Bulgaria Pharmaceuticals and Healthcare Industry Update Quarter 3 2012

• Publication date: June 2012
• Report size: 89 pages

Includes 3 FREE quarterly updates BMI View: While the recently appointed new heads at the Bulgarian Ministry of Health and the National Health Insurance Fund (NHIF) are now clearly looking at more aggressive mechanisms for cutting drug prices in the country, despite the short-term challenges we still believe the industry is attractive and will generate high single-digit yearly growth over our five-year projection period. O...

Includes 3 FREE quarterly updates

BMI View: While the recently appointed new heads at the Bulgarian Ministry of Health and the
National Health Insurance Fund (NHIF) are now clearly looking at more aggressive mechanisms for
cutting drug prices in the country, despite the short-term challenges we still believe the industry is
attractive and will generate high single-digit yearly growth over our five-year projection period. Our 2012-
2013 market projection scenario for Bulgaria’s pharmaceutical industry is governed by two main factors.
Namely, short-term negotiations of medicine price cuts and the likelihood that the health ministry and the
NHIF will push ahead with more far-reaching legislative changes to how Bulgaria prices its medicines.

Headline Expenditure Projections
- Pharmaceuticals: BGN2.10bn (US Dollar 1.49bn) in 2011 to BGN2.23bn (US Dollar 1.47bn) in 2012;
+6.1% in local currency terms and -1.8% in US dollar terms. Projection moderately down since
Q212 due to a revised projection scenario.
- Healthcare: BGN5.12bn (US Dollar 3.64bn) in 2011 to BGN5.20bn (US Dollar 3.42bn) in 2012; +1.6% in
local currency terms and -5.9% in US dollar terms. Growth projection unchanged from Q212,
though historic figures were revised due to newly available data from the World Health
Organization (WHO).
- Medical devices: BGN281mn (US Dollar 200mn) in 2011 to BGN286mn (US Dollar 188mn) in 2012;
+1.8% in local currency terms and -5.8% in US dollar terms. Projection unchanged from Q212.
Risk/Reward Ratings: Despite recognising new challenges for drugmakers operating in Bulgaria in the
last quarter, the industry has received an improved Pharmaceutical Risk/Reward Rating (RRR) score in
Q312. This is due to a technical market rewards upgrade as a result of its 2011 pharmaceutical revenues per
capita reaching a key milestone of US Dollar 200 per person, which boosted a key subcomponent score in the
industry rewards indicator. Bulgaria is now ranked ninth out of the 20 industry s surveyed in the region.
Globally, Bulgaria is 43rd out of the 95 industry s surveyed in our pharmaceutical universe.

Key Trends And Developments
- Changes in the leadership at both the Ministry of Health and the NHIF are a sign that the pace of
drug policy and healthcare reform in Bulgaria is quickening. Desislava Atanasova has been very
keen on deeper drug policy reforms that would require legislative amendments and therefore go
through parliament. Since taking office, Atanasova has said she is in favour of changes to
Bulgaria’s reference pricing system, mainly with the proposals her predecessor Stefan
Konstantinov announced. Drug policy reforms that go through parliament this year are unlikely to
have an impact on the industry until early 2013.
- The short-term negotiations between the NHIF and industry authorisation holders (ie: drugmakers)
appear to have concluded by the end of April. However, the Ministry of Health is looking at new
ways to extend these negotiations to include non-fully reimbursed drugs. In terms of the impact
on drugmakers of the concluded negotiations this very much depends on a firm ’s portfolio;
so far most of the drug price cuts have been on oncology medicines. The total number of drugs
that have had the price reduced is reportedly just 160 of the 1,673 medicines included on the
reimbursement list.
BMI Economic View: Significantly weaker external demand for Bulgaria’s exports and a banking segment
highly exposed to the eurozone sovereign debt crisis will continue to weigh on the country’s economic
outlook in the coming years. In early April, we revised down our Bulgarian real Gross Domestic Product growth projection for
2012 and 2013 to 0.6% and 1.9%, from 1.1% and 2.3% respectively.
BMI Political View: We do not expect Prime Minister Boyko Borisov’s cabinet reshuffle in March to
lead to major policy changes in the short term, particularly as the prime minister will avoid unpopular
reforms with the 2013 parliamentary election now in sight. That said, Borisov will continue to highlight
his government’s commitment to pushing longer-term reforms and attracting investment, in line with
increased scrutiny by the EU. We expect a victory for the GERB government in 2013.

Drug And Medication Industry in Bulgaria

Executive Summary .. 5
Industry SWOT Analysis .... 7
Bulgaria Pharmaceuticals And Healthcare SWOT .... 7
Bulgaria Political Environment and Risk Analysis ... 8
Bulgaria Economic Environment and Risk Analysis . 8
Bulgaria Business Environment SWOT .. 9
Pharmaceutical Risk/Reward Ratings 10
Data : Central And Eastern Europe Pharmaceutical Risk/Reward Ratings, Q312 .... 10
Rewards .. 11
Risks ... 12
Bulgaria – Industry Summary . 14
Regulatory Regime 16
Pricing Regime . 17
Drug Policy Amendments Passed In 2011 18
Drug Policy Amendments For 2012 19
Legislative Changes To Drug Policy In 2013 And Beyond 20
Drug Price Inflation .... 21
Reimbursement Regime .... 21
Reimbursement Regime Developments. 23
Intellectual Property Environment .. 24
Trademark Disputes .... 25
Pharmaceutical Advertising .. 25

Industry Developments .... 27
Epidemiology .... 27
Data : Main Causes Of Death In Bulgaria (per 100,000 population) .... 27
Healthcare Segment .. 28
Healthcare Reform Outlined Through To 2020 ... 29
Healthcare Financing . 31
Data : NHIF Budget ... 32
Research & Development . 33
Clinical Trials ... 33
Medical Devices 34
Data : Classification Of Medical Devices In The EU ... 34

Market Projection Scenario .. 35
Pharmaceutical Industry Projection .... 35
Data : Pharmaceutical Sales, from 2008 to 2016 . 37
Key Growth Factors – Market .. 38
Data : Overall Healthcare Expenditure, from 2008 to 2016 39
Data : Government Healthcare Expenditure, from 2008 to 2016 ... 40
Data : Private Healthcare Expenditure, from 2008 to 2016 40
Macroeconomic Projection Scenario. 41
Data : Bulgaria Economic Activity, from 2011 to 2016 .. 48
Prescription Drug Industry Projection 49
Data : Prescription Drug Sales, from 2008 to 2016 ... 50
Patented Drug Industry Projection 51
Data : Patented Drug Sales, from 2008 to 2016 ... 52
Generic Drug Industry Projection .. 53
Data : Generic Drug Sales, from 2008 to 2016 54
OTC Medicine Industry Projection 55
Data : OTC Medicine Sales, from 2008 to 2016 ... 56
Data : OTC Medicines Sales Breakdown, from 2006 to 2010 (US$mn) ... 56
Medical Device Industry Projection .... 57
Data : Medical Device Sales, from 2008 to 2016 .. 58
Pharmaceutical Trade Projection . 59
Data : Pharmaceutical Trade, from 2008 to 2016 60
Key Risks To BMI’s Projection Scenario 61

Competition Overview ... 62
Pharmaceutical Market .. 62
Company Activities 62
Wholesale Segment .... 64
Retail Segment . 64
Data : Pharmaceutical Wholesale And Retail Industry, from 2007 to 2010 ... 65
Company Profiles ... 66
Local Firms ... 66
Sopharma 66
Biovet . 69
Actavis Bulgaria .... 71
Multinational Firms . 73
GlaxoSmithKline .... 73
Novartis .. 74
Sanofi . 75
Pfizer.. 77
Merck & Co . 78
Data : Population By Age Group, 1990-2020 (‘000) .... 80
Data : Population By Age Group, 1990-2020 (% of total) . 81
Data : Key Population Ratios, 1990-2020 82
Data : Rural/Urban Population Split, 1990-2020 .... 82
Glossary ... 83
BMI Methodology .... 85
How We Generate Our Pharmaceutical Market Projections ... 85
Pharmaceutical Risk/Reward Ratings Methodology 86
Ratings Overview ... 86
Data : Pharmaceutical Risk/Reward Indicators . 87
Weighting 88
Data : Weighting Of Components ... 88
Sources ... 88

Drug and Medication in Bulgaria

Bulgaria Patented Drug Sales, Us$bn

• $ 250
• Industry data
• January 2013

Yearly, From 2006 To 2021
By Business Monitor International
Source: IMS, BMI

• Industries : Drug and Medication
• Countries : Bulgaria

Bulgaria Patented Drug Sales, Us$bn, % Chg Y-o-y

• $ 250
• Industry data
• January 2013

Yearly, From 2007 To 2021
By Business Monitor International
Source: IMS, BMI

• Industries : Drug and Medication
• Countries : Bulgaria

Bulgaria Patented Drug Sales, Us$bn, 5 Year Trailing Cagr, %

• $ 250
• Industry data
• January 2013

Yearly, From January 01, 2012 To January 01, 2012
By Business Monitor International
Source: IMS, BMI

• Industries : Drug and Medication
• Countries : Bulgaria

Bulgaria Patented Drug Sales, Us$bn, 10 Year Forward Cagr, %

• $ 250
• Industry data
• January 2013

Yearly, From January 01, 2012 To January 01, 2012
By Business Monitor International
Source: IMS, BMI

• Industries : Drug and Medication
• Countries : Bulgaria

Bulgaria Patented Drug Sales, Us$bn, 5 Year Forward Cagr, %

• $ 250
• Industry data
• January 2013

Yearly, From January 01, 2012 To January 01, 2012
By Business Monitor International
Source: IMS, BMI

• Industries : Drug and Medication
• Countries : Bulgaria