Boston, MA -- (SBWIRE) -- 08/17/2012 -- BMI View: The short-term outlook for the Serbian pharmaceutical market will continue to be clouded by corruption, debts accrued by the country's health insurance agency and also the liquidity of the country's wholesalers. Additionally, the challenging economic situation will hamper the purchase of necessary medicines by the majority of the cash-strapped population, especially as out-of-pocket contribution to healthcare in general stands at almost 40%. We therefore envisage generic medicines gaining further ground on their patented counterparts, although imports will continue to play an important part in the overall market.

Headline Expenditure Projections

- Pharmaceuticals: RSD74.78bn (US$1.02mn) in 2011 to RSD79.30bn (US$934mn) in 2012; +6.0% in local currency terms and -8.4% in US dollar terms. Forecast slightly lower from Q212 due to macroeconomic factors.
- Healthcare: RSD335.38bn (US$4.57bn) in 2011 to RSD360.98bn (US$4.25bn) in 2012; +7.6% in local currency terms and -7.0% in US dollar terms. Forecast slightly lower from Q212 due to macroeconomic factors.
- Medical devices: RSD16.97bn (US$231mn) in 2011 to RSD17.71bn (US$209mn) in 2012; +4.3% in local currency terms and -9.8% in US dollar terms. Forecast lower from Q212 due to macroeconomic factors.

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Business Environment Rating: In BMI's regional Risk/Rewards Rating (RRR) matrix for Q312, Serbia moved up by two places, now ranking 14th out of the 20 key markets surveyed. However, its composite score is unchanged from Q212, with its overall risks and rewards scores both remaining below the regional average. Issues such as insufficient funding for public healthcare and corruption will continue to hamper the development of legitimate medicines market.

Key Trends & Developments

- In May 2012, Serbian drugmaker Hemofarm, a subsidiary of German firm Stada Arzneimittel, started direct sales to state-run pharmacies, which allows it to avoid some wholesalers. The company said the new policy will help it reduce the complexity of the supply chain. Hemofarm previously incurred losses after some Serbian pharmaceutical wholesalers did not make payments for medicines manufactured by the company, which resulted in a write-down for Stada.
- In February 2011, Serbia's state-run health insurance fund secured a 10% write-down of its debt to drugmakers, valued at more than RSD14bn (US$186mn), according to the fund's general manager Aleksandar Vuksanovic. The fund has also promised to accelerate payments for delivery, having negotiated deals with domestic drugmakers Galenika and Jugoremedija for terminating a portion of their claims, as well as reducing some prices for new deliveries.

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