Impact of the economic recession on the pharmaceutical sector

February 2010 I.M. Buysse (UU) Supervised by: R.O. Laing (WHO) A.K. Mantel (UU)

WHO COLLABORATING CENTRE FOR PHARMACOEPIDEMIOLOGY & PHARMACEUTICAL POLICY ANALYSIS

Impact of the economic recession on the pharmaceutical sector

Table of contents
Executive summary ................................................................................................................................. 3 Introduction ............................................................................................................................................ 6 Background ............................................................................................................................................. 8
History of recessions ............................................................................................................................................................. 8 Asian Crisis 1997-2000 .......................................................................................................................................................... 9 Economic crisis 2008-2009.................................................................................................................................................. 12 WHO involvement in assessing the impact of the recession .............................................................................................. 14 Hypotheses ......................................................................................................................................................................... 15

Methods ................................................................................................................................................ 16
IMS data collection ............................................................................................................................................................. 16 Provision of indexed data ................................................................................................................................................... 18 Graphical transformation methods..................................................................................................................................... 18 Economic indicators ............................................................................................................................................................ 19 Shift from private to public sector ...................................................................................................................................... 19 Country selection ................................................................................................................................................................ 19 Impact of the recession on specific groups and individual medicines ................................................................................ 20

Results ................................................................................................................................................... 22
Overall pharmaceutical consumption ................................................................................................................................. 22 Consumption of medicines for acute and chronic indications ............................................................................................ 26 Consumption of original & licensed brands and others brands & unbranded medicines ................................................... 29 Price per IMS Standard Unit ................................................................................................................................................ 32 Pharmaceutical expenditure ............................................................................................................................................... 35 Shift from private to public sector ...................................................................................................................................... 37 Impact of the recession on specific groups and individual medicines ................................................................................ 39

Discussion.............................................................................................................................................. 47
Conclusion........................................................................................................................................................................... 51

References: ........................................................................................................................................... 52 Annexes ................................................................................................................................................. 54

2

Table of contents

Impact of the economic recession on the pharmaceutical sector

Executive summary
Introduction
The global financial crisis which started in 2008 may have considerable impact on governments’ budgets and the available funding for health services. Past economic recessions (especially the ‘97 Asian financial crisis) have shown that the impact on public health can be severe. At a high level meeting in January 2009 WHO was requested to investigate the impact of the current economic recession on global health. As part of this investigation a programme was established which focused on the impact of the global economic crisis on the pharmaceutical sector. The goal of this study was to assess the impact of global recession on consumption of medicines and pharmaceutical expenditures and prices. A secondary objective was to investigate which medicines were affected the most and the least by the recession in those countries that showed a clear decline in medicines consumption.

Methods
IMS Health provided indexed data for pharmaceutical consumption, expenditures and prices in 84 countries from the first quarter of 2007 (Q1 07) until the last quarter of 2009 (Q4 09). Changes in medicines consumption, pharmaceutical expenditure and prices over time (compared to the first quarter of 2008 (Q1 08); the last quarter before the recession) were assessed per WHO region (AFR, AMR, EMR, EUR, SEAR and WPR) and World Bank income category (high, upper middle, lower middle and low income countries). Linear regression analysis was used to establish a potential relationship between a decline in GDP and pharmaceutical consumption in the European region. The consumption of medicines was subdivided into medicines for acute and chronic indications to examine if there was a difference in development of consumption between these two categories. To investigate a shift from original & licensed brands to other brands & unbranded medicines the consumption patterns of both categories were compared. A potential relationship between a decline in GDP and an increase in pharmaceutical prices was assessed by linear regression as well. A shift in pharmaceutical consumption from the private sector to the public sector was investigated in four countries where data for both private and public sector were available. Four countries were selected for further analysis based on the observed decline in medicines consumption: Estonia, Latvia, Lithuania, and Romania. Poland was hardly affected by the global recession and was thus selected as a comparator. For these five countries data was retrieved on the volume of different medicine groups (EphMRA ATC 2 level). First a Pareto analysis was performed to identify 30% of medicine groups which accounted for 80% of total consumption. The periods Q4 07 + Q1 08 and Q4 08 + Q1 09 were compared as a period before and period during the economic recession, respectively, to detect medicine groups which declined the most. Medicine groups which declined in three of the four selected countries and not in Poland were considered to be of interest. Of these medicine groups data was gathered at therapeutic groups (EphMRA ATC 3 level). The same analyses were used to select categories which declined the most and had a possible negative effect on public health. Of these categories data on consumption volume on product level (EphMRA ATC 4) was used for more detailed analyses of changes in volume of consumption.

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Executive summary

Impact of the economic recession on the pharmaceutical sector

Results and discussion
Although the economic recession affected many countries only a few showed a substantial decline in pharmaceutical consumption. The European region was the WHO region with the most severe decline (-6%, Q3 09 compared to Q1 08). The South East Asian region had the biggest increase in pharmaceutical consumption (+28% in Q4 09) and the American region had the smallest increase (+12% in Q4 09). Only the high income countries showed a small decrease in pharmaceutical consumption of -3% (Q3 09 compared to Q1 08), in the other income categories the pharmaceutical consumption increased ranging from +7% in the upper middle income countries to +17% in the low income countries (Q4 09 compared to Q1 08). The countries with the most severe decline in pharmaceutical consumption were Estonia (-18%), Latvia (-14%) and Lithuania (-17%) (Q3 09 compared to Q1 08). The correlation between a decline in GDP and decline in pharmaceutical consumption of a country in the European region was moderate and differed from quarter to quarter (r2 ranged from 0,39 to 0,65). It is not yet clear when these Baltic States will return to their pre-recession levels of consumption, although the numbers of Q4 09 showed a lesser decline in consumption. The expectation that the decline of consumption of medicines for acute indications would be more severe than for chronic indications was not seen in this study. Only the European region did show this difference in decline of the two groups, although the differences were minimal. To reduce pharmaceutical expenditure it was expected that there would be a shift from the use of patent protected and licensed products to branded and other non patent protected products would occur, but this shift was not seen in this study. Almost all countries showed a price increase but there was no correlation between the level of increase in pharmaceutical prices and a more severe recession in a country. The shift from private to public sector was not common in the four countries, where this data was available. In Brazil, Uruguay and South Africa the consumption in both private and public sector grew although not at the same pace. Mexico did show a shift from private to public sector. The consumption of original & licensed brands increased in Mexico in the public sector and declined in the private sector. These changes may have been due to health section reform that occurred at the same time as the economic recession. Most of the declining EphMRA ATC 2 categories were not considered to have a negative impact on public health if used less (i.e. vitamins declined by -22% to -15%, mineral supplements by -23% to -5%, nasal by -24% to -8% and cold preparations by -20% to -4%). Categories of interest for further analysis were systemic antirheumatics, opthalmologicals, psycholeptics and psychoanaleptics. The decline of the systemic antirheumatics was probably caused by a decline in the use of NSAIDs. EphMRA ATC 3 categories anti-infectives and artificial tears were probably the cause of the decline in the ATC 2 category ophthamologicals. The ATC 3 categories N5A antipsychotics and N6A antidepressants and moodstabilizers were considered of interest because these categories declined in at least three of the four recession struck countries and could have a negative impact on public health if used less. Further analyses of the most frequently used products in these categories did not show a consistent change in consumption with the economic recession. No individual marker products were found which could be used by governments to track their pharmaceutical consumption and the functioning of their health systems to provide early warning signs.

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Executive summary

Impact of the economic recession on the pharmaceutical sector

The time span of this study was limited to one year before and two years after the recession. Many countries were already beginning to recover from the economic recession in 2010 and the value of this study for those recovered countries as a measure of the impact of the economic crisis on the pharmaceutical sector is thus limited. However there may be more to learn from this recession which could guide future policy responses to future recessions. For example some countries experienced severe declines in GDP but did not show any decline in pharmaceutical consumption.

Conclusions
The economic recession which began in 2008 has had a mixed effect on pharmaceutical consumption, expenditures and prices. The largest changes have occurred in high income countries and in Europe. On country level, particulary the Baltic States showed large changes in their pharmaceutical consumption, expenditure and prices. No consistent pattern in the decline of consumption of particulair classes or individual medicines were seen. This recession provides an opportunity to identify which policy approaches most effectively prevented or contributed to declines in pharmaceutical consumption.

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Executive summary

Impact of the economic recession on the pharmaceutical sector

Introduction
With the collapse of the housing market in the USA and parts of Europe in 2007 the world entered a financial crisis which lasted at least through the years 2008 and 2009. Depending on the country governments adjusted their budgets, which had considerable impact on the available funding to pay for health services.(1-3) In the Organisation for Economic Cooperation and Development (OECD) countries the average amount spend on healthcare before the recession was about 9% of the gross domestic product (GDP), ranging from 6% in Korea, Mexico and Poland to 15,3% in the USA (numbers of 2005).(4) In a recession governments may choose to lower their health care budgets. Since medicines or pharmaceuticals are a substantial part of the health care budget world wide (around 17% in OECD countries) it is likely that governments may take measures to reduce these costs. As a consequence patients may find themselves unable to pay for their health services. It is hard to gauge the implications of the recession on people's health. Experience from past recessions has shown that the impact can be severe. (5) Stukler et al. showed that suicides and homicides rose among working-age men and women when unemployment rose rapidly during times of recession in Europe. A one percent increase in unemployment caused an increase in suicides of 0,79%. (6) An increase in underweight rates among primary school children and low birth weight were observed during the crisis in Thailand.(7) In Mexico mortality among elderly and children was 5-7% higher during the crisis of 1995-1996 when compared to non-crisis years. According to the authors this increase is most likely related to the magnitude of economic crisis and a reduction in public sector medical services. (8) These are some examples of the possible impact of an economic crisis on public health. At the 2009 Executive Board meeting held in January 2009, WHO was requested to investigate the impact of the current recession on health. (9) As part of this investigation, a programme has been established which focuses on the impact of the global economic crisis on the consumption, expenditure and prices of medicines.(9) This present report will address the impact of the economic recession on the pharmaceutical sector from the beginning of 2007 to the end of 2009. In this report other economic recessions during the twentieth century will be described, beginning with the Great Depression in 1930’s, to put the 2008-2009 economic crisis in perspective. The Asian Crisis in 1997 was the first crisis where the impact of a recession on public health was assessed. Therefore this crisis will be highlighted. We will also describe the development of the present economic crisis. We will highlight some policy changes with respect to public health in countries severely affected by the economic recession, like Estonia, Latvia and Lithuania. After this background section we will describe the data and methods used for analysing the changes in pharmaceutical consumption in relation to the economic situation. Data on pharmaceutical consumption, expenditure and prices was provided by IMS Health for 84 countries for each quarter in the period 2007-2009.(10) The results of these analyses will be presented in the results section. First we will present the changes in pharmaceutical consumption in different areas over the world where we will look in more detail at countries with interesting changes in their consumption pattern. The consumption divided in acute and chronic indication and in original & licensed brands and other brands & unbranded medicines will be investigated to see if there is a different effect of the

6

Introduction

Impact of the economic recession on the pharmaceutical sector

economic recession on the consumption of these different categories. We will also focus on pharmaceutical expenditure and prices to see if these were affected by the crisis. In countries with a clear decline in consumption we will look in more detail to the pharmaceutical consumption at different ATC levels (Anatomic therapeutic classification) and we will try to identify marker products which could predict a decline in pharmaceutical consumption in times of economic recession. These marker products could thus act as sentinel products. A shift was expected from the use of private to public health facilities because they are less expensive. Data of four countries will be analysed to detect such a shift. In the discussion this study will be compared to other studies carried out especially those regarding the Asian Financial crisis. Some of the implications for (pharmaceutical) policy and public health will be given and finally some recommendations for further research will be made. The purpose of this report is to provide an overview of the changes in pharmaceutical consumption, expenditure and prices for different regions in the world and some observed changes will be highlighted in more detail. This report provides information that can be used by policy makers, development planners and pharmaceutical experts to guide their responses in addressing the present recession and in monitoring a next recession.

7

Introduction

Impact of the economic recession on the pharmaceutical sector

Background
History of recessions
The world has already faced multiple financial crises during the 20th century. Some resulted in an economic crisis in which not only the financial sector collapsed but the Gross Domestic Product (GDP) dropped and unemployment rose. One of the most severe recessions was the Great Depression which started in 1929 in the USA with the collapse of the USA stock market prices. (11) It quickly spread over the world because the USA invested and loaned substantial amounts of money to Europe to recover from World War I. Although the Great Depression started in the USA, Australia, Canada and Germany were the countries which were most severely affected by this crisis.(12) Recovery started in most countries in 1933 although they did not fully recover until the beginning of World War II, when governments increased their spending to produce war materials. Another recession which had a great impact world wide was the 1973 oil crisis. As a response to the re-supply of the Israeli military by the USA during the Yom Kippur war, the Organization of the Petroleum Exporting countries (OPEC) brought an oil embargo into force. (13) As a consequence the price of oil increased by 395%. (14) This price increase of crude oil had a negative impact on industrial production. In March 1974 the embargo was lifted and the recovery began. At the end of the 1970s Latin-America entered a recession. In the 1960s and 1970s Latin-American countries, especially Brazil, Mexico and Argentina, borrowed large amounts of money for industrialization. (15) Mexico, Brazil, Argentina and Venezuela had a debt of $29 billion in 1970 which increased to $159 billion in 1978 (see Figure 1). In 1979 interest rates in Europe and USA increased making it more difficult for the Latin American countries to pay back their debts. When the international capital markets discovered that the Latin American countries could not pay back their loans (August 1982), they refused new loans to these countries. This caused a halt to the increase of investments in industrialization. To prevent a more severe increase of the debts the Latin American countries changed their import substitution industrialization economies to be export-oriented industrialized economies. Large capital outflow caused a depreciation of the exchange rates which led to an increase of interest rates. This improved the situation in these countries although they still face large debts to date.

8

Background

Impact of the economic recession on the pharmaceutical sector

Figure 1: Total Latin American Debt Outstanding, 1970-1989. (15)

In 1997 South East Asia entered a recession which will be described in more detail in the next section. The beginning of 2000 was marked by a recession caused by the burst of the internet bubble. (16) The market had great expectations in the ability of so called dot-com companies to make enormous profits. There was also a substantial amount of capital available to buy stocks. Therefore the prices of stocks increased rapidly. Even before the companies made real profits the prices of their stocks were very high. Suddenly the confidence fell and many companies went bankrupt dragging down investors. (17)

Asian Crisis 1997-2000
The Asian Crisis is the first crisis in which more thorough investigations of the consequences on health were performed. The Asian Crisis started in Thailand. After several years of economic prosperity Thailand developed one of the highest current account deficiencies among developing countries (8% of GDP in 1995 and 1996).(7) A decline in demand for Thai export products led to the collapse of the Thai baht. The central bank‘s reserves were not big enough to maintain the value of the Thai baht to the USA dollar. A lack of confidence in the economies combined with the decline in currencies lead to a capital outflow, bankruptcy and unemployment. The crisis spread from Thailand to the other countries in Asia. Indonesia, Thailand and South Korea were the countries most affected in South-East Asia, followed by Malaysia, Hong Kong, Philippines and Laos. Taiwan, India, Singapore, Brunei and China were the countries which were affected least.(18) Thailand, South Korea and Indonesia received support from the International Monetary Fund (IMF) to stabilize their currency. (19) IMF demanded these countries to restructure their banking sector and required the countries to keep their interest rates high to prevent capital outflow and a further

9

Background

Impact of the economic recession on the pharmaceutical sector

decline of their national currencies. Malaysia refused the assistance of IMF because of these restrictions. (19) The crisis in Indonesia became more complex than the crises in the other countries since it turned into a political and social crisis, thereby complicating the Indonesian economic situation and responses of the Indonesian government to the economic crisis. (20) WHO investigated the impact of the Asian financial crisis on the pharmaceutical sector in Indonesia. It was expected that the use of health facilities would decrease, but the health centres and hospitals did not report significant changes in the number of patient visits. However Indonesia did experience a significant shortage of raw materials for pharmaceutical production due to changes in exchange rates. The government took several measures to protect the pharmaceutical sector. One of these measures was monitoring the availability of 12 key indicator medicines. Another measure was to provide additional funds for the provision of a national buffer stock of essential medicines. The monitoring of the availability of generic products was also a measure to guarantee the access to generic products. To cover the excess of exchange rate to buy raw materials above Rp 8000 per USA dollar the government provided additional subsidies to pharmaceutical companies producing generic products. The government also established the Jaring Pengaman Sosial Bidang Kesehatan (JPS-BK), a social security net for health. This fund was especially meant for poor households.

Figure 2: Pharmaceutical consumption in South East Asia Q2 1996 - Q2 2002. These figures show that the decline in pharmaceutical consumption (b) started later than the decline in GDP (a). (21)

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Background

Intercontinental Medical Statistics (IMS) Health has performed a retrospective investigation of the consumption of medicines during the crisis in South-East Asia. (21) Their research covered the consumption data for six years (see Figure 2). They measured the overall pharmaceutical consumption and pharmaceutical consumption split by acute and chronic indication. The observed decline in volume of pharmaceutical consumption (see Figure 3) was the most severe in Indonesia (-13%), Thailand (-22 %) and South-Korea (-16 %). Therefore IMS Health concentrated their more in depth research on these three countries. The decline in pharmaceutical consumption was consistent

Impact of the economic recession on the pharmaceutical sector

with the economic situation in three countries. The decrease in GDP was also the most severe in Indonesia, Thailand and South-Korea. The data gathered by IMS Health showed that the pharmaceutical consumptions dropped when GDP growth dropped, although the decline started some quarters later (see Figure 2 and Table 1, the left figure about the development of GDP shows a decline at t=0-1 quarters and the right figure about the pharmaceutical consumption t=2-3 quarters). The recovery of pharmaceutical consumption took longer than GDP.

Pharmaceutical consumption South East Asia 1997/1998
15% 10% Volume Growth (%) 5% 0% -5% -10% -15% -20% -25%
PH IL IP PI N ES ES IA N D YS IA RE AN RE A AI LA PO IW KO O N G

40% 20% 0% -20% -40% -60% -80%

N

AL A

G A

D O

TA

TH

SI N

U TH

IN

M

Volume Growth

Value Growth (Local Currency)

SO

Value Growth (USD)

Figure 3: This figure reflects the change in volume of pharmaceutical consumption in South East Asia in 1997-1998. The value of the pharmaceutical consumption is given in local currencies and in US dollars. Indonesia, Thailand and South Korea showed the most dramatic decline in pharmaceutical consumption. (9)

Looking at the difference between consumption of acute and chronic medication one can see that the consumption for chronic indication recovered quicker than the overall consumption (Table 1).
Table 1: One can see in this how many quarters it took for real GDP (expressed in local currency), overall drug consumption, consumption of medicines for acute and chronic indication (expressed in supply units) to decline, get to the bottom of the decline and to recover. (9)
Overall Drug Consumption Consumption for Chronic Consumption for Acute (SU) Disease (SU) Disease (SU) Qtrs. Qtrs. Qtrs. Qtrs. Qtrs. Qtrs. Qtrs. to Qtrs. to Qtrs. to Qtrs. to Qtrs. to Qtrs. to to to to to to to recovery bottom recovery bottom recovery recovery decline bottom decline decline decline bottom Real GDP (LCU) Thailand Indonesia Korea Average 1 2 2 1.67 5 (.86) 6 (.85) 4 (.92) 5 18 17 8 12.67 2 2 1 1.67 5 (.78) 7 (.81) 5 (.80) 5.67 (.80) 18 13 10 13.67 3 2 3 2.67 4 (.79) 4 (.75) 3 (.90) 3.67 (.81) 9 15 8 10.6 2? 2 1 1.67 6 (.72) 7 (.80) 5 (.67) 6 (.73) 26

H O

N G

K

Never 19

11

Background

12

Value Growth (%)

Impact of the economic recession on the pharmaceutical sector

Economic crisis 2008-2009
The main cause of the current economic crisis is thought to be that US banks had provided high-risk loans to people with poor credit history to purchase homes prior to 2007. (22) Between 2004 and 2006 house prices fell and interest rates in the US rose from 1% to 5,35% thereby triggering a slowdown of the housing market. (22) Homeowners could no longer afford the large mortgages they had taken to buy their houses. As a consequence banks and investors suffered losses and would not take on any more risk, leading to a freezing of the credit market. The same problem occurred in Europe. The European Central Bank (ECB) and the US Federal Bank made funds available for banks and they have cut interest rates so the banks could start providing loans again. Since banks were still very cautious about loans and did not lend to one another, the measures of the ECB and the Federal Reserve did not prevent the crisis progressing. From the beginning of 2008, banks and investors faced severe problems. (22) Governments tried to keep banks and investors in business by providing them very large loans in exchange for shares in the banks. On September 15, 2008 Lehman Brothers, a major investment bank in the USA, filed for bankruptcy being the first of many banks in the US and Europe to collapse. The lack of confidence in the credit market led to a decline in economic growth and from the second half of 2008 many countries all over the world entered a recession. (22) This recession started in the developed countries and caused a decline in revenues. The developed countries needed money to stabilize their own economy and had no extra funds left to provide loans to and invest in developing countries. The decline in loans and investments is the reason why developing countries (which were highly dependent on loans and development assistance) were hit hard by the current economic recession. The costs of existing loans became higher due to the decline in exchange rates. Some export oriented economies such as China or India saw a decline in demand for their exports, with consequences for their national revenues.(23) Examples of countries which were hit hard by the recession are Estonia, Latvia and Lithuania. (24) After years of rapid growth of their GDP, all three countries saw their GDP decline rapidly during the ’08-’09 recession. Estonia saw a decline in GDP of -15,0% in the first quarter of 2009 and Latvia showed a bigger decline of -18,6% in the same quarter (see table 2). (25) In the Euro area (EA16) and European Union (EU27) the decline of GDP in 2009 compared to 2008 decreased (see Table 2).(25) In Q1 09 these declines were respectively -5,0% and -4,9%. In Q4 09 these declines were -2,1% for the Euro area and -2,3% for the European Union. Declines in GDP were still large in Estonia, Latvia, Lithuania and Romania compared to the Euro area and the European Union but not as large as in Q1 09. Poland had no decline in GDP although the growth rate became less (from 1,5% in Q1 09 to 1,0% in Q3 09).

12

Background

Impact of the economic recession on the pharmaceutical sector

Table 2: Growth rates of GDP in volume of 2009 compared to the same quarter of 2008. (25)

Percenta ge cha nge compa red wi th the s a me qua rter of the previ ous yea r Q1 09 EA16
1 2

Q2 09 -4,8 -5,0 -16,1 -17,3 -19,7 -8,7

Q3 09 -4,0 -4,3 -15,6 -19,3 -14,2 7,1

Q4 09 -2,1 -2,3 -9,4 -17,9 -13,0 -6,6

-5,0 -4,9 -15,0 -18,6 -13,1 -6,2

EU27

Es toni a La tvi a Li thua nia Roma ni a

1,5 1,3 1,0 na Pol a nd 1 ) EA 16 consist of Austria, Belgium, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. 2 ) EU27 includes Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. NA = not available.

The governments of the Baltic States needed to have a careful look at their budgets because of declining revenues. Health care is one of the largest expenses on the budgets of governments. Some of the measures the Baltic governments took with respect to their health system/budget are highlighted below. The three Baltic States intended to adopt the Euro as their national currency in 2011. Therefore they did not want to consider a devaluation of their currency, otherwise they would have to start over with the application for joining the euro zone. (24) Besides the adoption of the euro there was another issue. Most loans in the Baltic States were financed with money from Sweden. If the Baltic countries devalued their currencies their debts would increase. In Estonia several (health care) reforms were implemented. One of the biggest changes was the policy of payments on sick leave. Before the recession people would receive money from day 2 of their sick leave out of the National Health Insurance Fund. Now people only receive money after 3 days of sick leave by their employers during maximal 5 days and the National Health Insurance Fund (EHIF) only starts to pay on day 9 of the sick leave. This could save the Estonian government 29 million Euros. (26) The government also decided to simply reduce the budget of the EHIF by 40 million Euros. (1) The budget of EHIF is used to cover medical services for all insured people. The Latvian government decided to increase the fees of healthcare paid by patients as a measurement to reduce the expenses on health care. (27) The overall budget cut of the ministry of health was 12,7 million Euros of a total budget cut of 71,1 million Euros for the entire government. (2, 3) In January 2009, the government decided to reduce the reimbursement levels from 90% to 75% and from 75% to 50% for different categories of care. (3) Other measures taken were transfer of some medical treatments from hospitals to out-patient clinics and reduction of hospital funding by 30-45%. The Lithuanian government reduced their public expenditure by 956,52 million Euros (28). This included a reduction in the budget of the Compulsory Health Insurance Fund (CHIF) by 86,55 million

13

Background

Impact of the economic recession on the pharmaceutical sector

Euros. (22) A reduction of the budget for subsidizing medicines of 9,04 million Euros was agreed at the same time. In all the Baltic countries the governments decided to increase their Value Added Tax (VAT) on pharmaceuticals. One of the reasons was to put the taxes in line with some European tax levels, but the most important reason to implement this change was to increase government revenues. (27, 2931)

WHO involvement in assessing the impact of the recession
To discuss the impact of the financial crisis on global health, WHO convened a high-level meeting on January 19, 2009. (9) At the time of this meeting there was a widely stated expectation that this current crisis would be the worst since the Great Depression in the 1930s. Increases in food and fuel prices before the recession brought more than 100 million people back into poverty. (16) There was a concern expressed that the poor would be hit the hardest by the economic recession as unemployment would lead to a drop in household income and in many countries unemployed people would lose their health insurance. (19) This would lead to an inability to pay for health care. Figure 4 shows the relation between an economic crisis and a decreased health status. An economic crisis means that there is less economic growth, which leads to higher unemployment and inflation. This can lead to bankruptcies. It also means that household income and tax revenue decrease. When families have less to spend they will buy less food and food of less quality. They also cut back their expenses on health and education. Governments have to cut back on their budgets when tax revenues decline.

14

Background

Figure 4: This flowchart shows the relation between an economic crisis and a decreased health status. An economic crisis implies an increase in unemployment and inflation. It also leads to bankruptcies. This causes a decrease in household income and tax revenues. People spend less money on food, health and education. Decreased revenue means that governments have to cut back on their budgets. A cut back on the heath and education budget can mean that funding for immunization, health insurance and improvements in technology declines. This can lead to a decreased health status of the population. Mortality rates will increase and life expectancy will decrease. (19)

Impact of the economic recession on the pharmaceutical sector

Some important shifts in health expenditure were expected to be seen. Private out-of-pocket expenditure usually declines in a recession because most services are also available in the public sector at lower costs. In the Mexican crisis of 1995-1996 out of the pocket health expenditures declined from 3,9% of GDP in 1994 to 3,1% of GDP in 1995.(8) The demand for public services would exceed the available supply and cause problems in access for those who normally depend on public services. A recession is often accompanied by inflation and sometimes devaluation of domestic currencies which causes an increase in the price of imported raw materials, medicines and medical equipment. A more efficient way of health sector spending could lead to an increase in the use of the cheaper generic medicines instead of branded medicines. Usually branded medicines are priced higher but in some circumstances they are not (i.e. when a country has a reference price system). Because of the rapid evolution of the economic recession it was decided at the high-level meeting on January 19, 2009 that monitoring of early warning signs was of great importance. The monitoring requires information from various sources. The WHO has established a programme to track the impact of the recession on health and the pharmaceutical sector. IMS Health provides quarterly reports on pharmaceutical consumption, expenditure and prices in 84 countries. Changes in general consumption, consumption of medicines for acute and chronic indication, consumption of original & licensed brands and other brands & unbranded medicines, expenditure and price per Standard Unit are monitored in the 84 countries. These 84 countries world-wide represent 81% of the global population, only the countries in Africa were covered less.

Hypotheses
The quarterly reports of IMS Health/WHO offer only an aggregate overview of the changes in consumption. Therefore we decided to look in more detail at the detected changes. Based on experiences from previous recessions this study was undertaken to test the following hypotheses in more depth: • A decrease of GDP will lead to a decrease in pharmaceutical consumption. The more severe the decline in GDP, the more severe the decline in pharmaceutical consumption will be. Consumption of medicines for an acute indication will decrease more than medicines used for a chronic indication. A shift of the consumption of branded medicine to generic medicines would occur. Prices in national currency units (NCU) will increase more in countries which were more severely affected by the economic crisis. The overall pharmaceutical expenditure will stay the same or drop while expenditure in the public sector will increase and the private sector will decrease, where such information is available. In countries which have a substantial decline in pharmaceutical consumption marker products can be detected to track changes in pharmaceutical consumption due to an economic recession.

•

• •

•

•

15

Background

Impact of the economic recession on the pharmaceutical sector

Methods
IMS data collection
The data for this study was obtained by Intercontinental Medical Statistics (IMS Health). IMS Health is a company which provides market intelligence and expert analysis to healthcare providers and pharmaceutical industries. IMS collects pharmaceutical consumption data from wholesalers, hospitals and/or dispensing outlets such as pharmacies and drugstores.(10) To gather this consumption data IMS uses different methods. Within countries IMS uses the same method but the methodology used varies between countries and depends on the nature of the pharmaceutical supply systems. IMS collects data in over a hundred countries world-wide. Data used for this study originates from 84 countries. These 84 countries represent about 81% of the global population. There is a lack of coverage in the African countries. Only South Africa, Algeria, and some countries in French West Africa are covered. Morocco, Tunisia and Egypt were covered as well but these countries belong to the WHO Eastern Mediterranean region. In Central America the data is combined for Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama and in French West Africa for Benin, Burkina, Cameroon, Congo, Gabon, Ivory Coast, Mali, Senegal and Togo. If IMS does not collect data from all suppliers in a country they project the sample of a particular distribution channel to the national level. In most low- and middle-income countries, IMS measures consumption in the private sector. In many countries the private sector is the major or only supplier to the public sector, which makes it hard to measure both private and public sector. If IMS collects information on the distribution chain of the private sector, they do not give an estimate based on this gathered information for the public sector. IMS makes an explicit distinction between countries where they are able to cover both public and private sector and countries where they are not. Consumption is expressed as volume in standard units (SU). This is a measure used by IMS derived from the number of doses. It is measured differently depending on the formulation of the medicine. It is different from the measure WHO uses, the Defined Daily Dose (DDD). DDD is defined by the WHO as the assumed average maintenance dose per day for a drug used for its main indication in adults. (32) Usually one SU equals one capsule, one tablet, one prefilled syringe, one dose of inhaled medicine or 5 ml of an oral suspension etc. DDD’s and SU’s are used as a measure of consumption of medicines by patients. Care is needed when standard units are compared between countries as formulations can differ between countries. In this study we compare changes in SU’s so the difference in formulation between countries is not an issue. The European Pharmaceutical Market Research Association (EphMRA) developed an anatomical classification system (AC-system) which is used by IMS to make the subdivision in acute and chronic indication. (24) IMS based the subdivision of acute and chronic medicines on an analysis of primary care records in the United Kingdom as well as subsequent medical review. The AC-system of EphMRA is used as a base for the Anatomical Therapeutic Chemical classification system (ATC-system) which is used by WHO as an international standard. Drugs are classified in three or four different levels in the EphMRA system, while the WHO-ATC-classification uses four to five levels. The fourth level in the EphMRA system is the molecule level. The fourth level in the WHOATC-classification is a therapeutic/chemical/pharmacological subgroup and the fifth level is the

16

Methods

Impact of the economic recession on the pharmaceutical sector

chemical substance subgroup. Both classification systems use the abbreviation ATC. In this report ATC refers to the EphMRA classification. For the purpose of this study medicines were grouped in two categories: original & licensed brands and other brands & unbranded medicines. A subdivision in original & licensed brands versus other brands & unbranded medicines can be used to detect movements from the use of originator medicines to generics, although there are some complexities within different classes of drugs that must be taken into account before definitive conclusions can be made. IMS Health defines an original brand as a brand to be designated as an original brand, with a molecule in the product which has or has had a molecule patent and is marketed by the patent holder (originator) of that product. (10) Licensed brands are brands with a license which are sold by a different company than the originator. Original and licensed brands also include products whose patents are expired but which are still sold under their brand name. A formulation or process patent or a supplementary protection certificates are not sufficient criteria on their own to be included in this group. Products which are being marketed by companies which are neither the originator nor hold a license from the originator belong to the category other brands & unbranded medicines. Other brands & unbranded medicines are not the same as generics since products protected by formulation, process and supplementary protection certificates may be included in this group if no molecule patient existed. This group also includes branded products that contain ingredients for which there are no originators. Some examples of these products are some oral contraceptives and insulins, vitamins, infant milk and homeopathic products. The distinction between other brands & unbranded medicines can sometimes appear somewhat artificial, depending on how the product is described rather than how it is either priced or marketed. Generally IMS collects information about the price of a product from various sources but only from a single point in the supply chain. This information can relate to average weighted prices, price lists, reimbursement prices or a combination of all three. IMS estimates the prices charged at other points in the supply chain using averages based on local country knowledge. Therefore the estimated prices do not represent actual prices charged at individual product level. The index Price per Standard Unit is calculated by dividing the total reported value of sales by total volume for each country. Movements in this index can be a result of new product introductions, government policies relating to reimbursement prices and approved margins through the distribution chain and/or increases in generic market share. It is not necessarily a sign of higher prices of individual products. IMS Health usually collects information based on national currency units. Therefore changes in exchange rates will not be reflected in prices, unless the change affects the price being charged in the local currency due to importation costs. In the multi-country audits such as French West Africa and Central America local currency has been converted to $US or €. As a result exchange rate fluctuations directly affect the prices seen in IMS Health audits. Pharmaceutical expenditure depends on the volume of consumption and prices of medicines. Therefore changes in pharmaceutical expenditure can relate to changes in volume and changes in prices. Since the pharmaceutical expenditure depends on the prices which are estimated by IMS the same uncertainties can be applied to the expenditure as to the prices. As with the prices, the expenditure is also expressed in national currency units.

17

Methods

Impact of the economic recession on the pharmaceutical sector

Provision of indexed data
IMS provided a dataset with the pharmaceutical consumption in 84 countries for the first quarter of 2008 till the fourth quarter of 2009. Data was provided for two different indices. The first index shows the evolution compared to the first quarter of 2008 (Q1 08). The first quarter of 2008 was considered to be at least one quarter before the economic recession struck. By using this index a comparison can be made between the period before the recession and during or after the recession. A general formula for the calculation of these index numbers based on Q1 08 for the consumption expressed in SU’s is:

index number Qn =

Total SU' s in Qn Total SU' s in Q1 08

To calculate the index numbers for expenditure or price per IMS SU total SU’s have to be replaced by the value for expenditure or price per IMS SU. To take seasonal variation into account another index number was calculated based on the year before:

index number Qn =

Value of total SU' s or Expenditure or price in Qn Value of total SU' s or Expenditure or price in Qn - 1

To acquire more data points for the graphical transformation index numbers for the period Q1 2007 to Q4 2007 were calculated for consumption, consumption split by acute and chronic indication and split by original & licensed brands and other brands & unbranded medicines. These index numbers (Q1 07 – Q4 07) are based on Q1 08 and were calculated with the aid of the index numbers based on the year before and the index numbers of Q1 08:

Index number Q x

07

indexed on Q1 08 =

index number Q x 08 indexed on Q1 08 index number Q x 08 indexed on year before

Graphical transformation methods
After the calculation of index numbers for Q1 07 - Q4 07 MS Excel was used for graphical representation. To display different changes in the different areas over the world, graphics were made with the pharmaceutical consumption per WHO region (AFR, AMR, EMR, EUR, SEAR and WPR) and a global average. To see if the changes were dependent on the income level, countries were divided into World Bank income categories (high income, upper middle, lower middle and low income countries). To look in more detail at the countries, which showed an interesting change, graphics were made with the consumption of these particular countries, other countries of interest in this WHO region, global average and the average of the WHO-region to which the countries belong. The weighted averages of pharmaceutical consumption (split by acute and chronic indication and split by original & licensed brands and other brands & unbranded medicines) were provided by IMS Health. The averages of the pharmaceutical consumption (split by acute and chronic indication and split by original & licensed brands and other brands & unbranded medicines), pharmaceutical expenditure and price per IMS SU per World Bank income category and the averages of the pharmaceutical expenditure and price per IMS SU per WHO Region were calculated as a crude

18

Methods

Impact of the economic recession on the pharmaceutical sector

average of the indexed data of the individual countries. The global averages were also calculated as crude averages of the indexed data of the individual countries.

Economic indicators
Economic indicators describe the statistics of the economy of countries. Different economic indicators are used for different purposes. Gross Domestic Product (GDP) is a measure for the total production of a country in a year and therefore a measure for the economic performance of a country. GDP is defined as the total market value of all final products and services produced within the borders of a country in a year. To investigate if a decrease in pharmaceutical consumption correlates with a decrease in growth of GDP a linear regression analysis was performed. The volumes of GDP in index numbers for the 29 European countries were extracted from the website of EUROSTAT, the statistical agency of the European Union. The index numbers of Q1 09−Q3 09 compared to the same quarter a year before for pharmaceutical consumption and GDP were used to correct for seasonal variation. The periods Q1 09−Q3 09 were chosen to compare GDP and pharmaceutical consumption of the most recent periods. A decline in GDP leads to a decline in exchange rate of a local currency against a hard currency as the Euro or the US dollar. A lower exchange rate causes an increase in the price of imported raw materials and medicines. As a result price per IMS SU in national currency will increase. To assess whether prices (in national currency units) showed a bigger increase if the country was more affected by the economic recession a linear regression analysis was performed. For the same reasons as mentioned before the index numbers of GDP and pharmaceutical prices in European countries for Q1 09 compared to Q1 08 were used.

Shift from private to public sector
People have less to spend during a recession and therefore it was expected that people would make more use of the facilities in the public sector instead of the private sector. To see if this shift occurred graphics were made for the countries where IMS could provide data for both sectors: Brazil, Mexico, South Africa and Uruguay. For the consumption of acute and chronic medication and original & licensed brands and other brands & non branded medicines graphics were made for each country. For the overall consumption one graphic is made. Indexed consumption data for the period Q1 07 – Q4 09 is used for the graphical display of this possible shift. The data is indexed on the first quarter of 2008.

Country selection
Based on the analysis of the initial series of tables and graphics on the overall consumption countries with a substantial decline in pharmaceutical consumption were selected to be examined in more detail on EphMRA ATC 2/3/4 level. Pharmaceutical consumption depends like consumption of other products on the demand of the consumers. Therefore natural fluctuations in pharmaceutical consumption are common. Because we did not correct for seasonal variation we only selected countries with a decrease in pharmaceutical consumption of more than 5% for three consecutive quarters. Countries were selected based on the data provided up to the first quarter of 2009. Countries which showed a decline of three consecutive periods after this point in time were not included in these more detailed analyses.

19

Methods

Impact of the economic recession on the pharmaceutical sector

Estonia, Latvia, Lithuania and Romania were selected since these countries showed a substantial decline in overall consumption. Russia showed a number of declines as well but was not selected because of the problems with acquiring insight in their health systems. Poland was selected as a comparator because this is one of the few countries in Eastern Europe which was hardly affected in terms of the economic crisis. The consumption in Poland dropped by -9% in Q2 08 compared to Q1 08. However, when looking at the consumption pattern from Q1 07−Q4 09 one observes an increase in consumption in the first quarter of every year and a constant consumption during the rest of the year although at a lower level compared to this first quarter.

Impact of the recession on specific groups and individual medicines
One of the goals of this analysis was to detect groups of medicine which showed a big decrease in consumption and groups of medicines which consumption hardly changed. If possible a selection of marker medicines in these groups was made. IMS Health provided a dataset with the SU’s per EphMRA ATC 2 category for the Estonia, Latvia, Lithuania, Romania and Poland for the period 2007-2009. After sorting the data per country, the total SU’s per quarter for each country were calculated. With the aid of this total, the SU’s per EphMRA ATC 2 category were expressed as a percentage of the total SU’s of the corresponding quarter. An average of these percentages for each EphMRA ATC 2 category was calculated. These averages were used to make a Pareto analysis per country. For this analysis the EphMRA ATC 2 categories were sorted by highest average percentage of total SU’s. After the data was sorted a cumulative percentage was calculated to generate a graphic to show the distribution of EphMRA ATC 2 categories of total consumption. Based on this Pareto analysis 30% of EphMRA ATC 2 categories were selected which accounted for about 80% of total consumption. Seasonal variation has great influence on the changes in consumption. Therefore it was decided to compare a specific quarter with the corresponding quarter a year before. The periods Q4 08 and Q1 09 were chosen as quarters during the recession, because these periods contain the most recent data and it is still possible to compare the values to a period before the recession started. The winter is also one of the periods in which people have many costs and pharmaceutical consumption is more likely to be affected. The SU’s were converted in SU’s per capita for a better comparison of the data between countries. Population data for the countries in question was extracted from the website of EUROSTAT. The SU’s per capita for Q4 07 and Q1 08 were added as well as the values for Q4 08 and Q1 09. Of these two values the absolute and percentage change were calculated. After this calculation a ranking was made based on the increase in percentage change. These rankings were examined to look for categories which had a decline in at least three of the four recession hit countries (Estonia, Latvia, Lithuania and Romania) and preferable not in Poland. This selection was used to select the EphMRA ATC 2 categories of interest for further analysis on EphMRA ATC 3 level. Only EphMRA ATC 2 groups which could have a potential harmful effect on public health if they are used less by patients were selected. Methods IMS Health provided a dataset with the SU’s for these specific EphMRA ATC 3 categories, which were selected. For the EphMRA ATC 3 categories the SU’s per capita were calculated for the period Q4 07 + Q1 08 and for Q4 08 + Q1 09 and were compared. The percentage change during these periods was

20

Impact of the economic recession on the pharmaceutical sector

calculated. Again it was checked which EphMRA ATC 3 categories in this case met the criteria of declining in three of the four recession hit countries and not in Poland. Of these categories the development at product level was investigated to identify possible marker products to track changes in a recession. Graphics were made of products when SU’s per capita were available for all five countries (Estonia, Latvia, Lithuania, Romania and Poland). The developments were checked for selection of possible marker products. A marker product would be a product that has a sudden change in consumption shortly after the initiation of the recession in Q1 08. Changes in consumption pattern that started in the beginning of 2007 and continually developed were not considered to be caused by the economic recession.

21

Methods

Impact of the economic recession on the pharmaceutical sector

Results
Overall pharmaceutical consumption
Based on the indexed data provided by IMS Health figures were produced to show changes in the consumption of pharmaceuticals from the first quarter of 2007 to the fourth quarter of 2009. Data was indexed on the first quarter of 2008 which is at least one quarter before the recession. In most parts of the world it appears that the pharmaceutical consumption was not affected by the economic recession. Figure 5 shows that the European region (EUR) the only WHO region is where consumption is lower compared to before the recession (-6% in Q3 09 compared to Q1 08), although the consumption in Q4 09 increased. In the other WHO regions the consumption increased, ranging from +12% (Q4 09) in the American region (AMR) to +28% (Q4 09) in the South East Asian region (SEAR).
Average pharmaceutical consumption index Global and WHO regions
(Evolution on Q1 08) 1,30 1,25 1,20 1,15 1,10 1,05 1,00 0,99 0,95 0,95 0,90 0,93 Q1 07 Q2 07
GLOBAL

1,28 1,22 1,18 1,16 1,14 1,12

1,02

Q3 07

Q4 07
AFR

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09
SEAR

Q3 09
WPR

Q4 09

Figure 5: Pharmaceutical consumption global and by WHO regions. Volumes of consumption in SU’s indexed on Q1 08 were used for this figure. The pharmaceutical consumption in the European region declined after the recession started (Q1 08) until Q3 09, while the pharmaceutical consumption in the other WHO regions increased.

The current economic recession began in the developed world. To see if the more developed countries were affected more by the recession change in pharmaceutical consumption was assessed for different income levels according to World Bank classification (Figure 6). This figure shows that only the high income countries showed a small decline of -4% (Q3 09 compared to Q1 08) while the other countries with less income all had an increase in their consumption. The low income countries even had an increase of +18% in Q4 09 compared to the first quarter of 2008.

22

Results

Impact of the economic recession on the pharmaceutical sector

Average pharmaceutical consumption index Global and World Bank income categories
1,20 1,15 1,10 1,05 1,01 1,00 0,97 0,95 0,96 0,93 0,90 Q1 07
Global

(Evolution on Q1 08) 1,18 1,16 1,12

1,06 1,04

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

High income

Upper middle income

Lower middle income

Low income

Figure 6: Pharmaceutical consumption global and by World Bank classification. Volumes of consumption in SU’s indexed on Q1 08 were used for this figure. Only the high income countries showed a slight decline for three consecutive quarters after the recession, until Q3 09.

Since averages per region do not give a clear picture about developments at country level, charts were produced to look in more detail at developments in specific regions. Most of the 84 countries did not show a decline in their pharmaceutical consumption. China even had an increase in pharmaceutical consumption of +40% (Q4 09 compared to Q1 08) (see Figure 7). However there were some exceptions: Estonia (-28% Q3 09), Latvia (-24% Q3 09), Lithuania (-17% Q3 09), Romania (-11% Q3 09), Mexico private sector (-14% Q3 09) and Russia both private (-19% Q3 09) and public sector (-35% Q2 09) all showed a severe decline in pharmaceutical consumption. Italy and the United Arab Emirates showed a decline for three consecutive quarters as well, but their pharmaceutical consumption increased in Q1 09. Malaysia only showed a decline of five consecutive quarters starting in Q4 08 (-7% Q4 09 compared to Q1 08) (Figures 7 & 8).

23

Results

Impact of the economic recession on the pharmaceutical sector

Pharmaceutical consumption WPR, China and Malaysia
(Evolution on Q1 08) 1,40 1,30 1,20 1,10 1,00 1,22 1,16 1,40

0,97 0,95

0,90 0,90 0,80 Q1 07 Q2 07 Q3 07
GLOBAL

0,93

Q4 07

Q1 08
WPR

Q2 08

Q3 08

Q4 08
CHINA

Q1 09

Q2 09

Q3 09

Q4 09

MALAYSIA

Figure 7: Pharmaceutical consumption in WPR, China and Malaysia. Volumes of consumption in SU’s were used for this figure and indexed on Q1 08. Malaysia showed a decline of -7% in Q4 09 compared to Q1 08, while China showed an increase of +40% in the same period.

Pharmaceutical consumption EUR, Poland, Romania and Baltics
(Evolution on Q1 08) 1,10 1,05 1,00 0,95 0,90 0,85 0,80 0,75 0,70 Q1 07 Q2 07
EUR

1,03 1,02 0,99 0,97 0,89 0,88 0,86 1,02 0,98

Q3 07

Q4 07
Poland

Q1 08

Q2 08

Q3 08
Latvia

Q4 08

Q1 09
Lithuania

Q2 09

Q3 09

Q4 09

Estonia

Romania

Figure 8: Pharmaceutical consumption in EUR, Poland, Romania and the Baltic States. Volumes of consumption in SU’s were used for this figure and indexed on Q1 08. Romania and the Baltic States showed substantial declines in their pharmaceutical consumption.

One of the hypotheses was that a decline in GDP will lead to a decrease in pharmaceutical consumption. Figure 9 shows that in the European region a greater decline in GDP may be associated with a lower pharmaceutical consumption, although this relationship is moderate and varied over different quarters(r2 = 0,3914 to 0,6513 see Annex 1: Correlation decline in GDP and pharmaceutical consumption). Many countries had a decline in GDP but only a limited number of countries (i.e. Estonia, Latvia, Lithuania and Romania) had a severe decline in pharmaceutical consumption. Results

24

Impact of the economic recession on the pharmaceutical sector

Correlation GDP and pharmaceutical consumption EUR y = 0,7106x + 33,528 (Q3 09 compared to Q3 08)
Pharmaceutical consumption (indexed on Q3 08)
110,00 108,00 106,00 104,00 102,00 100,00 98,00 96,00 94,00 92,00 90,00 80,00 LV EE LT 100,00 FI SLV RO HU IE IT PT NL R² = 0,6513

GB NO BE DK LU CH AT GR PL BG ES TR CZ FR SK

85,00 90,00 95,00 Gross Domestic Product (indexed on Q3 08)

Figure 9: This figure shows the relation between the change in GDP and the change in pharmaceutical consumption in 29 European Countries for Q3 09 compared to Q3 08. GDP and pharmaceutical consumption were given as an index compared 2 to the year before (r = 0,6513).

25

Results

Impact of the economic recession on the pharmaceutical sector

Consumption of medicines for acute and chronic indications
The research IMS Health performed on the ‘97-’98 Asian Crisis showed that the consumption of medicines for acute indications decreased more and took longer to return to the pre-recession values than the consumption of medicines for chronic indications. Figures 10 & 11 show that there is little difference between the development of the consumption of medicine for an acute or chronic indication on global and WHO region level. Again the European region is the only region where the consumption of medicines for both acute and chronic indication declined, until Q3 09. The consumption of medicines for acute indications decreased from Q1 08 onwards to -9% in Q3 09. The consumption of medication for chronic indications decreased from Q1 08 with a recovery in Q4 08 and Q1 09 to a decline of -6% in Q3 09. The increase in the other regions ranged from +7−+26% (Q4 09 compared to Q1 08) for the acute indications and from +13−+29% (Q4 09 compared to Q1 08) for the chronic indications.
Average consumption index of medicines for acute indication Global and WHO regions
(Evolution on Q1 08) 1,30 1,25 1,20 1,15 1,10 1,05 1,00 1,00 0,98 1,26 1,20 1,18 1,13 1,11 1,07

0,95 0,96 0,93 0,90 Q1 07 Q2 07 Q3 07 Q4 07
AFR

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09

Q3 09
WPR

Q4 09

GLOBAL

SEAR

Figure 10: Consumption of medicines for acute indication for the WHO regions. The European region showed a decline in consumption of medicines with an acute indication up to -9% in Q3 09 compared to Q1 08. The other regions showed an increase in the consumption of medicines with an acute indication.

Average consumption index of medicines for chronic indication Global and WHO regions
1,30 1,25 1,20 1,15 1,10 1,05 1,00 0,98 0,95 0,96 0,90 0,85 Q1 07
GLOBAL

(Evolution on Q1 08) 1,29 1,23 1,17 1,13

1,03

0,92 Q2 07 Q3 07
AFR

Q4 07

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09
SEAR

Q3 09

Q4 09
WPR

Figure 11: Consumption of medicines for chronic indication for the WHO regions. Again the European region was the only region with a decline (-6% in Q3 09 compared to Q1 08).

26

Results

Impact of the economic recession on the pharmaceutical sector

Average consumption index medicines with acute indication Global and World Bank income categories
(Evolution on Q1 08) 1,20 1,17 1,15 1,13 1,12 1,10 1,05 1,00 0,95 0,90 Q1 07
Global

1,00 0,96 0,93 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

1,02 0,98

Q4 09

High income

Upper middle income

Lower middle income

Low income

Figure 12: Consumption of medicines with an acute indication for the World Bank income categories. Countries with a high income showed a decline from the beginning of the recession. After an initial increase, the consumption decreased in the upper middle income countries in 2009 and seems to recover in Q3 09 and Q4 09.

Average consumption index of medicines with chronic indication Global and World Bank income categories
(Evolution on Q1 08) 1,20 1,17 1,15 1,13 1,10 1,05 1,00 1,07 1,06

1,02 0,97

0,95 0,95 0,93 0,90 Q1 07
Global

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

High income

Upper middle income

Lower middle income

Low income

Figure 13: Consumption of medicines with a chronic indication. In all the World Bank income categories there was an initial increase in consumption of medicines for a chronic indication. Only the high income countries showed a decline of -3% in Q3 09 compared to Q1 08.

27

Results

High- and upper middle income countries did show a difference between the consumption of acute and chronic medicines (Figures 12 & 13). While the consumption of acute medicines declined slightly by -4% (Q3 09 compared to Q1 08), the consumption of chronic medication increased by approximately +2 to +3% until Q2 09 in the upper middle income countries and by -7% and -3% (Q3 09) respectively in the high income countries. In Q3 09 the consumption in the upper middle income countries seemed to be recovering, whereas the consumption of both acute and chronic medication in the high income countries was still decreasing in Q3 09 and seemed to be recovering in Q4 09. In the lower middle and low income countries the development was similar, the consumption of both categories increased within a range of +12−+17% (Q4 09) for acute and +13−+17% (Q4 09) for chronic indications. Similar

Impact of the economic recession on the pharmaceutical sector

patterns were observed in those countries which had the largest overall decline (see Annex 2 Consumption of medicines for acute and chronic indications).

28

Results

Impact of the economic recession on the pharmaceutical sector

Consumption of original & licensed brands and others brands & unbranded medicines
People have less money to spend during a recession. Therefore it would be expected that a shift would occur from the original & licensed brands to the other brands & unbranded medicines if the original & licensed brands are more expensive. No shift from original & licensed brands to other brands & unbranded medicines is seen so far at WHO regional and global level (Figures 14 & 15). The American region seemed to be an exception to this pattern. The consumption of original & licensed brands decreased continually, in Q4 09 it was -5% less than the consumption in Q1 08. This decrease is probably not caused by the recession since the decrease is seen ever since the beginning of 2007. The consumption of other brands & unbranded medicines in the American region is increasing from Q1 07 onwards to +13% in Q4 09 compared to Q1 08. Except for a greater variation in the consumption of original & licensed brands there was no difference between the consumption of original & licensed brands and other brands & unbranded medicines at World Bank level (Figure 16Figures 16 & 17). The consumption of both original & licensed brands and other brands & non branded medicines was increasing in all the income categories with +6−+20% (Q4 09). Only in the high income countries the consumption of both original & licensed brands and other brands & unbranded medicines decreased, in Q3 09 with respectively -5% and -2% compared to the first quarter of 2008. The consumption of both original & licensed brands and other brands & unbranded medicines declined in Malaysia (see Annex 3: Consumption of original & licensed brands and others brands & unbranded medicines). The consumption of original & licensed brands and other brands & unbranded medicines increased at the same pace in China (respectively with +27% and +29% in Q3 09 compared to Q1 08).

29

Results

Impact of the economic recession on the pharmaceutical sector

Average consumption index original & licensed brands Global and WHO regions
(Evolution on Q1 08) 1,20 1,18 1,15 1,12 1,10 1,05 1,01 1,00 0,99 0,95 0,90 0,85 0,88 Q1 07 Q2 07
GLOBAL

1,07

1,08 1,05 1,00 0,95

0,97 0,91

Q3 07

Q4 07
AFR

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09
SEAR

Q3 09
WPR

Q4 09

Figure 14: Consumption of original & licensed brands for the different WHO regions. The American region (AMR) shows a small decline from the beginning of 2007.

Average consumption index other brands & unbranded medicines Global and WHO regions
(Evolution on Q1 08) 1,25 1,20 1,15 1,10 1,05 1,00 0,98 1,04 1,22 1,18 1,13

0,95 0,95 0,90 0,85 Q1 07
GLOBAL

0,93

Q2 07

Q3 07
AFR

Q4 07

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09
SEAR

Q3 09

Q4 09
WPR

Figure 15: Consumption of other brands & unbranded medicines for the different WHO regions. In most regions the consumption of unbranded medicines increased. The European region (EUR) is the only region where the consumption hardly grows and in some quarters even decreased.

30

Results

Impact of the economic recession on the pharmaceutical sector

Average consumption index original brands & licensed brands Global and World Bank income categories
(Evolution on Q1 08) 1,15 1,13 1,10 1,09 1,05 1,02 1,00 1,00 0,99 0,95 0,95 0,94 0,90 Q1 07
Global

1,06

1,01

Q2 07

Q3 07
High income

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Upper middle income

Lower middle income

Low income

Figure 16: Consumption of original & licensed brands for the World Bank income categories over time. Only the high income countries had a decline in consumption of original & licensed brands.

Average consumption index other brands & unbranded medicines Global and World Bank income categories
(Evolution on Q1 08) 1,20 1,15 1,10 1,05 1,00 0,95 0,90 1,00 0,96 0,93 0,92 Q1 07
Global

1,20 1,16 1,12 1,09 1,05

Q2 07

Q3 07
High income

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Upper middle income

Lower middle income

Low income

Figure 17: Consumption of other brands & unbranded medicines for the World Bank income categories over time. Only the high income countries had no increase of the consumption of other brands & unbranded medicines, until Q3 09 compared to Q1 08.

31

Results

Impact of the economic recession on the pharmaceutical sector

Price per IMS Standard Unit
In all WHO regions an increase of the crude average price per IMS SU was observed. The African region and the American region were the WHO regions with the largest increase (+11% Q4 09 compared to Q1 08) while the other regions had an increase of +5−+8% in Q4 09 compared to Q1 08 (see Figure 18). The high income countries only had a price increase of +5% (Q4 09), while the low income countries had an increase of +11% and the upper middle income countries of +15% (Q4 09) (see Figure 18). In the European region Romania had the biggest increase in price of +39% (Q4 09), followed by Estonia and Latvia with an increase of respectively +21% and +11% (Figure 20). Malaysia showed a large price increase of +16% (Q4 09 compared to Q1 08) (Figure 21).
Average price per IMS Standard Unit index Global and WHO regions
1,15 1,10 1,05 1,00 0,97 0,95 0,94 0,90 0,85 0,88 Q1 07 Q2 07 Q3 07 Q4 07
AFR

(Evolution on Q1 08) 1,11 1,08 1,05

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09

Q3 09
WPR

Q4 09

GLOBAL

SEAR

Figure 18: Average price per IMS Standard Unit index for the WHO regions. All regions showed an increase in price. The Western Pacific region (WPR) has the smallest increase of about +5%, while African (AFR) and American (AMR) regions experienced an increase of about +11% in Q4 09 compared to Q1 08.

Average price per IMS Standard Unit index Global and World Bank income categories
(Evolution on Q1 08) 1,20 1,15 1,10 1,05 1,00 0,95 0,93 0,90 0,91 Q1 07
Global

1,15 1,11 1,09 1,05 0,97

Q2 07

Q3 07
High income

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Upper middle income

Lower middle income

Low income

32

Results

Figure 19: Average price per IMS Standard Unit index for the World Bank income categories. High income countries experienced one quarter of a decline in price but this decline quickly recovered and in Q4 09 the price was +5% higher compared to Q1 08. In this same period the upper middle income countries and the low income countries showed an increase of respectively +15% and +11%.

Impact of the economic recession on the pharmaceutical sector

Average price per IMS Standard Unit index EUR, Poland, Baltics and Romania
(Evolution on Q1 08) 1,40 1,30 1,20 1,10 1,00 0,93 0,90 0,80 0,85 Q1 07 Q2 07
EUR

1,39

1,21 1,11 1,07 1,01

Q3 07

Q4 07
Poland

Q1 08

Q2 08

Q3 08
Latvia

Q4 08

Q1 09
Lithuania

Q2 09

Q3 09
Romania

Q4 09

Estonia

Figure 20: Average price per IMS Standard Unit for Poland, Romania and the Baltic States. Romania showed an increase in price of +39% over the period Q1 08-Q4 09. Estonia and Poland have an increase of respectively +21% and +11%.

Average price per IMS Standard Unit WPR, China and Malaysia
(Evolution on Q1 08) 1,20 1,15 1,10 1,05 1,00 0,96 0,95 0,94 0,90 0,85 Q1 07 Q2 07 Q3 07
GLOBAL

1,16

1,09 1,05

0,87

Q4 07

Q1 08
WPR

Q2 08

Q3 08

Q4 08
CHINA

Q1 09

Q2 09

Q3 09

Q4 09

MALAYSIA

Figure 21: Average price per IMS SU in WPR, China and Malaysia. Malaysia experienced two quarters of decline after the start of the recession. From Q4 08 onwards the average price increased in Malaysia. Prices were +16% higher in Q4 09 compared to Q1 08. However these changes may be unrelated to the economic recession.

33

Results

Impact of the economic recession on the pharmaceutical sector

It was expected that a more severe decrease in GDP would lead to an increase in pharmaceutical prices due to more expensive imported raw materials and medicines. Figure 22 shows that there was no correlation between these two variables in the European region.
Correlation GDP and pharmaceutical prices EURO
(Q1 09 compared to Q1 08)

Pharmaceutical consumption (indexed on Q1 08)

130,00 125,00 120,00 115,00 110,00 105,00 100,00 95,00 90,00 85,00 80,00 85,00 90,00 95,00 Gross Domestic Product (indexed on Q1 08)

y = -0,249x + 127,2 R² = 0,0309

RO

TR EE LV BG PL CZ GR SLV HU GB ES IT BE IE CH FI LU SK FR PT AT SE NL

LT

NO

100,00

105,00

Figure 22: This figure shows the relation between change in GDP and the change in pharmaceutical prices in 29 European countries for Q1 09 compared to Q1 08. GDP and pharmaceutical consumption are given as an index compared to the same quarter a year before. This figure shows that a decrease in GDP is not necessarily related to an increase in 2 pharmaceutical prices (r = 0,0309).

34

Results

Impact of the economic recession on the pharmaceutical sector

Pharmaceutical expenditure
In the WHO regions and the World Bank income categories, with the exception of EUR, the pharmaceutical expenditure increased throughout the study period. The increase in expenditure ranged from +20% in EMR to +33% in SEAR (Q4 09) (see Figure 23). In the low income countries this increase was +31% (Q4 09 compared to Q1 08) (Figure 24). In China (+37% in Q3 09) and Malaysia (+14% in Q3 09) the expenditure has increased as well (Figure 25) contrary to the Baltic countries where the expenditure has decreased. Latvia has the largest decline of the three Baltic States, up to a decline of -23% in the third quarter of 2009 (Figure 26). These figures are in line with the changes in volume and prices.
Average pharmaceutical expenditure index Global and WHO regions
(Evolution on Q1 08)

1,33 1,30 1,20 1,10 1,00 0,92 0,90 0,90 0,80 0,84 Q1 07 Q2 07
GLOBAL

1,28 1,24 1,20 1,10

Q3 07

Q4 07
AFR

Q1 08
AMR

Q2 08

Q3 08
EMR

Q4 08
EUR

Q1 09

Q2 09
SEAR

Q3 09
WPR

Q4 09

Figure 23: Pharmaceutical expenditure for WHO regions. The pharmaceutical expenditure increased in all the regions. The European region (EUR) is the only region where the increase of pharmaceutical expenditure is limited.

Average pharmaceutical expenditure index Global and World Bank income categories
(Evolution on Q1 08)

1,35 1,30 1,25 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,91 0,85 0,86 Q1 07
Global

1,31 1,23

1,12

0,95

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

High income

Upper middle income

Lower middle income

Low income

35

Results

Figure 24: Average pharmaceutical expenditure index for World Bank income categories. The pharmaceutical expenditure increased in all the income categories. The low income countries showed the largest increase, +31% in Q4 09 compared to Q1 08.

Impact of the economic recession on the pharmaceutical sector

Average pharmaceutical expenditure index WPR, China and Malaysia
(Evolution on Q1 08) 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,91 0,80 0,70 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08
CHINA

1,46

1,24 1,20 1,08

0,79 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

GLOBAL

WPR

MALAYSIA

Figure 25: Pharmaceutical expenditure in Western Pacific region (WPR), China and Malaysia. China showed a major increase (+54% in Q3 09 compared to Q1 08) in pharmaceutical expenditure. Malaysia showed an increase as well of +14% for the same period.

Average pharmaceutical expenditure index EUR, Poland, Romania and Baltics
(Evolution on Q1 08) 1,40 1,36 1,30 1,20 1,10 1,00 0,90 0,88 0,80 0,79 0,70 Q1 07 Q2 07
EUR

1,10 0,95 0,99 0,91

Q3 07

Q4 07
Poland

Q1 08

Q2 08

Q3 08
Latvia

Q4 08

Q1 09
Lithuania

Q2 09

Q3 09

Q4 09

Estonia

Romania

Figure 26: Pharmaceutical expenditure in Poland, Romania and the Baltic States. Estonia, Latvia and Lithuania showed a decline in their expenditure, while Romania showed an increase in pharmaceutical expenditure of +36% in Q4 09.

36

Results

Impact of the economic recession on the pharmaceutical sector

Shift from private to public sector
Average pharmaceutical consumption Private and public sector Brazil
(indexed on Q1 08) 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,80 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 BRAZIL (PRIV.) BRAZIL (PUB.)
1,25 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 0,80 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 MEXICO (PRIV.) MEXICO (PUB.)

Average pharmaceutical consumption Private and public sector Mexico
(indexed on Q1 08)

Average pharmaceutical consumption Private and public sector Uruguay
(indexed on Q1 08) 1,15 1,10
1,35 1,55 1,45

Average pharmaceutical consumption Private and public sector South Africa
(indexed on Q1 08)

1,05 1,00 0,95 0,90 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 URUGUAY (PRIV.) URUGUAY (PUB.)

1,25 1,15 1,05 0,95 0,85 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 SOUTH AFRICA (PRIV.) SOUTH AFRICA (PUB.)

Figure 27a-d: Pharmaceutical consumption in the private and public sector in Brazil, Mexico, South Africa and Uruguay for the period Q1 07-Q4 09. Consumption volume is indexed on Q1 08. In Uruguay there does not seem to be a shift from private to public, until Q3 09. While in Mexico and South Africa the consumption in the public sector increases more than in the private sector, until Q3 09. Mexico even has a decline in the private sector. After an initial stronger increase in the public sector in Brazil, the difference between private and public stabilizes after Q1 09.

37

Results

To investigate if there was a shift from private to public sector, graphics were made of the overall pharmaceutical consumption in four countries where data on private and public sector was available for analysis (Figure 27 Figure 27). The audits performed by IMS Health on the public sector contain some private insurance sales and exclude public tenders. In the period Q1 08-Q3 09 the consumption in the private sector in Mexico declined whereas the consumption in the public sector increased. In South Africa the consumption in the public sector seemed to be increasing faster than in the private sector. Brazil had an enormous increase in consumption in the public sector after Q1 08. However the consumption decreased in the third and fourth quarter of 2008 and came in line with the increase of the private sector in the second and third quarter of 2009. In Uruguay the development of consumption in the private sector showed the same pattern as in the public sector, until Q3 09. Differences in development of consumption of medicines for acute and chronic indication and consumption of branded and non branded medicines were examined for the same four countries. No difference in the development of consumption of acute and chronic medication was found. Only Mexico showed a much stronger increase in the use of original & licensed brands in the public sector compared to the other brands & unbranded medicines. This might be explained by the differences in audits performed by IMS Health. In the other three countries there is no clear difference between the changes in consumption of original and licensed brands and other and unbranded medicines in private and public sector (see annex 4.1 & 4.2).

Impact of the economic recession on the pharmaceutical sector

Average price per IMS Standard Unit Private and public sector Brazil
(indexed on Q1 08) 1,30 1,25 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 0,80 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 BRAZIL (PRIV.) BRAZIL (PUB.) 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 0,80 0,75

Average price per IMS Standard Unit Private and public sector Mexico
(indexed on Q1 08)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 MEXICO (PRIV.) MEXICO (PUB.)

Average price per IMS Standard Unit Private and public sector Uruguay
(indexed on Q1 08) 1,25 1,20 1,15 1,10 1,00 1,05 1,00 0,95 0,90 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 URUGUAY (PRIV.) URUGUAY (PUB.) 0,90 0,80 0,70 1,30 1,20 1,10

Average price per IMS Standard Unit Private and public sector South Africa
(indexed on Q1 08)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 SOUTH AFRICA (PRIV.) SOUTH AFRICA (PUB.)

Figure 28a-d: Price per IMS SU (in national currency units) for private and public sector in Brazil, Mexico, Uruguay and South Africa. The price per IMS SU increased over time. The price per IMS SU in the public sector varies more.

In Brazil, Mexico and South Africa prices in the public sector increased less than prices in the private sector (see Figure 28). Next to that prices in the public sector varied more than in the private sector. This difference is most likely caused by bulk purchases and therewith leads to economies of scale. Since there was no clear shift from private to public sector in consumption and prices, with the exception of Mexico, there was no shift based on expenditure (see annex 4.3: Pharmaceutical expenditure in private and public sector).

38

Results

Impact of the economic recession on the pharmaceutical sector

Impact of the recession on specific groups and individual medicines
To examine the declines in pharmaceutical consumption in Estonia, Latvia, Lithuania and Romania was looked at percentage change for Q4 08 + Q1 09 compared to Q4 07 + Q1 08 at different EphMRA ATC levels. The goal of this method was to compare these changes with the corresponding developments in Poland. A Pareto analysis was performed to identify the 30% of EphMRA ATC 2 categories which accounted for about 80% of the total consumption in each country. The number of EphMRA ATC 2 categories therefore differed between countries (See annex 5: Distribution of consumption for the distribution charts of Estonia, Latvia, Lithuania, Romania and Poland). An interesting finding was that all the EphMRA ATC 2 categories that accounted for 80% of the total consumption in Estonia were declining for the period Q4 08 + Q1 09 compared to Q4 07 + Q1 08 (see Table 3Table 3). In the other countries some groups declined but other groups increased. In Poland, the country which was not really influenced by the economic recession, the consumption in the majority of EphMRA ATC 2 categories increased (see Table 7). There were 13 EphMRA ATC 2 categories which declined in at least 3 of the recession hit countries when Q4 07+Q1 08 was compared with Q4 08+Q1 09(see Table 3-7). Most of these EphMRA ATC 2 categories showed major declines but these declines may not necessarily have a harmful effect on public health. Categories which will probably have little impact on public health include A11 Vitamins and R1 Nasal preparations. M1 Antireumatics systemically (declined by -20,6% to -0,3%), S1 Opthalmologicals (declined by -20,2% to -0,0%) and N5 Psycholeptics (declined by -19,8% to -0,9%) were identified as the most important EphMRA ATC 2 categories that showed a decline in this period in the Baltic States and Romania and not in Poland. Although the EphMRA ATC 2 category N6 Psychoanaleptics only declined in two of the four recession hit countries this group was seen to be of considerable importance. It is a group closely related to N5 Psycholeptics and therefore worth further investigation.

39

Results

Impact of the economic recession on the pharmaceutical sector

Table 3: EphMRA ATC 2 categories Estonia. Percentage change of SU’s per capita of Q4 08 + Q1 09 compared to Q4 07 + Q1 08 ranked by increasing percentage change. The percentages of total sales in Estonia of the ATC2 categories are shown in the second column.

Table 4: EphMRA ATC 2 categories Latvia. Percentage change of SU’s per capita of Q4 08 + Q1 09 compared to Q4 07 + Q1 08 ranked by increasing percentage change. The percentages of total sales in Latvia of the ATC2 categories are shown in the second column.

Table 5: EphMRA ATC 2 categories Lithuania. Percentage change of SU’s per capita of Q4 08 + Q1 09 compared to Q4 07 + Q1 08 ranked by increasing percentage change. The percentages of total sales in Lithuania of the ATC2 categories are shown in the second column.

Estonia
% of tota l ATC 2 s a l es % change M2 (ANTIRHEUMATICS TOPICAL) 4,14% -29,29% C6 (OTH CARDIOVASCULAR PRDS) 1,28% -27,03% V3 (OTHER THERAPEUTIC PRODS) 1,35% -26,16% R1 (NASAL PREPARATIONS) 3,46% -24,07% A12 (MINERAL SUPPLEMENTS) 2,31% -23,34% D8 (ANTISEPTICS+DISINFECTANT) 1,43% -22,13% A11 (VITAMINS) 5,75% -22,02% A7 (A-DIAR ORAL ELEC+A-INFLA) 1,31% -21,67% N6 (PSYCHOANALEPTICS) 1,32% -21,63% B1 (ANTITHROMBOTIC AGENTS) 2,73% -21,61% D2 (EMOLLIENTS & PROTECTIVES) 1,96% -20,68% M1 (ANTIRHEUMATIC SYSTEM) 4,68% -20,59% S1 (OPHTHALMOLOGICALS) 10,29% -20,18% R5 (COUGH,COLD PREPARATIONS) 2,85% -19,92% N5 (PSYCHOLEPTICS) 4,28% -19,72% N2 (ANALGESICS) 3,18% -19,24% C1 (CARDIAC THERAPY) 2,61% -18,80% R3 (ANTI-ASTHMA & COPD PROD) 3,26% -17,22% A2 (A-ACID A-FLAT A-ULCERANT) 2,34% -15,39% C8 (CALCIUM ANTAGONISTS) 2,60% -15,30% C5 (A-VARICOSE/HAEMORRHOIDAL) 1,57% -13,31% C10 (LIP.REG./ANTI-ATH. PREPS) 1,71% -12,68% M5 (OTHER MUSCULO-SKELETAL) 2,18% -11,31% V7 (OTHER NON-THERAPEUTIC) 1,57% -11,03% C7 (BETA BLOCKING AGENTS) 3,24% -10,86% A10 (DRUGS USED IN DIABETES) 2,59% -4,54% C9 (RENIN-ANGIOTEN SYS AGENT) 4,77% -4,28%

Latvia
% of tota l ATC 2 s al es % change A11 (VITAMINS) 5,13% -19,99% N5 (PSYCHOLEPTICS) 6,49% -15,96% M5 (OTHER MUSCULO-SKELETAL) 1,33% -15,35% A12 (MINERAL SUPPLEMENTS) 2,18% -15,28% A7 (A-DIAR ORAL ELEC+A-INFLA) 1,86% -14,19% M2 (ANTIRHEUMATICS TOPICAL) 2,33% -13,49% J1 (SYSTEMIC ANTIBACTERIALS) 1,11% -11,64% V3 (OTHER THERAPEUTIC PRODS) 1,43% -11,61% N6 (PSYCHOANALEPTICS) 1,62% -11,52% R1 (NASAL PREPARATIONS) 7,13% -10,25% N2 (ANALGESICS) 3,73% -10,09% R5 (COUGH,COLD PREPARATIONS) 3,90% -9,93% A2 (A-ACID A-FLAT A-ULCERANT) 1,82% -9,15% D8 (ANTISEPTICS+DISINFECTANT) 3,52% -5,88% C5 (A-VARICOSE/HAEMORRHOIDAL) 1,40% -5,29% M1 (ANTIRHEUMATIC SYSTEM) 3,47% -5,19% C4 (CEREBR/PERIPH VASOTHERAP) 2,25% -3,27% C1 (CARDIAC THERAPY) 2,13% -2,69% C10 (LIP.REG./ANTI-ATH. PREPS) 2,14% 0,25% S1 (OPHTHALMOLOGICALS) 9,40% 0,41% R3 (ANTI-ASTHMA & COPD PROD) 2,94% 0,60% C8 (CALCIUM ANTAGONISTS) 1,22% 9,24% C9 (RENIN-ANGIOTEN SYS AGENT) 3,32% 9,80% A5 (CHOLAGOGUES+HEPATIC PROC) 1,41% 9,87% C7 (BETA BLOCKING AGENTS) 2,32% 11,21% A10 (DRUGS USED IN DIABETES) 1,83% 11,22% B1 (ANTITHROMBOTIC AGENTS) 2,08% 12,14% V7 (OTHER NON-THERAPEUTIC) 1,04% 18,81%

Lithuania
ATC 2 A9 (DIGESTIVES INC.ENZYMES) A11 (VITAMINS) M2 (ANTIRHEUMATICS TOPICAL) N2 (ANALGESICS) R1 (NASAL PREPARATIONS) S1 (OPHTHALMOLOGICALS) C5 (A-VARICOSE/HAEMORRHOIDAL) A12 (MINERAL SUPPLEMENTS) R5 (COUGH,COLD PREPARATIONS) D11 (OTHER DERMATOLOGICAL PRD) C6 (OTH CARDIOVASCULAR PRDS) C4 (CEREBR/PERIPH VASOTHERAP) A2 (A-ACID A-FLAT A-ULCERANT) M1 (ANTIRHEUMATIC SYSTEM) A7 (A-DIAR ORAL ELEC+A-INFLA) C1 (CARDIAC THERAPY) R3 (ANTI-ASTHMA & COPD PROD) N5 (PSYCHOLEPTICS) A5 (CHOLAGOGUES+HEPATIC PROC) N6 (PSYCHOANALEPTICS) C8 (CALCIUM ANTAGONISTS) C9 (RENIN-ANGIOTEN SYS AGENT) C7 (BETA BLOCKING AGENTS) A10 (DRUGS USED IN DIABETES) C10 (LIP.REG./ANTI-ATH. PREPS) D8 (ANTISEPTICS+DISINFECTANT) B1 (ANTITHROMBOTIC AGENTS) % of tota l s a les % cha nge 1,32% -36,50% 6,15% -14,67% 2,65% -9,66% 4,06% -8,58% 5,86% -8,27% 8,84% -5,80% 1,38% -5,80% 2,80% -4,56% 3,26% -4,43% 1,49% -4,32% 1,71% -4,20% 2,50% -1,58% 2,04% -0,14% 2,43% 0,17% 1,49% 0,39% 2,76% 2,24% 3,29% 2,30% 5,14% 2,43% 1,48% 3,38% 1,72% 3,52% 1,31% 3,81% 4,38% 9,84% 2,36% 12,11% 1,31% 12,18% 1,86% 13,60% 4,73% 14,76% 1,74% 16,43%

40

Results

Impact of the economic recession on the pharmaceutical sector

Table 6: EphMRA ATC 2 categories Romania. Percentage change SU’s per capita of Q4 08 + Q1 09 compared to Q4 07 + Q1 08 ranked by increasing percentage change. The percentages of total sales in Romania of the ATC2 categories are shown in the second column.
Romania
% of total ATC 2 s al es M2 (ANTIRHEUMATICS TOPICAL) 2,49% J1 (SYSTEMIC ANTIBACTERIALS) 5,24% C3 (DIURETICS) 2,83% N2 (ANALGESICS) 10,96% A5 (CHOLAGOGUES+HEPATIC PROC) 2,01% C4 (CEREBR/PERIPH VASOTHERAP) 3,58% R5 (COUGH,COLD PREPARATIONS) 2,86% R3 (ANTI-ASTHMA & COPD PROD) 3,38% A2 (A-ACID A-FLAT A-ULCERANT) 2,86% S1 (OPHTHALMOLOGICALS) 6,94% M1 (ANTIRHEUMATIC SYSTEM) 2,89% R1 (NASAL PREPARATIONS) 6,41% A3 (GAST-INTEST DISORD DRUG) 2,43% N5 (PSYCHOLEPTICS) 3,52% B1 (ANTITHROMBOTIC AGENTS) 2,47% C9 (RENIN-ANGIOTEN SYS AGENT) 5,41% A10 (DRUGS USED IN DIABETES) 2,62% C1 (CARDIAC THERAPY) 4,27% C7 (BETA BLOCKING AGENTS) 3,52% Abs olute cha nge -2,50 -3,23 -1,30 -4,90 -0,82 -0,74 -0,57 -0,53 -0,41 -0,87 -0,34 -0,66 -0,17 -0,08 0,09 0,27 0,44 0,87 1,32 % cha nge -29,41% -18,13% -14,82% -14,30% -12,88% -6,85% -5,12% -5,08% -4,73% -4,67% -4,02% -3,09% -2,40% -0,75% 1,30% 1,74% 6,04% 7,33% 13,45%

Table 7: EphMRA ATC 2 categories Poland. Percentage change SU’s per capita of Q4 08 + Q1 09 compared to Q4 07 + Q1 08 ranked by increasing percentage change. The percentages of total sales in Poland of the ATC2 categories are shown in the second column.

Poland
ATC 2 A12 (MINERAL SUPPLEMENTS) J1 (SYSTEMIC ANTIBACTERIALS) C1 (CARDIAC THERAPY) A11 (VITAMINS) A5 (CHOLAGOGUES+HEPATIC PROC) D11 (OTHER DERMATOLOGICAL PRD) N5 (PSYCHOLEPTICS) S1 (OPHTHALMOLOGICALS) R2 (THROAT PREPARATIONS) C5 (A-VARICOSE/HAEMORRHOIDAL) N2 (ANALGESICS) R5 (COUGH,COLD PREPARATIONS) M1 (ANTIRHEUMATIC SYSTEM R3 (ANTI-ASTHMA & COPD PROD) M2 (ANTIRHEUMATICS TOPICAL) R1 (NASAL PREPARATIONS) N6 (PSYCHOANALEPTICS) B1 (ANTITHROMBOTIC AGENTS) D8 (ANTISEPTICS+DISINFECTANT) C8 (CALCIUM ANTAGONISTS) G4 (UROLOGICALS) C7 (BETA BLOCKING AGENTS) C3 (DIURETICS) A2 (A-ACID A-FLAT A-ULCERANT) A10 (DRUGS USED IN DIABETES) C9 (RENIN-ANGIOTEN SYS AGENT) C10 (LIP.REG./ANTI-ATH. PREPS) % of tota l s al es 3,40% 1,40% 2,49% 6,41% 1,65% 1,19% 3,53% 6,67% 1,29% 1,72% 3,97% 3,76% 1,91% 4,36% 2,82% 4,82% 2,41% 2,89% 4,37% 1,47% 1,54% 3,00% 2,44% 3,52% 2,12% 4,00% 1,95% % change -10,16% -4,48% -3,72% -3,51% -1,76% -1,03% -0,73% -0,19% 0,14% 0,87% 1,19% 1,56% 1,91% 2,30% 2,50% 3,00% 3,02% 3,29% 3,68% 4,58% 5,23% 6,88% 8,59% 9,15% 11,39% 15,18% 19,03%

41

Results

Impact of the economic recession on the pharmaceutical sector

A more detailed analysis on EphMRA ATC 3 level showed that the decline of EphMRA ATC 2 category M1 antirheumatics was caused by a decline in M1A Non steroidal anti-inflammatory drugs (NSAIDs) (see Table 8 Table 8). M1C specific antirheumatic agents was the group of concern regarding to public health. Notable is the fact that only in Lithuania methotrexate was included in the specific antirheumatic agents in the data from IMS. In the other countries methothrexate is included in a different EphMRA ATC 3 category. Methothrexate is the gold standard in the treatment of rheumatoid arthritis. Therefore it is not clear how representative the changes shown here are for the treatment of rheumatoid arthritis.
Table 8: Subdivision of EphMRA ATC 2 category M1 Antirheumatics into EphMRA ATC 3 categories. Percentage change in SU’s per capita for Q4 08 + Q1 09 compared to Q4 07 + Q1 08.

M1 Antirheumatics
Country
Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Poland Romania

ATC 3
M1A (ANTIRHEUMATIC N-STEROID) M1A (ANTIRHEUMATIC N-STEROID) M1A (ANTIRHEUMATIC N-STEROID) M1A (ANTIRHEUMATIC N-STEROID) M1A (ANTIRHEUMATIC N-STEROID) M1C (SPEC ANTIRHEUMATIC AGENT) M1C (SPEC ANTIRHEUMATIC AGENT) M1C (SPEC ANTIRHEUMATIC AGENT) M1C (SPEC ANTIRHEUMATIC AGENT) M1C (SPEC ANTIRHEUMATIC AGENT)

% of tota l s a l es
4,58% 3,43% 2,40% 2,85% 1,90% 0,08% 0,01% 0,02% 0,00% 0,03%

% cha nge
-20,79% -5,28% 0,14% -4,36% 1,92% -9,09% 15,45% 4,66% -0,43% 31,01%

The EphMRA ATC 2 category S1 Opthamologicals consists of 15 subcategories at EphMRA ATC 3 level. The complete table can be found in Annex 6: S1 Opthamologicals. Only the EphMRA ATC 3 category S1E Miotics and antiglaucoma preparations was identified as important for public health and therefore shown here (Table 9). This table shows that only in Estonia there was a small decline (-0,28%) in the consumption of this medication. The other countries showed an increase in consumption, in Latvia the consumption even increased with +24%. The decline of EphMRA ATC 2 category S1 is caused by other subcategories as S1A anti-infectives and S1K artificial tears.
Table 9: Percentage change of SU’s per capita for Q4 08 + Q1 09 compared to Q4 07 + Q1 08 for S1E Miotics and antiglaucoma preparations. Only Estonia showed a small decline of -0,28%.

S1 Opthamologicals
Country Estonia Latvia Lithuania Romania Poland atc3 S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS)

% of total sales 2,43% 1,64% 1,77% 1,39% 1,22%

% change -0,28% 24,20% 5,28% 6,87% 2,28%

42

Results

Impact of the economic recession on the pharmaceutical sector

In the EphMRA ATC 2 category N5 Psycholeptics N5A Antipsychotics and N5C Tranquilizers declined in three of the four recession struck countries (Table 10). N5A met the fixed criteria for identification of possible marker products. The consumption of this EphMRA ATC3 category was therefore investigated in more detail on product level (EphMRA ATC 4 level). Less use of N5C tranquilizers does not necessarily have a negative impact on public health, therefore this group was not examined in more detail.
Table 10: Subdivision of EphMRA ATC 2 category N5 Psycholeptics in EphMRA ATC 3 categories. Percentage change in SU’s per capita for Q4 08 + Q1 09 compared with Q4 07 + Q1 08.

N5 Psycholeptics
Country
Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland

ATC 3
N5A (ANTIPSYCHOTICS) N5A (ANTIPSYCHOTICS) N5A (ANTIPSYCHOTICS) N5A (ANTIPSYCHOTICS) N5A (ANTIPSYCHOTICS) N5B (HYPNOTICS & SEDATIVES) N5B (HYPNOTICS & SEDATIVES) N5B (HYPNOTICS & SEDATIVES) N5B (HYPNOTICS & SEDATIVE) N5B (HYPNOTICS & SEDATIVES) N5C (TRANQUILLISERS) N5C (TRANQUILLISERS) N5C (TRANQUILLISERS) N5C (TRANQUILLISERS) N5C (TRANQUILLISERS)

% of tota l s a les
1,02% 1,06% 0,71% 0,41% 1,13% 2,14% 3,90% 2,18% 1,59% 1,29% 1,12% 1,51% 2,24% 1,51% 1,10%

% cha nge
-20,93% -3,42% -0,63% 1,62% -1,84% -21,01% -23,53% 5,23% 1,32% 1,21% -16,03% -4,33% 0,67% -3,65% -1,88%

Figure 29 shows the development of haloperidol for the period Q1 07 – Q3 09. Haloperidol is the most used classic antipsychotic in these five countries. The development of the two most used atypical antipsychotics in these five countries, clozapine and olanzapine, are shown in figures 30 & 31. The use of these core drugs hardly declined. Haloperidol is declining in Estonia but this decline already started before the recession.
Haloperidol
(Evolution on Q1 08) 1,20 1,10 1,12 1,07 0,96 0,90 0,91 0,80 0,70 0,60 Q1 07 Q2 07 Estonia Q3 07 Q4 07 Latvia Q1 08 Q2 08 Q3 08 Poland Q4 08 Q1 09 Romania Q2 09 Q3 09 0,87 0,82 0,75

1,00 1,02

Lithuania

43

Results

Figure 29: Volume of consumption of haloperidol in Estonia, Latvia, Lithuania, Romania and Poland in SU per capita for the period Q1 07 – Q3 09 indexed on Q1 08.

Impact of the economic recession on the pharmaceutical sector

Clozapine
(Evolution on Q1 08) 1,20 1,10 1,00 0,90 0,80 0,78 0,70 0,60 Q1 07 Q2 07 Q3 07 Estonia Q4 07 Q1 08 Q2 08 Latvia Lithuania Q3 08 Q4 08 Poland Q1 09 Q2 09 Romania Q3 09

0,98 0,93 0,85

0,99 0,92

0,80

Figure 30: Volume of consumption of clozapine in Estonia, Latvia, Lithuania, Romania and Poland in SU per capita for the period Q1 07 – Q3 09 indexed on Q1 08.

Olanzapine
(Evolution on Q1 08) 1,30 1,20 1,10 1,00 0,93 0,90 0,86 0,86 0,80 0,76 0,70 Q1 07 Q2 07 Q3 07 Estonia Q4 07 Latvia Q1 08 Q2 08 Lithuania Q3 08 Q4 08 Poland Q1 09 Romania Q2 09 Q3 09 1,29

1,10 1,01

Figure 31: Volume of consumption of olazapine in Estonia, Latvia, Lithuania, Romania and Poland in SU per capita for the period Q1 07 – Q3 09 indexed on Q1 08.

44

Results

Impact of the economic recession on the pharmaceutical sector

Table 11 shows the changes of the EphMRA ATC 3 categories belonging to EphMRA ATC 2 category N6 Psychoanaleptics. The only group which had a decline in three of the four recession hit countries is N6E Neurotonics and other preparations. This group was not considered to have great importance for public health and was therefore not examined in more detail. A striking detail which can be seen in table 11 was that the use of antidepressants in Estonia was declining by almost -20%. It was expected that the incidence of depression would increase because of the rise in unemployment caused by the recession. Therefore an increase in the consumption of antidepressants was expected. This was the reason to have a more detailed look at the developments on product level of this EphMRA ATC 3 category.
Table 11: Subdivision of ATC 2 category N6 Psychoanaleptics in ATC 3 categories. Percentage change in SU’s per capita for Q4 08 + Q1 09 compared to Q4 07 + Q1 08.

N6 Psychoanaleptics
Country
Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland

ATC 3
N6A (ANTIDEPRES&MOOD STABIL) N6A (ANTIDEPRES&MOOD STABIL) N6A (ANTIDEPRES&MOOD STABIL) N6A (ANTIDEPRES&MOOD STABIL) N6A (ANTIDEPRES&MOOD STABIL) N6B (PSYCHOSTIMULANTS) N6B (PSYCHOSTIMULANTS) N6B (PSYCHOSTIMULANTS) N6B (PSYCHOSTIMULANTS) N6B (PSYCHOSTIMULANTS) N6D (NOOTROPICS) N6D (NOOTROPICS) N6D (NOOTROPICS) N6D (NOOTROPICS) N6D (NOOTROPICS) N6E (NEUROTONICS+OTHER PREPS) N6E (NEUROTONICS+OTHER PREPS) N6E (NEUROTONICS+OTHER PREPS) N6E (NEUROTONICS+OTHER PREPS) N6E (NEUROTONICS+OTHER PREPS)

% of tota l s a les
1,09% 0,48% 0,76% 0,56% 1,00% 0,10% 0,00% 0,00% 0,00% 0,00% 0,05% 1,09% 0,84% 0,52% 1,40% 0,08% 0,05% 0,11% 0,02% 0,00%

% cha nge
-19,18% 0,33% 1,54% 3,93% 2,16% -36,95% 31,16% -89,75% 374,72% 26,10% -10,57% -15,07% 6,70% 8,24% 3,65% -39,56% -37,90% -2,68% 10,44% -8,15%

In Annex 6: N6A Antidepressants and mood stabilisators the development of the EphMRA ATC 3 category N6A Antidepressants and mood stabilisators can be found. Amitryptyline is one of the most used products in this EphMRA ATC 3 category. In Estonia the use of amitryptyline declined by -29,8% (see Figure 32). In the other countries such a severe decline is not seen, the consumption stayed rather flat.

45

Results

Impact of the economic recession on the pharmaceutical sector

Amitriptyline
1,20 1,16 1,10 1,07 1,00 0,95 0,90 0,80 0,70 0,60 Q1 07 Q2 07 Q3 07 Estonia Q4 07 Latvia Q1 08 Q2 08 Lithuania Q3 08 Q4 08 Poland Q1 09 Q2 09 Q3 09 0,94 0,90 0,83 0,79 0,70 (Evolution on Q1 08)

Romania

Figure 32: Volume of the consumption of amitryptyline in the Baltic States, Romania and Poland in SU’s per capita from Q1 07 – Q3 09 indexed on Q1 08.

46

Results

Impact of the economic recession on pharmaceutical consumption

Discussion
Key findings
Although the economic recession affected many countries, only a few countries showed a substantial decline in pharmaceutical consumption. The European region was the WHO region with the most severe decline in consumption (-6% in Q3 09 compared to Q1 08). The countries with the most severe decline in pharmaceutical consumption were the Baltic States with a -28% decline in Estonia, -24% in Latvia and -17% in Lithuania (Q3 09 compared to Q1 08). There was a moderate correlation (r2= 0,65 in Q3 09) between worsening of the economic situation of a country as measured by GDP decline and the decline in pharmaceutical consumption. The decline in consumption of medicines for acute indications was not more severe than the decline for chronic indications. Only the WHO region EUR showed a slight trend towards this difference in decline but this trend was not very strong. Economic stress could have the consequence that consumers and health services choose to consume non patent protected generics instead of patent protected brands. Our hypothesis is that such a shift would occur. The IMS Health data helped us to investigate such a shift from original & licensed brands to other brands & unbranded medicines. The original & licensed brands usually correspond to the patent protected medicines and other brands & unbranded medicines can correspond with generic medicines whether branded or unbranded. In some circumstances branded generics may be priced higher than original brands but usually they are not. No shift from original & licensed brands to other brands & unbranded medicines was seen. Based on the data available for this study the hypothesis that a shift from original & licensed brands to other brands & unbranded medicines would occur has been rejected. A more severe price increase of pharmaceuticals was expected in countries with a more severe economic recession due to an increase in price of imported raw materials and medicines caused by a lower exchange rate of the local currency against a hard currency. Although all countries had an increase in pharmaceutical prices, there was no correlation between an increase in pharmaceutical prices and a more severe economic recession in a country. Pharmaceutical prices in Estonia increased by +21% in Q3 09 compared to Q1 08, but prices in Latvia and Lithuania hardly increased (+1% in Q3 09 compared to Q1 08). Malaysia showed a striking price increase of +16% (in Q4 09 compared to Q1 08). The reason why Malaysia showed this severe price increase is not yet known. The shift from private to public sector did not occur in the five countries where these data were available. Mexico indeed showed a shift from private to public sector which mainly consists of the private hospitals, insurances and excludes public tenders. The shift particularly occurred for original & licensed brands in Mexico. In Brazil, Uruguay and South Africa the consumption in both private and public sector was growing although not at the same pace. The shift in Mexico is probably not caused by the economic recession but by a health reform which was implemented during this time period. When the EphMRA ATC 2/3/4 categories were examined more closely for identifying marker products, there were only four EphMRA ATC 2 categories which declined in the Baltic States and

47

Discussion

Impact of the economic recession on pharmaceutical consumption

Romania and could have a negative impact on public health if used less. The EphMRA ATC 3 categories N5A Antipsychotics and N6A antidepressants and mood stabilisators were examined at product level. There were no marker products found in these categories that declined consistently.

Strengths and limitations of this study
The data provided by IMS made it possible to compare pharmaceutical consumption, expenditure and prices across many countries. Although only 12 African countries were covered by the IMS data we were still able to study the changes in pharmaceutical consumption, expenditure and prices in 84 countries world wide. IMS collects its data at a single point in the distribution chain. They use estimates to extrapolate the values to other parts of the supply chain. The actual values of for example the pharmaceutical consumption at these estimated points therefore need to be treated with care. However data is collected at the same point every time by a validated process which makes it very suitable for detecting changes in consumption over time. Therefore the extrapolation did not affect this study. The estimations of the pharmaceutical prices can differ from the actual prices the consumers pay for their pharmaceuticals. Average prices per SU are calculated by dividing the value of total sales by total volume consumed. Changes in products, generic market share, governments policies related to reimbursement prices and approved margins can therefore cause changes in price estimates. Therefore the estimations for prices and thus expenditure are a less reliable indicator of the impact of the economic recession than the estimations on consumption. The main conclusions of this report are therefore mainly based on the pharmaceutical consumption data and less on data of pharmaceutical expenditure and prices. Trend analysis is an adequate tool to investigate the influence on the recession. Extrapolating the normal development of pharmaceutical consumption over a longer period of time would generate more accurate knowledge about the recession impact. Unfortunately, such data was not available for this study. The collection of this data has started from 2007, so no extrapolation could be made and no regular trend analysis could be used. Besides the limited data available it is probably difficult to make a “normal” trend line for pharmaceutical consumption. Pharmaceutical consumption depends on many factors. Seasonal variation is one of the factors which can be corrected for, but it is more difficult to correct for changes in treatment guidelines, availability of pharmaceuticals etc. Although we have not applied a regular trend analysis, we were still able to see a sudden decline in pharmaceutical consumption, expenditure and prices (after a period of increase) in some countries and regions, which indicated that those countries and regions were probably affected by the economic crisis. In countries where the consumption changed, the pharmaceutical consumption was investigated in more detail at EphMRA ATC 2, ATC 3 and ATC 4 level. As a result of the limited data points available only two points in time were compared in this report for the analysis on EphMRA ATC 2 and ATC 3 level. This hampers making a distinction between trends started before the recession and changes caused by the recession. By making graphics of the developments of the consumption at product level, products were eliminated which had a decline which already started before the recession. The recession did not start in all countries at the same time. It is also not clear if all countries are recovering at the same pace. It might be possible that a decline in specific EphMRA ATC categories is

48

Discussion

Impact of the economic recession on pharmaceutical consumption

still to come. A problem with the comparison of Q4 08 + Q1 09 with Q4 07 + Q1 08 is that sudden changes after Q1 09 are not detected. These particular periods were chosen because seasonal variation is ruled out with this approach and it was the latest available data before and during the recession that could be compared. It was thought that declines in EphMRA ATC categories that could act as sentinel products would have declined a year after the recession started and would be detected if the two points (Q4 07 + Q1 08 and Q4 08 + Q1 09) were compared. The economic recession is less of scale and duration than expected in January 2009, due to various reasons. The IMF forecasted a 3,9% growth of the world economy In 2010,(33) although the recovery of the economies will be different in various regions. In the Euro area the economy will grow by 1%. (33) This study on the impact of the recession on access to medicines is therefore limited for measuring the effects on countries, which began to recover by the end of 2009. The data showed that the consumption in all countries, regions and income categories declined less or even increased in Q4 09. This might be a sign that the pharmaceutical sector is recovering from the economic recession. This recovery is only seen in one quarter therefore it is not known whether this recovery will continue. However the more in depth analysis focused on the Baltic States and Romania which are still in recession and were most severely impacted. (34, 35) It should be acknowledged that concerns remain about countries with severe budget deficiencies i.e. Greece.

Comparison with other literature
Only two studies could be found which investigated the impact of an economic recession on the consumption of medicines. Other studies examined the impact of an economic recession on other factors of public health, as suicide rates, child malnutrition and mental health. The WHO performed a study on the price and availability of essential medicines in Indonesia during the 1997 Asian Crisis. (20) They only looked at 12 different medicines available in a limited number of facilities. They found that there was little change in availability of these 12 medicines. This was in line with the lack of changes we found at product level. The Indonesian government endeavoured to keep the availability and prices of pharmaceuticals at pre recession levels. The WHO Indonesian study also found that prices hardly increased during the crisis but did so after the crisis by 25-50%. In this study, a general price increase was seen in most countries during the recession. In the Baltic States this could be caused by the increase in VAT, one of the measures taken by the governments to increase their revenues.(27, 29, 31) IMS Health also investigated the impact of the 1997 Asian Crisis on the consumption of medicines. (21) During six years they collected information on the pharmaceutical consumption starting at the beginning of this recession. Comparing the decline in GDP and pharmaceutical consumption, it appeared that in the Asian Crisis a more severe decline in GDP led to a more severe decline in pharmaceutical consumption. This relation between a decline in GDP and a decline in pharmaceutical consumption was seen in this ‘08-‘09 recession study, although this correlation was moderate (r2= 0,65 in Q3 09) and differs between different quarters. This correlation is probably moderate due to the way funding of health care systems in most high income countries is arranged. The health care systems protect consumers against loosing access to their regularly consumed medicines independent of the economic situation.

49

Discussion

Impact of the economic recession on pharmaceutical consumption

IMS Health also examined the changes in consumption of medicines for acute and chronic indication in the Asian Crisis. One of the findings was that the consumption of medicines for an acute indication declined more and took longer to recover. In the current ‘08-‘09 recession study this development was not as clear as occurred in Indonesia, Thailand and South Korea in the years after the Asian Crisis. Only the European countries showed a slight trend towards this development. It was thought that a decline in household income caused by unemployment and wage declines would lead to a shift in the use of health services from the private to the public sector. Bon-min Yang et al. investigated the impact of the 1997 Asian Crisis on health care utilization in Korea. (17) They found that there was a shift from the use of private hospitals and clinics to public health centres. In our study only a shift in pharmaceutical consumption from the private to the public sector was found in Mexico. In the other three countries where data was available such a shift was not seen. The change in Mexico is thought to be due to ongoing health reform and not to the economic recession. The shift in use of original & licensed brands to other brands & unbranded medicines was not seen in our study and was not investigated in other studies as well.

Implications for policy or public health
This study provides a quick but superficial insight into the functioning of the pharmaceutical system in time of economic recession. If pharmaceutical consumption, expenditure and prices do not change after the beginning of a recession the health system is most likely to be able to cope with the new economic situation. If we had found marker products which could act as sentinel products this would be a useful way for governments to track the pharmaceutical consumption in their country without collecting data on the entire pharmaceutical market. However, we were unable to identify sentinel products which consistently declined during this economic recession. The reasons for changes occurring or not occurring have not been investigated in this study. A comparison of “good or better” and “bad or worse” performing countries would help to provide a framework for a “good” health system. Figure 5-7 showed the correlation of change in GDP and pharmaceutical consumption for 29 European countries. Countries which are in the lower left corner were affected by the economic crisis (decline in GDP) and did have a decline in pharmaceutical consumption (Estonia, Latvia and Lithuania). In the upper left corner are the countries which had a decline in GDP but not in pharmaceutical consumption (Ireland, Finland and Slovenia). It would be interesting to see the differences in policy (changes) and in the health systems between these “good or better” and “bad or worse” performing countries. This might explain why the pharmaceutical consumption in Ireland, Finland and Slovenia was hardly affected. It could also provide a framework for policy making with do’s and do not’s in times of economic recession. This study looked at overall changes in pharmaceutical consumption. Previous studies on the impact of an economic recession on public health found that the people with the lowest incomes experienced the greatest decline in real household incomes. Bong-min Yang et al found that the poorest income category (10% of the population with the lowest income) had a decline of over 30% in real household income while the high income group only had a decline of 3%.(17) A decline in household income probably leads to a decline in health expenditure. Pharmaceutical consumption at a country level is aggregated and can therefore give a rosier picture than the analysis of

50

Discussion

Impact of the economic recession on pharmaceutical consumption

pharmaceutical consumption subdivided by income categories within a country. It would be very useful to study if for example people who became unemployed and therefore lost their health insurance consumed fewer medicines. People who kept their jobs and thus their income would probably not have to change their pharmaceutical consumption patterns. In times of economic recession government expenditures has to be examined carefully. This may also be a suitable time to reform health care. Changes have to be made so it is a good time to introduce more evidence based medicine. We found that the declines in pharmaceutical consumption in Estonia, Latvia, Lithuania and Romania were mostly products like vitamin and mineral supplements and cold and nose preparations. These products do not have evidence of effectiveness and could be excluded from reimbursement lists to keep funds for “essential” medicines.

Conclusion
This study showed that there were only a few countries which experienced a severe decline in pharmaceutical consumption. For the 29 European countries a moderate correlation (r2=0,65 Q3 09) was found between GDP decline and pharmaceutical consumption decline. There was no distinction between the decline in medicines for acute and chronic indications, as was seen in the 1997 Asian financial crisis. The expected shifts in use from patent protected and licensed products to branded and other non patent protected medicines and from private to public sector were not seen in this study. Mexico might be an exception but the shift from private to public sector in this country is probably caused by the health reform which was implemented during this time period. It was expected that there would be a more severe price increase in countries which were affected more by the economic crisis but this was not seen in this study. A general price increase was seen but there was no association with the economic situation of the countries. The decline in pharmaceutical consumption seems to be caused by a general decline in consumption and not by particular products. Unfortunately, no marker products could be identified which could be used by governments to track their pharmaceutical consumption and the functioning of their health systems. The products which declined in all the recession struck countries were products with a limited negative effect on public health if used less, i.e. vitamin and mineral supplements and cold and nose preparations. While most countries in 2010 have moved back into positive GDP growth some have not and there are concerns about countries such as Greece with high budget deficits. There may be more to learn from this recession which could guide future policy responses to future recessions.

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Impact of the economic recession on pharmaceutical consumption

References
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Annexes
Annex 1: Correlation decline in GDP and pharmaceutical consumption ............................................. 55 Annex 2: Consumption of medicines with acute and chronic indication ............................................. 56 Annex 3: Consumption of original & licensed brands and others brands & unbranded medicines..... 58 Annex 4: Shift from private to public .................................................................................................... 59
4.1: Consumption of medicines for acute and chronic indications ..................................................................................... 59 4.2: Consumption of original & licensed brands and other brands & unbranded medicines ............................................. 60 4.3: Pharmaceutical expenditure in private and public sector ........................................................................................... 61

Annex 5: Distribution of consumption .................................................................................................. 62 Annex 6: S1 Opthamologicals ............................................................................................................... 64

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Impact of the economic recession on pharmaceutical consumption

Annex 1: Correlation decline in GDP and pharmaceutical consumption
Correlation GDP and pharmaceutical consumption EUR y = 0,8644x + 18,101 (Q1 09 compared to Q1 08) R² = 0,3914
Pharmaceutical consumption (indexed Q1 08)
110,00 105,00 100,00 95,00 90,00 85,00 80,00 75,00 80,00 EE 85,00 90,00 95,00 100,00 LV LT TR CZ LU NL HU GB IE IT AT BE CH FI ES FR PT SLV SE BG SK RO PL GR NO

Gross Domestic Product (indexed on Q1 08)

Figure 35: This figure shows the relation between change in GDP and the change in pharmaceutical consumption in 29 European Countries for Q1 09 compared to Q1 08. GDP and pharmaceutical consumption are given as an index compared 2 to the year before. A decrease in GDP leads to a lower pharmaceutical consumption although this correlation with a r = 0,3914 is not very strong.

Correlation GDP and pharmaceutical consumption EUR y = 0,7357x + 30,493 (Q2 09 compared to Q2 08) R² = 0,5934
Pharmaceutical consumption (indexed on Q2 08)

105,00 FI LU

GB NL BE CZ AT TR SK NOPT PL FR SE CH GR ES BG IEDK SLV IT RO HU LT

100,00

95,00

90,00 EE 85,00 LV 80,00 80,00

85,00 90,00 95,00 100,00 Gross Domestic Product (indexed on Q2 08) Figure 36: This figure shows the relation between change in GDP and the change in pharmaceutical consumption in 29 European Countries for Q2 09 compared to Q2 08. GDP and pharmaceutical consumption are given as an index compared 2 to the year before (r = 0,5934).

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Impact of the economic recession on pharmaceutical consumption

Annex 2: Consumption of medicines with acute and chronic indication
Looking in more detail to the consumption on country level, the consumption of acute and chronic medication is decreasing in the Estonia, Latvia, Lithuania and Romania. (Figures 37 & 38) The consumption of medicines for an acute indication decreased more than the consumption of chronic medication. The consumption of acute and chronic medication in Poland has the same pattern for both categories. There is a peak in consumption in Q1 09 after which the consumption drops again to respectively 91% and 93% of the consumption in Q1 08. In Malaysia the consumption of acute medicines is decreasing compared to Q1 08, although the decrease is getting less (Figures 39 & 40). In Q3 09 the consumption is only -3% less than in Q1 08. China shows more increase in the consumption of acute medicines (+53% Q3 09) than for chronic medication (+30% Q3 09).
Consumption of medicines for acute indication EUR, Baltic countries, Poland and Romania
(Evolution on Q1 08) 1,12 1,10 1,03 1,00 1,00 0,98 0,90 0,88 0,80 0,70 0,60 Q1 07
EUR

0,98 0,95 0,92 0,82 0,77

Q2 07

Q3 07
POLAND

Q4 07

Q1 08
ESTONIA

Q2 08

Q3 08
LATVIA

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

LITHUANIA

ROMANIA

Figure 37: Consumption of medicines with an acute indication in EUR, Poland, Romania and Baltic States. Estonia has the most severe decline in consumption of acute medicines (-38% in Q3 09), while the decline in consumption of acute medicines in Lithuania is considerably less compared to Estonia and Latvia.

Consumption of medicines for chronic indication EUR, Baltic countries, Poland and Romania
(Evolution on Q1 08) 1,10 1,05 1,03 1,00 1,01 0,95 0,90 0,85 0,80 0,75 0,70 Q1 07 Q2 07
EUR

1,03 1,01 0,99 0,93

0,98

0,88

0,87

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08
LATVIA

Q4 08

Q1 09
LITHUANIA

Q2 09

Q3 09
ROMANIA

Q4 09

POLAND

ESTONIA

Figure 38: Consumption of medicines with a chronic indication in EUR, Poland, Romania and the Baltic States. Similar to the acute indication are Estonia and Latvia the countries with the most decline in consumption. In this situation the decrease in Lithuania is more in line with the decrease in the other Baltic States.

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Impact of the economic recession on pharmaceutical consumption

Consumption of medicines for acute indication WPR, China and Malaysia
(Evolution on Q1 08) 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,80 Q1 07 Q2 07
GLOBAL

1,44

1,18 1,13

0,97 0,94 0,88 Q3 07 Q4 07 Q1 08
WPR

0,99

Q2 08

Q3 08

Q4 08
CHINA

Q1 09

Q2 09

Q3 09

Q4 09

MALAYSIA

Figure 39: Consumption of medicines with an acute indication in WPR, China and Malaysia. China has an increase in consumption, while Malaysia has a decrease in consumption of medicines with an acute indication from Q4 08.

Consumption of medicines for chronic indication WPR, China and Malaysia
(Evolution on Q1 08) 1,40 1,37 1,30 1,20 1,10 1,00 0,90 0,80 Q1 07 Q2 07
GLOBAL

1,23 1,17

0,97 0,93 0,91

Q3 07

Q4 07

Q1 08
WPR

Q2 08

Q3 08

Q4 08
CHINA

Q1 09

Q2 09

Q3 09

Q4 09

MALAYSIA

Figure 40: Consumption of medicines with a chronic indication in WPR, China and Malaysia. Malaysia shows a decrease contrary to the increase in consumption in the total region. China shows an increase after the start of the recession while before the recession the consumption was decreasing from at least Q1 07.

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Impact of the economic recession on pharmaceutical consumption

Annex 3: Consumption of original & licensed brands and others brands & unbranded medicines
Consumption of original & licensed brands WPR, China and Malaysia
(Evolution on Q1 08) 1,30 1,25 1,20 1,15 1,12 1,10 1,05 1,00 0,95 0,90 0,88 0,85 Q1 07 Q2 07
GLOBAL

1,20

1,08 0,99 0,97 0,97

Q3 07

Q4 07

Q1 08
WPR

Q2 08

Q3 08

Q4 08
CHINA

Q1 09

Q2 09

Q3 09

Q4 09

MALAYSIA

Figure 41: Consumption of original & licensed brands for Western Pacific region (WPR), China and Malaysia. China had a continuous increase in the consumption of original & licensed brands from the first quarter of 2007 onwards. The consumption of original & licensed brands decreased in Malaysia up to 86% of the consumption in Q1 08, although the decrease has not the same extent over time.

Consumption of other brands & unbranded medicines WPR, China and Malaysia
(Evolution on Q1 08) 1,40 1,30 1,20 1,10 1,00 0,90 0,80 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
WPR

1,37

1,22 1,16

0,99 0,95 0,90 0,92

Q2 08

Q3 08

Q4 08
CHINA

Q1 09

Q2 09

Q3 09

Q4 09

GLOBAL

MALAYSIA

Figure 42: Consumption of other brands & unbranded medicines for Western Pacific region (WPR), China and Malaysia. Malaysia had an increase in the consumption of other brands & unbranded medicines for two consecutive quarters after the recession. From Q4 08 onwards there is a decline in consumption in Malaysia to 89% (Q2 09) of the consumption of Q1 08. China had an increase in consumption of other brands & unbranded medicines up to 15% in Q2 09.

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Impact of the economic recession on the pharmaceutical sector

Annex 4: Shift from private to public
4.1: Consumption of medicines for acute and chronic indications
Consumption Acute vs Chronic Private and public sector Brazil
(Evolution on Q1 08) 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,80 0,70 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 ACUT (PRIV.) CHRON (PRIV.) ACUT (PUB.) CHRON (PUB.) 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,80 0,70 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 ACUT (PRIV.) CHRON (PRIV.) ACUT (PUB.) CHRON (PUB.)

Consumption Acute vs Chronic Private and public sector Mexico
(Evolution on Q1 08)

Consumption Acute vs Chronic Private and public sector Uruguay
(Evolution on Q1 08) 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 0,80 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 ACUT (PRIV.) CHRON (PRIV.) ACUT (PUB.) CHRON (PUB.) 0,95 0,75 1,55 1,35 1,15 1,95 1,75

Consumption Acute vs Chronic Private and public sector South Africa
(Evolution on Q1 08)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 ACUT (PRIV.) CHRON (PRIV.) ACUT (PUB.) CHRON (PUB.)

Figure 43a-d: Consumption of medicines with an acute and chronic indication in the private and public sector in Brazil, Mexico, Uruguay and South Africa. Data is indexed on Q1 08, the last quarter before the recession. a) In Brazil the consumption of chronic medication increased more in both private and public sector than the acute medication since Q1 09 . b) Since the beginning of Q1 09 the consumption of acute medicines in the public sector of Mexico increased to +42% Q3 09 compared to in Q1 08. c) In Uruguay was the consumption of chronic medication bigger than the consumption of acute medicines both in private and public sector. d) In South Africa the consumption of acute medicines increased very strong until Q3 09. The increase of consumption in the public sector was bigger than the increase in the private sector.

In Brazil and Uruguay the consumption of chronic medication increased more than the consumption of acute medication (see Figure 43). In Mexico and South Africa the consumption in the public sector increased more than in the private sector, especially the consumption of acute medication. This might be a sign that people make more use of the facilities in the public sector than in the private sector. In Mexico both acute and chronic declined in the private sector and increased in the public sector, until Q3 09. In the other countries the developments of acute and chronic are in the same direction.

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Impact of the economic recession on the pharmaceutical sector

4.2: Consumption of original & licensed brands and other brands & unbranded medicines
Consumption original & licensed brands vs other brands & unbranded medicines Private and public sector Brazil
1,60 1,50 1,40 1,30 1,20 1,10 1,10 1,00 0,90 0,80 0,70 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Original & licensed brands (PRIV.) Other brands & unbranded (PRIV.) Original & licensed brands (PUB.) Other brands & unbranded (PUB.) 1,00 0,90 0,80 0,70 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Original & licensed brands (PRIV.) Other brands & unbranded (PRIV.) Original & licensed brands (PUB.) Other brands & unbranded (PUB.) (Evolution on Q1 08) 1,50 1,40 1,30 1,20

Consumption original & licensed brands vs other brands & unbranded medicines Private and public sector Mexico
(Evolution on Q1 08)

Consumption original & licensed brands vs other brands & unbranded medicines Private and public sector Uruguay
(Evolution on Q1 08) 1,30 1,50 1,40 1,20 1,30 1,10 1,20 1,10 1,00 1,00 0,90 0,90 0,80 0,70 0,80 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Original & licensed brands (PRIV.) Other brands & unbranded (PRIV.) Original & licensed brands (PUB.) Other brands & unbranded (PUB.) 0,60

Consumption original & licensed brands vs other brands & unbranded medicines Private and public sector South Africa
(Evolution on Q1 08)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Original & licensed brands (PRIV.) Other brands & unbranded (PRIV.) Original & licensed brands (PUB.) Other brands & unbranded (PUB.)

Figure 44a-d: Consumption of original & licensed brands and other brands & unbranded medicines in both private and public sector in Brazil, Mexico, Uruguay and South Africa. a) In Brazil is the consumption of unbranded medicines in the public sector increasing to +43% in Q3 09 compared to Q1 08 after a large increase in the period Q3 07 – Q3 08 and a decline in Q1 09 –Q2 09. b) In Mexico is the use of both original & licensed and other brands & unbranded medicines declined in the private sector while these groups increased in the public sector. The original & licensed brands declined (private) and increased (public) the most. c) In Uruguay the use of other brands & unbranded medicines in the public sector increased the most, although all categories increased. d) In South Africa the consumption of other brands & unbranded medicines in the public sector increased the most.

In Brazil is the increase of consumption of other brands & unbranded medicines larger than the increase of consumption of original & licensed brands, both in private and public sector. In Mexico the consumption of both original & licensed brands and other brands & unbranded medicines decreased in the private sector and increased in the public sector. The increase in consumption of original & licensed brands in the public sector is considerable larger than the increase of other brands & unbranded medicines. Consumption of original and licensed brands in the public sector increased up to +42% in Q2 09 compared to Q1 08. The other brands & unbranded medicines used in the public sector increased the most, although the use of both original & licensed brands and other & unbranded medicines in both private and public sector increased in Uruguay. In South Africa the

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Impact of the economic recession on the pharmaceutical sector

public sector consumed more other brands & unbranded medicines from Q2 09 onwards, +51% in Q4 09 compared to Q1 08.

4.3: Pharmaceutical expenditure in private and public sector
Average pharmaceutical expenditure index Private and public sector Brazil
(indexed on Q1 08) 1,60 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,80 0,70 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 BRAZIL (PRIV.) BRAZIL (PUB.) 1,35 1,30 1,25 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 MEXICO (PRIV.) MEXICO (PUB.)

Average pharmaceutical expenditure index Private and public sector Mexico
(indexed on Q1 08)

Average pharmaceutical expenditure index Private and public sector Uruguay
(indexed on Q1 08) 1,35 1,30 1,25 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 URUGUAY (PRIV.) URUGUAY (PUB.) 1,75 1,65 1,55 1,45 1,35 1,25 1,15 1,05 0,95 0,85 0,75

Average pharmaceutical expenditure index Private and public sector South Africa
(indexed on Q1 08)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 SOUTH AFRICA (PRIV.) SOUTH AFRICA (PUB.)

Figure 55a-d: Average pharmaceutical expenditure index (national currency units) in private and public sector in Brazil, Mexico, Uruguay and South Africa. The expenditure is higher in the public sector.

Expenditure in the public sector in Brazil and South Africa increased a lot since Q1 09 (+59% and +73% respectively Q4 09 compared to Q1 08. Pharmaceutical expenditure in the private sector increased as well, in Q4 09 the expenditure is about 26%-35% higher compared to Q1 08. In Uruguay expenditure in private and public sector increased at the same pace. Pharmaceutical expenditure in the public sector in Mexico was higher compared to the private sector. In Q4 09 the expenditure in the public sector declined with -15% compared to Q1 08.

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Impact of the economic recession on the pharmaceutical sector

Annex 5: Distribution of consumption

Distribution of consumption Estonia
100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 0,00% 20,00%

Consumption (%)

29,47%; 80,76%

40,00% 60,00% 80,00% Number of ATC 2 categories (%)

100,00%

Distribution of consumption Latvia
100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 0,00% 20,00%

Consumption (%)

29,17%; 80,55%

40,00% 60,00% 80,00% Number of ATC 2 categories (%)

100,00%

Figure 56a-e: Figures of the average percentage of total supply units of ATC 2 categories in Estonia, Latvia, Lithuania, Romania and Poland for 2007-2009.

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Impact of the economic recession on the pharmaceutical sector

Distribution of consumption Lithuania
100,00% 90,00% 80,00%

Consumption (%)

28,72%; 80,04%

70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 0,00% 20,00% 40,00% 60,00% 80,00% Number of ATC 2 categories (%) 100,00%

Distribution of consumption Romania
100,00% 90,00% 80,00% 23,16%; 81,96%

Consumption (%)

70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 0,00% 20,00% 40,00% 60,00% 80,00% Number of ATC 2 categories (%) 100,00%

Distribution of consumption Poland
100,00% 90,00% 80,00%

Consumption (%)

70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 0,00% 20,00%

27,55%; 81,11%

40,00% 60,00% 80,00% Number of ATC 2 categories (%)

100,00%

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Impact of the economic recession on the pharmaceutical sector

Annex 6: S1 Opthamologicals
Table 121: Absolute and percentage change of SU’s per capita for Q4 08 + Q1 09 compared with Q4 07 + Q1 08 for S1 Opthamologicals.

S1 Opthamologicals
Country Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania atc3 S1A (ANTI-INFECTIVES-EYE) S1A (ANTI-INFECTIVES-EYE) S1A (ANTI-INFECTIVES-EYE) S1A (ANTI-INFECTIVES-EYE) S1A (ANTI-INFECTIVES-EYE) S1B (CORTICOSTEROIDS-EYE) S1B (CORTICOSTEROIDS-EYE) S1B (CORTICOSTEROIDS-EYE) S1B (CORTICOSTEROIDS-EYE) S1B (CORTICOSTEROIDS-EYE) S1C (OPHTH A-INFLAM+A-INFEC) S1C (OPHTH A-INFLAM+A-INFEC) S1C (OPHTH A-INFLAM+A-INFEC) S1C (OPHTH A-INFLAM+A-INFEC) S1C (OPHTH A-INFLAM+A-INFEC) S1D (ANTI-VIRAL AGENTS -EYE) S1D (ANTI-VIRAL AGENTS -EYE) S1D (ANTI-VIRAL AGENTS -EYE) S1D (ANTI-VIRAL AGENTS -EYE) S1D (ANTI-VIRAL AGENTS -EYE) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS.) S1E (MIOTICS+ANTIGLAUC.PREPS) S1F (MYDRIATICS+CYCLOPLEGICS) S1F (MYDRIATICS+CYCLOPLEGICS) S1F (MYDRIATICS+CYCLOPLEGICS) S1F (MYDRIATICS+CYCLOPLEGICS) S1F (MYDRIATICS+CYCLOPLEGICS) S1G (OCULAR ANTI-ALLERGICS, DECONGESTANTS) S1G (OCULAR ANTI-ALLERGICS, DECONGESTANTS) S1G (OCULAR ANTI-ALLERGICS, DECONGESTANTS) S1G (OCULAR ANTI-ALLERGICS, DECONGESTANTS) S1G (OCULAR ANTI-ALLERGICS, DECONGESTANTS) S1H (LOCAL ANAESTHETICS -EYE) S1H (LOCAL ANAESTHETICS -EYE) S1H (LOCAL ANAESTHETICS -EYE) S1H (LOCAL ANAESTHETICS -EYE) S1H (LOCAL ANAESTHETICS -EYE) S1K (ARTIFICIAL TEARS+OC LUBS) S1K (ARTIFICIAL TEARS+OC LUBS) S1K (ARTIFICIAL TEARS+OC LUBS) S1K (ARTIFICIAL TEARS+OC LUBS) S1K (ARTIFICIAL TEARS+OC LUBS) S1L (CONTACT LENS SOLUTIONS) S1L (CONTACT LENS SOLUTIONS) S1L (CONTACT LENS SOLUTIONS) S1L (CONTACT LENS SOLUTIONS)

% of total sales 2,46% 0,56% 0,81% 1,26% 0,74% 0,19% 0,07% 0,16% 0,11% 0,12% 0,63% 0,61% 0,46% 0,71% 0,25% 0,00% 0,05% 0,00% 0,00% 0,01% 2,43% 1,64% 1,77% 1,39% 1,22% 0,05% 0,10% 0,09% 0,08% 0,13% 1,08% 1,30% 0,98% 1,80% 1,47% 0,03% 0,09% 0,07% 0,01% 0,04% 2,63% 1,35% 2,17% 0,31% 0,95% 0,02% 0,11% 0,19% 0,00%

% change -30,98% -7,11% -10,21% -11,89% -3,76% -14,82% -0,44% -4,16% -1,79% 15,29% -15,43% -5,15% 12,83% 11,41% 1,18% -18,38% 73,90% 67,84% 92,66% -13,75% -0,28% 24,20% 5,28% 6,87% 2,28% -45,98% -1,71% 1,61% 16,50% 1,64% -42,82% 0,08% -13,43% -13,78% 3,83% -50,04% -13,66% 7,55% 268,14% -1,03% -16,37% -4,36% -1,94% -38,69% -7,45% 103,36% 8,68% -54,56% -20,66%

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Impact of the economic recession on the pharmaceutical sector

S1 Opthamologicals
Country Estonia Latvia Lithuania Romania Poland Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Poland Estonia Latvia Lithuania Romania Poland Estonia Latvia Lithuania Romania Poland atc3 S1M (EYE TONICS AND EYE VITAMINS) S1M (EYE TONICS AND EYE VITAMINS) S1M (EYE TONICS AND EYE VITAMINS) S1M (EYE TONICS AND EYE VITAMINS) S1M (EYE TONICS AND EYE VITAMINS) S1N (ANTICATARACTOGENICS) S1N (ANTICATARACTOGENICS) S1N (ANTICATARACTOGENICS) S1N (ANTICATARACTOGENICS) S1P (OCULAR ANTINEOVASCULARISATION PRODUCTS) S1P (OCULAR ANTINEOVASCULARISATION PRODUCTS) S1P (OCULAR ANTINEOVASCULARISATION PRODUCTS) S1P (OCULAR ANTINEOVASCULARISATION PRODUCTS) S1P (OCULAR ANTINEOVASCULARISATION PRODUCTS) S1R (OPHTH N/STEROID A-INFLAM) S1R (OPHTH N/STEROID A-INFLAM) S1R (OPHTH N/STEROID A-INFLAM) S1R (OPHTH N/STEROID A-INFLAM) S1R (OPHTH N/STEROID A-INFLAM) S1S (OPHTHALMOL SURGICAL AIDS) S1S (OPHTHALMOL SURGICAL AIDS) S1S (OPHTHALMOL SURGICAL AIDS) S1S (OPHTHALMOL SURGICAL AIDS) S1T (OPHTHALMOL DIAG AGENTS) S1T (OPHTHALMOL DIAG AGENTS) S1T (OPHTHALMOL DIAG AGENTS) S1T (OPHTHALMOL DIAG AGENTS) S1T (OPHTHALMOL DIAG AGENTS) S1X (OTHER OPHTHALMOLOGICALS) S1X (OTHER OPHTHALMOLOGICALS) S1X (OTHER OPHTHALMOLOGICALS) S1X (OTHER OPHTHALMOLOGICALS) S1X (OTHER OPHTHALMOLOGICALS)

% of total sales 0,68% 0,78% 1,08% 0,04% 0,18% 1,62% 0,83% 1,16% 1,33% 0,00% 0,00% 0,00% 0,00% 0,00% 0,02% 0,27% 0,11% 0,03% 0,13% 0,00% 0,00% 0,01% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,06% 0,83% 0,09% 0,01% 0,07%

% change -37,54% -12,91% -17,49% 1,98% -0,97% 13,83% -4,59% -0,18% 0,07% -100,00% -20,04% 0,00% -100,00% 17,48% -37,04% -6,34% 17,47% 53,98% -9,03% 0,00% 6,17% 38,45% 168,82% 39,64% 0,00% 37,31% 0,00% 68,04% 279,09% -31,36% -36,46% -70,28% 7,41%

65