BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Pharmaceutical Sector Of Australia

The Australian pharmaceutical market is highly developed, although the country’s small population allows for only limited expansion in the short term. Prescription drugs account for the bulk of demand, or over 80% of total sales, with the sector’s market share expected to stagnate over the next five years. The role of generics in this segment is, however, likely to strengthen, with the sector gaining around four percentage points on the 2005 figure of 11%. Demographic factors will drive the growth of central nervous system, cardiovascular and metabolic therapeutic areas in particular, although the demand will be increasingly met by imports. By 2010, the trade balance will, therefore, shift further in favour of foreignmade medicines.

BMI expects growth in the pharmaceuticals market in 2006 at around 6%, with the market exceeding a value of US$11.35bn in 2010. The government’s focus on healthcare cost containment, which includes a higher financial burden on the patient and price cuts under the Pharmaceutical Benefits Scheme (PBS), will stimulate the development of the generics sector. The over-the-counter (OTC) market will gain significantly in terms of value – driven by greater health awareness and regulatory changes – but remain relatively constant as a percentage of the total market, illustrating the strength of overall market growth.

In regional terms, Australia’s pharmaceuticals market continues to show the greatest long-term potential in the Asia Pacific as an investment prospect, ahead of both Japan and the emerging and sizeable markets of China and India. Australia leads BMI’s newly adjusted Business Environment Rankings for Asia. However, the country has been listed on the PhRMA’s 2006 ‘priority watch list’ as a result of an alleged deterioration in patent and data protections for pharmaceuticals, as well as what are seen as discriminatory pricing and reimbursement policies pertaining to novel medicines. Further negotiations over Australia’s free trade agreement (FTA) with the US are under way, with the Australian government recently agreeing to consider US demands, which include eliminating certain important provisions regarding generics.

The local pharmaceutical industry is undergoing consolidation and change, including the uncoupling of business units, in order to adapt to the country’s fast-moving operating environment. Having purchased fellow domestic generic producer Arrow Pharmaceuticals, leading domestic contract manufacturer Sigma continues to consider further acquisitions, with Australian Pharmaceutical Industries being the key target. Multinationals are proceeding with their commitment to the Australian market, despite difficulties regarding pricing and reimbursement. In the meantime, large foreign generic players – from India in particular – are making considerable inroads into the local market.

Contents

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Chapter 1 - Executive Summary

Australia Pharmaceuticals & Healthcare Industry SWOT

Australia Political SWOT

Australia Economic SWOT Analysis

Australia Business Environment SWOT

Chapter 2 - Australia: Business Environment Ranking

Table: Asia Business Environment Rankings

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Australia: Market Summary

Regulatory Regime

Intellectual Property Issues

Trade Agreements

Unresolved IP Issues

Pricing & Reimbursement

Price Cuts

Chapter 4 - Industry Trends & Developments

Health Profile

Table: HIV/AIDS In Australia

Healthcare Expenditure

Pharmaceutical Industry

Domestic Sector

Domestic Sector Developments

Foreign Industry

Foreign Company Activities

Biotechnology And Research

Table: Australian Biotechnology Industry Data

Government Support For Biotech And Research

Clinical Trials

Chapter 5 - Industry Forecast Scenario

Overall Market Forecast

Table: Australia Drug Market Expenditure Forecasts

Key Growth Factors – Industry

Table: Real Health Spending Per Capita

Table: Health Expenditure Forecasts

Key Growth Factors – Macroeconomic

Table: Economic Activity – Historical Data And Forecasts

Prescription Market Forecast

Table: Australian Prescription Market Forecasts

OTC Market Forecast

Table: Australia OTC Market Forecast Indicators

Generics & Branded Market Forecasts

Table: Generics And Branded Market Forecasts

Export/Import Forecasts

Table: Sectoral Trade Indicators

Other Healthcare Data Forecasts

Table: Other Healthcare Data

Key Risks To BMI’s Forecast Scenario

Chapter 6 - Country Snapshot: Australia Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Year

Chapter 7 - Competitive Landscape

Overview

Table: Competitive Landscape In Australia – Leading Multinationals

Chapter 8 - Company Profiles: Leading Multinationals

Pfizer

Sanofi-Aventis

GlaxoSmithKline

Merck & Co

Novartis

Roche

AstraZeneca

Eli Lilly

Chapter 9 - Company Profiles: Indigenous Manufacturers

Mayne Pharma

Chapter 10 - Sigma Pharmaceuticals

Australian Pharmaceutical Industries

Alphapharm

Herron Pharmaceuticals

Chapter 11 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Technical Process

Pharmaceutical Industry

Sources

Chapter 12 - Appendix: Regional Demographic Data

Table- Manufacturing Wages (ave per annum), US$

Table - Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Asia Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of Asian Pharmaceuticals & Healthcare Sources

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BMI's Asian Pharmaceuticals Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceuticals & healthcare industry associations, chambers of commerce and company reports. Information sources include: