Bulgaria Pharmaceuticals and Healthcare Report Q2 2008

The Bulgarian pharmaceutical market has emerged as one of the most promising in Central and Eastern Europe (CEE) in recent years. Market prospects have been further improved by the European Union (EU) membership gained at the start of 2007, which has vastly improved the country's intellectual property (IP) regime, facilitating access for foreign products.

However, chronic funding shortages plaguing the healthcare sector will continue to hamper the government's attempt to modernise and improve services. Moreover, the Health Protection Confederation, which represents 14 patient organisations, is planning to take legal action against the Bulgarian Doctors Union (BDU) for delaying medical supply negotiations at the National Health Insurance Fund (NHIF), which could further exacerbate the funding issue. In the meantime, the pharmacy association is also considering litigation against the government over new legislation tightening pharmacy ownership and reducing margins.

In the light of the above, generic drugs, presently accounting for over a quarter of the market by value, will continue to gain shares at the expense of costlier, patented variety. This situation will be further upheld by the strong local generics industry, despite the fact that some firms have been purchased by foreign concerns. Similarly, although relatively modest at present, the development of the over-thecounter (OTC) market will be significant, stimulated by increasing health awareness among consumers, vertical and horizontal integration of the sector, as well as strong advertising support for such products and the focus on cost containment in healthcare.

In terms of other medical sectors, while the Bulgarian medical devices market is one of the least developed in Eastern Europe, healthcare system improvement and modernisation of primary care in particular years have established a solid base for market development - finances permitting. Imports - mainly from Germany and the US - continue to account for the bulk of the market, with the country's EU accession further boosting this situation. Over the coming years, foreign companies may also wish to take advantage of the fact that the investment incentives for firms registered locally are higher.

BMI's revised Business Environment Rankings for Q208 place Bulgaria in the joint second position, alongside the Czech Republic, out of the 16 regional markets surveyed in CEE. The country's score, improved by one, allowed Bulgaria to gain one place in relation to the previous period, when it was ranked joint third alongside Hungary. Indeed, foreign firms continue to enjoy the benefits of Bulgaria's EU membership and a favourable business climate. Prominent foreign companies are also becoming more directly involved in the Bulgarian pharmaceutical market by acquisition of domestic players.

Consequently, some of the larger local companies (backed by foreign capital and ownership) are now in a position to offer strong export portfolios, having implemented good manufacturing practice (GMP) standards in domestic production.