfolios – 49% of respondents expect the number of orders to grow in the next 12 months, while 20% of major builders anticipate falls in the number of orders.

Good financial standing of construction companies
The financial situation of the largest construction companies continues to be rated as good – 71% of companies surveyed believe this to be the case (compared to 60% six months ago). 32% of the major building companies in Poland anticipate that at the end of 2009, the financial standing of their enterprises will be better-off compared to the situation in 2008; exactly the same proportion of respondents take the opposite view. ”

As a result of deflation in the construction industry, many of the contracts concluded in 2008 and executed in 2009 will carry higher-than-expected margins, which will boost financial results of the majority of large construction companies relative to the preceding year. However, soon or later, construction prices will start to rise, hence the strong competition observed recently will have an adverse impact on the financial performance of contractors,” says Bartlomiej Sosna, Senior Construction Analyst at PMR and the author of the report.

Improvement in PMR Construction Climate Indicator
A special summary index portraying the level of the market situation in the Polish construction industry is created on the basis of assessments of the current market situation, the financial standing and portfolio of orders obtained by construction companies. In September 2009, the PMR Construction Climate Indicator had a value of 5.5 pts, showing certain improvement in the market situation in the construction sector in the past six months.

According to companies surveyed, the most attractive segments of the construction market in the two-year horizon include roadwork projects (84% of responses), sports and recreation facilities (31%) power engineering construction (31%) and environmental protection construction (24%). At the opposite end of the spectrum were the following sectors: office construction (5%) and warehouse construction (9%), which were considered the least promising segments of the construction market in the coming two years.

The responses largely reflect the current situation in the construction market where road building projects constitute the main driving force behind growth in the construction industry – in the initial three quarters of 2009, the segment reported a year-on-year increase in construction and assembly output of over 40%. In the same period, the growth rate for the entire civil engineering construction segment was over 25%, making up for declines in residential and non-residential construction (-12.8% and -6,5%, respectively).

“In the coming months, we expect continued falls in construction and assembly output generated by the construction of buildings, which, however, will be made up for by rapid growth in civil engineering construction. The Polish construction market will return to a sustained growth path only after the commercial construction situation has stabilised, which is not to be expected earlier than the middle of 2010. However, it all largely depends on the anticipated growth in lending activity of financial institutions,” adds Bartlomiej Sosna.

This press release is based on information contained in the latest PMR report : Construction sector in Poland, H2 2009

In 2008 the OTC product market in Central and Eastern Europe developed by around 26%, to €9.2bn.

In 2009 this market in the region will grow by around 8%, according to a recently released report “OTC market in Central and Eastern Europe 2009. Comparative analysis and development forecasts for 2009-2011″ from PMR, a research and consulting company.

8% OTC market growth in 2009
In the last few years the economies of the Central and Eastern European (CEE) countries (Russia, Poland, Ukraine, Bulgaria, Romania, Hungary, the Czech Republic, Slovakia, Slovenia and Croatia) expanded very dramatically. The favourable economic situation, combined with increases in wages and burgeoning affluence in the countries in question, along with changing lifestyles which prompt people to take better care of their health and appearance, accelerated the growth of the OTC market in Central and Eastern Europe.

In 2008 it grew by 26% and was worth €9.2bn, according to PMR estimates. The current global financial crisis will result in a reduction in demand for OTC products, as people try to limit their spending on products which they can do without, and in the pharmaceutical industry this means spending less on dietary supplements and OTC drugs. In some CEE countries, such as Ukraine, negative growth may even be seen on the OTC product market.
“However, PMR forecasts that, despite this, the overall OTC product market in the region will grow by around 8% to approximately €10bn in 2009. This is mainly because, in Russia, the largest market of the region, the OTC product market will see a positive growth rate of several percent this year” Monika Stefanczyk, Head Pharmaceutical Market Analyst at PMR and report co-author, explained.

In the first half of 2009, the market in Russia grew by around 28% in rouble terms. In euro terms the growth rate was 6%, and in dollar terms there was an 8% reduction . However, such figures reflect unfavourable exchange rates and not, therefore, real market growth. This shows, that despite the global financial crisis, Russians are still buying OTC products very often and that the market should also grow rapidly in the next few months.
Russia predominates in the region
Last year, almost half of OTC market value in the region was accounted for by Russia, according to PMR estimates. Poland was the second largest OTC market in the region, with a share as a proportion of total sales in excess of 22%. Ukraine had a share of around 10%, whereas for the Czech Republic the figure fluctuated around 6%.

Regulations pertaining to distribution not standardised
One of the factors which influences growth on the OTC product market is the nature of the regulations pertaining to the distribution of such products in individual countries. “Although in some countries non-pharmacy and online sales of OTC drugs is allowed, pharmacies will remain the main channel for sales of OTC medicines, because there is a preference among consumers of OTCs to purchase such products at outlets at which they can also obtain a pharmacist’s advice” Agnieszka Stawarska, Pharmaceutical Market Analyst at PMR and report co-author, explained.

In addition, the online sales channels of many groups of drugs may not become widely used, because of several factors: lack of trust in the channel in question, consumer habits and, finally, the low number of internet users in some countries.
In none of the countries of the region are there restrictions on the sale of dietary supplements in general stores, which are always subject to laws on foodstuffs, rather than those pertaining to pharmaceuticals. Legislation which regulates non-pharmacy sales of OTC drugs is, however, more restrictive, and the regulations differ from one country to the next.

In none of the CEE countries analysed is the sale of all OTC drugs permitted in general stores. The most liberal law exists in Hungary, where some 390 brands of OTC drugs may be sold in places other than pharmacies.
Most CEE countries also do not permit the online sale of drugs.

The most liberalised countries are Poland and the Czech Republic, whose governments have decided to regulate this issue and have approved the online sale of all OTC drugs. In Poland the online sale of OTC drugs was approved on 1 May 2007, and in the Czech Republic a law permitting the online sale of medicines came into force in January 2008.

PMR Publications is part of PMR – a British-American company providing market information, advice and services to international businesses interested in Central and Eastern European countries as well as other emerging markets. PMR key areas of operation include consultancy and market research.