Executive Summary

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The health sector in the Czech Republic is in a state of flux as detailed in BMI's Q307 Czech Republic Pharmaceuticals & Healthcare Report. Proposed reforms to the system include the introduction of flat charges for prescriptions, as well as fees for both doctor consultations and hospital visits. BMI expects these changes to be deeply controversial with industry stakeholders and patient groups likely to offer strong resistance.

The Czech Republic's pro-business governing party the Civil Democrats is keen to curb consumption in the health sector, with Health Minister Tomáš Julínek championing the implementation of fees at the point-of-delivery. Opposition is fiercest from the pro-market right of the political spectrum, which wishes to see even greater liberalisation, with commentators seeing the two camps as irreconcilable.

Meanwhile, BMI expects draft amendments to the national tax legislation to have a deflationary impact on consumption, as they propose an increase in the VAT on medicines from 5% to 9%. Despite the downside afforded by these reforms we remain optimistic about the strength of the Czech drug sector. We expect the market to grow by an average annual rate of 6.98% from US$2.89bn in 2006 to US$4.05bn in 2011. Recent solid economic growth has contributed to stabilising the market, enabling greater out-ofpocket spending, while industry is likely to continue to attract foreign investment, encouraged by the advantages that the market offers within the EU. In fact, the overall health of the economy may end up negating the deflationary impact of the VAT hike, with consumer-spending power remaining strong.

Drugmakers in the country will also be encouraged by the desire of the government to introduce a 15% flat tax rate and a 19% corporate tax rate by 2010. Such tax systems are common in Central & Eastern Europe and are designed to stimulate business. In pharmaceuticals, this could result in more funds being made available for R&D. Local drugmakers such as Zentiva are expected to be affected by the new prescription fee system. However, there is hope offered by the example of Slovakia. A similar system introduced in this country but after a year generic sales recovered, although they remained depressed for branded drugs.

Meanwhile, the Czech Republic has retained it lead at the top of BMI's Business Environment Rankings for Central & Eastern Europe, although only just. The country improved its score marginally after an upwards revision of its rating for long-term political risk. However, Bulgaria and Estonia have both increased their overall scores and are now on level terms.

Contents

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Chapter 1 - Executive Summary

Czech Republic Pharmaceuticals And Healthcare Industry SWOT

Czech Republic Political SWOT

Czech Republic Economic SWOT

Czech Republic Business Environment SWOT

Chapter 2 - Czech Republic: Business Environment Rankings

Table: Central And Eastern Europe Pharmaceuticals Business Environment Ranking

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Czech Republic: Market Summary

Chapter 4 - Regulatory Regime

Intellectual Property Environment

Pricing And Reimbursement Issues

Pharmacy Sector

Hospital Sector

Healthcare Sector

Table: Health Expenditure Indicators

R&D Sector

Chapter 5 - Industry Forecast Scenario

Overall Market Forecast

Table: Czech Republic Drug Market Forecast Indicators

Key Growth Factors – Industry

Table: Czech Republic Health Expenditure Forecast Indicators

Key Growth Factors – Macroeconomic

Table: Growth And Output

Prescription And OTC Market Forecasts

Table: OTC Drugs Market Forecast Indicators

Table: Czech Republic Prescription Drug Market Indicators

Generics And Branded Market Forecasts

Table: Czech Republic Generics And Branded Market Forecast Indicators

Export/Import Forecasts

Table: Czech Republic Export And Import Forecast Indicators

Other Healthcare Data Forecasts

Table: Socio-Demographic Indicators

Key Risks To BMI’s Forecast Scenario

Chapter 6 - Competitive Landscape

Wholesale

Retail

Table: Pharmacies And Pharmacy Market Ratios

Chapter 7 - Company Monitor

AstraZeneca

Bristol-Myers Squibb

Sanofi-Aventis

Walmark

Zentiva (incorporating Sicomed)

Chapter 8 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Technical Process

Pharmaceutical Industry

Sources

Competitive Landscape for Europe 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 European Pharmaceutical & Healthcare Sources

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