Slovakia Pharmaceuticals and Healthcare Report Q2 2008

Slovakian pharmaceutical market remains one of the less attractive markets amongst its Central and Eastern European (CEE) peers, primarily due to its small size and a sizeable healthcare debt, despite a relatively favourable business environment. However, the new left-leaning government, elected in 2006, has passed a basket of measures in an attempt to achieve a better financial balance, although some of the changes have been strongly opposed. Most recently, the government banned profit-making in the healthcare insurance sector, with the aim of freeing up more funds for patients' needs, but also disincentivising the companies in the sector by removing competition and essentially their reason for operating.

In terms of market segmentation, the generics market represents around a quarter of the total by value.

However, the new anti-Bolar (and thus anti-EU legislation) law threatens to delay the entry of copy products onto the market over the coming years, to the detriment of the local as well as international generics players. In the meantime, the over-the-counter (OTC) market will continue to improve, in line with the modernisation of the primary care sector and rising healthcare awareness of the general population.

The Slovakian medical devices market has developed strongly in the last decade, driven by modernisation of hospitals and the improvement of the primary sector and private medical laboratories. While the domestic medical equipment industry is relatively advanced, local manufacturers are increasingly having to look abroad for placement of their products, under pressure from foreign hi-tech goods and foreign companies becoming more directly involved in the market. The market will remain intensely competitive, with price being one of the key factors.

The new BMI's Business Environment Rankings for Q108 places Slovakia in a joint tenth position, alongside Poland, of the 16 CEE states surveyed. The country's operating environment is disadvantaged by deficiencies of the regulatory infrastructure, preferential treatment for the domestic industry as well as counterfeiting.

Nevertheless, given the increased integration of the country into the EU, with euro-adoption scheduled for 2009, the role of foreign companies and foreign-made pharmaceuticals is expected to become more prominent in the coming years. Despite strong international expansion of local players - most notably the local leader Zentiva (which is, however, now headquartered in the Czech Republic) - imports are expected to strengthen their position in the local market. In the meantime, Zentiva's Slovak sales can be expected to continue growing despite challenging conditions in the market, with the company achieving CZK1.6bn in the first nine months of 2007, up by 17.4% year-on-year (y-o-y).