Netherlands Pharmaceuticals and Healthcare Report Q4 2009

BMI calculates the Netherlands's pharmaceutical expenditure to have been EUR5.8bn (US$8.5bn) in 2008. By 2013, we expect the total amount spent on prescription and OTC medicines to have reached EUR6.6bn, equating to a compound annual growth rate (CAGR) of 2.7%.

Looking forward, BMI's new 10-year forecast model projects that drug expenditure should reach EUR7.4bn (US$9.2bn) in 2018, representing a CAGR of 4.9% over the 10-year period. As a proportion of GDP, drug expenditure is expected to decline marginally over the 10 years, from 0.98% in 2008 to 0.90% in 2018. The slow growth relative to economic output is anticipated due to stringent costcontainment measures by the government, including a greater use of generics and drug price cuts.

Indeed, the Foundation for Pharmaceutical Statistics (Stichting Farmaceutische Kengetallen, SFK) expects drug spending through pharmaceutical aid at community pharmacies to have declined in 2008 as the result of a round of government price cuts in June and July of that year. BMI's own figures, which include OTC products, suggest that overall drug expenditure remained flat between 2007 and 2008.

Meanwhile, drug retailers continue to feel the effects of the latest round of price cuts instigated in 2008.

In May 2009, drug retailer and wholesaler Mediq (formerly OPG) announced that it was looking to expand its operations into the US, Germany and Scandinavia in response to a fall in profits, which the company attributes to lower drug prices in its pharmacies in the Netherlands.

In BMI's updated Business Environment Ratings for Q409, the Netherlands is ranked sixth out of nine markets surveyed. The Netherlands' strong and transparent regulatory framework means it scores highly in terms of risk. However, in regional terms, the sizes of the drug market and per-capita pharmaceutical expenditure are comparatively low, meaning returns from the market are likely to be below average.

Globally, the Netherlands is ranked in 13th position out of 71 pharmaceutical markets covered by BMI.

The Dutch health insurance system is well developed, but has shown signs of strain under pressure from the increasing number of claims from an ageing population. In January 2009 it was revealed that the Dutch government had bailed out 34 health institutions in the Netherlands by providing them with approximately EUR73mn (US$95mn) over the last decade.