Australia Pharmaceuticals and Healthcare Report Q4 2009

In 2008, Australia's pharmaceutical market was worth US$6.93bn, it is forecast to reach US$7.28bn in 2009 and rise to over US$10bn in 2013, which represents a compound annual growth rate (CAGR) of 7.72. This is a substantial growth rate considering the mature nature of the market, with virtually the whole population having good access to medicines despite the geographical size of the country and low population density in some areas. Drug expenditure will grow in US dollar terms throughout the forecast period, although in local currency terms the market is expected to contract in 2012 and 2013. This is primarily due to an anticipated weakening of the Australian dollar against the US dollar as the US economy recovers.

According to a report by Australian-based Access Economics, commissioned by the Pharmacy Guild of Australia, recent reforms enacted by the Pharmaceutical Benefits Schedule (PBS) will save the government a total of AUD7.4bn (US$5.32bn) over the next 10 years. However, others such as New South Wales director-general Debora Piccone feel that the Australian system of free universal healthcare is set to disappear in as little as five years and that a US-style end user-pays system is inevitable. This is said to be a result of an ageing, although affluent, population and out-of-control costs. Additionally, a study led by UWA researcher Anna Hynd reported that, despite price cuts, some low-income groups are struggling to pay for some treatments and as a result one in five Australian adults may be skipping doses or refraining from purchasing medicines because of the costs.

Local company Biota has had a boost in April 2008 when its share price rose by 77% (to AUD1.57). This is a result of governments around the world considering stockpiling Relenza which is marketed by GlaxoSmithKline (GSK), but from which Biota receives 7% royalties from sales.

Sigma has launched a court action against Wyeth Pharmaceuticals in order to release its generic version of the international firm's antidepressant Efexor, which had global sales of USD3.9bn in 2007-8, stating that Wyeth's patents are invalid on 'a number of grounds'.

Australia's government has set up an AUD83mn Innovation Investment Follow-on Fund (IIFF) and a research and development tax credit to help cash-poor biotechnology firms weather the financial crisis.

The IIFF will be released to licensed venture capital firms to invest in small technology companies.

Australia has moved up to the top of BMI's Business Environment Ranking for the Asia Pacific region, as a result of its advanced drug sector, an excellent and improving regulatory system and investment in local industry. Its strong patent protection - 25 years as opposed to 20 years in other parts of the world - is good for local innovation but may weaken local generics companies.