Government Austerity Measures Hit The Pharmaceutical Industry


BMI View : Public consumption in France will decline in 2014 and 2015 as the government attempts to bring the fiscal deficit within the EU's deficit reduction target of 3.0% of GDP by 2015 - affecting expenditure on pharmaceuticals and healthcare as a part of the government's fiscal consolidation plans. However, the new government of Manuel Valls has indicated it may seek to further delay its deficit cutting commitments and this may result in the healthcare sector being a continued target of austerity, particularly as health expenditure growth for 2015, 2016 and 2017 has been capped at 2.1%, 2.0% and 1.9%, respectively and additional measures may be required to rein in spending.

Aligning with our long-term view that the French government will engage in more concerted fiscal consolidation (with a heavy focus on the pharmaceuticals and healthcare sector) as a result of the country's lacklustre economic activity, [1] France's new prime minister Manuel Valls has unveiled details as to how the government aims to extract EUR50bn (USD69bn) in savings between 2015 and 2017, including proposals to slice EUR10bn (USD14bn) of healthcare spending.

Manuel Valls said his top priority is curbing France's government spending, which is among the highest in the world at 57% of the country's GDP and to help France meet EU deficit targets. 'We cannot live beyond our means,' Valls said after a Cabinet meeting. BMI notes that this plan is the biggest state spending reduction in France in half a century.

Austerity Measures Target Debt Reduction
France: Government Debt

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Related sectors of this article: Pharmaceuticals & Healthcare
Geography: France