Generics in Spain Industry Profile

Reference Code: 0180-0334 Publication date: August 2005

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EXECUTIVE SUMMARY

EXECUTIVE SUMMARY Market Value The Spanish generics market grew by 18.6% in 2004 to reach a value of $480.9 million. Market Value Forecast In 2009, the market is forecast to have a value of $907.1 million, an increase of 88.6% since 2004. Market Segmentation I Ethical generic sales dominate the market, accounting for 96.3% of the overall value. Market Segmentation II Spain accounts for 4.3% of the European generics market.

Spain - Generics © Datamonitor (Published August 2005)

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CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY

3

CHAPTER 1

7

Market Overview

1.1

Market Definition

7

1.2

Research Highlights

7

1.3

Market Analysis

8

CHAPTER 2

Market Value

9

CHAPTER 3

Market Segmentation I

10

CHAPTER 4

Market Segmentation II

11

CHAPTER 5

Competitive Landscape

12

CHAPTER 6

Leading Companies

13

6.1

Esteve Group

13

6.2

Laboratorios CINFA

13

6.3

Laboratorios Normon

13

6.4

Mayne Group Limited

14

6.5

Ranbaxy Laboratories

14

6.6

Ratiopharm Inc.

14

6.7

STADA Arzneimittel

15

CHAPTER 7 7.1

Market Forecasts

Market Value Forecast

16 16

Spain - Generics © Datamonitor (Published August 2005)

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CONTENTS CHAPTER 8

Macroeconomic Indicators

17

CHAPTER 9

Further Reading

19

9.1

Sources

19

9.2

Related Datamonitor Research

19

Spain - Generics © Datamonitor (Published August 2005)

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CONTENTS

LIST OF TABLES Table 1:

Spain Generics Market Value: $ million, 2000-2004 ........................................... 9

Table 2:

Spain Generics Market Segmentation I: % Share, by Value, 2004 ................... 10

Table 3:

Spain Generics Market Segmentation II: % Share, by Value, 2004.................. 11

Table 4:

Spain Generics Market Value Forecast: $ million, 2004-2009 .......................... 16

Table 5:

Spain Size of Population (million) , 2000-2004.................................................. 17

Table 6:

Spain GDP (1995=100), 2000-2004 .................................................................. 17

Table 7:

Spain Inflation, 2000-2004 ................................................................................. 17

Table 8:

Spain Exchange Rate, 2000 .............................................................................. 18

Spain - Generics © Datamonitor (Published August 2005)

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MARKET OVERVIEW

CHAPTER 1

1.1

MARKET OVERVIEW

Market Definition The value of the generics market consists of all sales of generics drugs at exmanufacturers prices. The market does not include consumer healthcare products, nor animal healthcare. Datamonitor defines a generic as a product, which is an officially approved copy of an original product whose patent has expired, marketed either as a brand or using the generic name. This definition excludes multi-source copy products that make up much of markets such as India, Spain and Italy. All currency conversions have been calculated at a 2004 average. For the purpose of this report, Europe is deemed to consist of Belgium, France, Germany, Italy, Netherlands, Spain and the UK. Asia-Pacific consists of the Chinese and Japanese markets. The global market is deemed to be Asia-Pacific, Europe, Canada and the US.

1.2

Research Highlights The market’s small size has allowed it to exhibit very high growth rates, particularly as the government is pushing generics use Unlike many of the larger European markets that are dominated by the larger international players, domestic players hold significant market share in the Spanish generics market. Doctors in Spain often have a tendency to prescribe the newest available drugs and are subsequently unwilling to recommend generics.

Spain - Generics © Datamonitor (Published August 2005)

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MARKET OVERVIEW

1.3

Market Analysis Due to the late introduction of generics to the country at the end of the last decade, the Spanish generics market is relatively underdeveloped. However the market’s small size has allowed it to exhibit very high growth rates, particularly as the government is pushing generics use, which will allow the market to continue to show very high growth rates. The Spanish generics market generated total revenues of $480.9 million in 2004, representing a compound annual growth rate (CAGR) of 37.1% for the five-year period spanning 2000-2004. The very high rate of growth was due to the government attempting to popularize generics as a way of reducing healthcare costs, combined with the markets small size (it was effectively non-existent in the mid 90s). Subsequently the Spanish market performed substantially better than the European market as a whole, which grew with a CAGR of 18.7%. Ethical generic sales proved the most lucrative for the Spanish generics market in 2004, generating total revenues of $463.1 billion, equivalent to 96.3% of the market‘s overall value. The dominance of the ethical generic sector is due to almost all the current generic demand stemming from government efforts to reduce prescription costs by encouraging generic use. The sale of OTC generics contributed total sales of $17.8 million in 2004, equating to the remaining 3.7% of the market‘s aggregate revenues. The strong identity of brandname drugs and the limited availability and lack of knowledge about the effectiveness of generic alternatives have hindered sales in this sector. Looking forward, the market is forecast to decelerate its current performance, with an anticipated CAGR of 13.5% for the five-year period 2004-2009 expected to drive the market to a value of $907.1 million by the end of 2009. Despite the market’s slowdown, strong growth will continue to be seen fuelled by more drugs coming offpatent and increased recognition of generics as a cheap alternative to brand-name products. Despite the slowdown the Spanish market is expected to continue to grow at a faster rate than the European market, which is forecast to grow with a CAGR of 12%.

Spain - Generics © Datamonitor (Published August 2005)

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MARKET VALUE

CHAPTER 2

MARKET VALUE

The Spanish generics market grew by 18.6% in 2004 to reach a value of $480.9 million. The compound annual growth rate of the market in the period 2000-2004 was 37.1%. The strongest growth was in 2002, when the market grew by 98.1%. Table 1:

Spain Generics Market Value: $ million, 2000-2004

Year

$ million

€ million

% Growth

2000 2001 2002 2003 2004

136.2 162.1 321.1 405.6 480.9

109.6 130.5 258.5 326.6 387.1

19.00% 98.10% 26.30% 18.60%

CAGR, 2000-2004:

37.1%

Source: Datamonitor

Figure 1:

D AT AM ON IT O R

Spain Generics Market Value: $ million, 2000-2004

% Growth

600

120.0%

500

100.0%

400

80.0%

300

60.0%

200

40.0%

100

20.0%

0

% Growth

$ million

$ million

0.0% 2000

Source: Datamonitor

2001

2002

2003

2004

D AT AM ON IT O R

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MARKET SEGMENTATION I

CHAPTER 3

MARKET SEGMENTATION I

Ethical generic sales dominate the Spanish generics market, accounting for 96.3% of the overall value. OTC generics account for the remaining 3.7% of the market. Table 2:

Spain Generics Market Segmentation I: % Share, by Value, 2004

Category

% Share

Ethical Generic OTC Generic

96.30% 3.70%

Total

100.0%

Source: Datamonitor

Figure 2:

D AT AM ON IT O R

Spain Generics Market Segmentation I: % Share, by Value, 2004

OTC Generic 3.7%

Ethical Generic 96.3%

Source: Datamonitor

D AT AM ON IT O R

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MARKET SEGMENTATION II

CHAPTER 4

MARKET SEGMENTATION II

Spain accounts for 4.3% of the European generics market. Italy's generics market accounts for 3.3% of the regional value. Table 3:

Spain Generics Market Segmentation II: % Share, by Value, 2004

Geography

% Share

Rest of Europe Spain Italy Netherlands Belgium

88.60% 4.30% 3.30% 2.80% 0.90%

Total

100.0%

Source: Datamonitor

Figure 3:

D AT AM ON IT O R

Spain Generics Market Segmentation II: % Share, by Value, 2004

Italy 3.3% Spain 4.3%

Netherlands 2.8%

Belgium 0.9%

Rest of Europe 88.6%

Source: Datamonitor

D AT AM ON IT O R

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COMPETITIVE LANDSCAPE

CHAPTER 5

COMPETITIVE LANDSCAPE

As a result of the relatively recent introduction of generics into Spain, the country’s generics market is particularly fragmented. Unlike many of the larger European markets that are dominated by the larger international players, domestic players such as Normon, Esteve and Cinfa, hold significant market share in the Spanish generics market, alongside the more established foreign companies such as Ratiopharm and STADA. One reason for the low level of large international players is that the Spanish market is not viewed as being as promising as the Italian or French markets. A significant factor in that view has been the reluctance of Spanish physicians in regularly prescribing generic drugs. Indeed, doctors in Spain often have a tendency to prescribe the newest available drugs and are subsequently unwilling to recommend generics. This trend has hindered the Spanish government’s attempts to cut healthcare spending through extensive use of generic drugs. However, several overseas generics companies are present within the market. In June, Ranbaxy Laboratories acquired a portfolio of 18 generic products from Spanish pharmaceutical company Efarmes SA in an attempt to tap the markets potential. At the end of last year Mayne Group announced the acquisition of a specialized hospital generic pharmaceutical distribution business from Laboratorios Farmacéuticos ROVI, providing a direct sales and marketing presence in the country, in addition to the distribution rights to ROVI’s existing product portfolio.

Spain - Generics © Datamonitor (Published August 2005)

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LEADING COMPANIES

CHAPTER 6

6.1

LEADING COMPANIES

Esteve Group Esteve Group is a large pharmaceutical-based company in Spain. The operations of Esteve Group are split into a number of companies, the pharmaceutical company, Esteve; the medical marketing company, Pensa; dermatological producer, Isdin; and fine chemicals producer, Esteve Química. The company is headquartered in Barcelona, Spain. For the fiscal year ended December 2004, the company generated revenues of $1,016 million compared to $1,048.3 million the previous year.

6.2

Laboratorios CINFA Laboratorios CINFA is pharmaceutical company involved in the development, manufacture and marketing of medical products and devices. Outside of Spain, the company’s home market, it has subsidiaries in Portugal and Brazil. In the fiscal year ended December 2004, CINFA generated revenues of $97.2 million 21.5% higher compared to $80.8 million the previous year.

6.3

Laboratorios Normon Laboratorios Normon is a leading Spanish pharmaceutical company. Specializing in generic medicine the company was the first to launch a generic drug in the country in 1997. Normon currently offers 50 active components with over 250 forms. The company has a presence in 20 countries and has 565 employees. Normon is headquartered in Madrid, Spain. The company generated revenues of $92.2 million in fiscal 2004, 11.6% higher than in fiscal 2003.

Spain - Generics © Datamonitor (Published August 2005)

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LEADING COMPANIES

6.4

Mayne Group Limited Mayne Group Limited Australia has diversified healthcare networks. The company operates in the pharmaceuticals market, and in diagnostic services. It develops and manufactures generic pharmaceuticals for world markets and produces a number of consumer health products. Mayne Group Limited is headquartered in Melbourne, Australia. For the fiscal year ended December 2004, the company reported revenues of $4.5 billion, an increase of 9.1% on fiscal 2003. The company saw a net income of $73.4 million in fiscal 2003, an increase from a loss of $304.7 million in fiscal 2003.

6.5

Ranbaxy Laboratories Ranbaxy Laboratories is the largest pharmaceutical company in India, manufacturing pharmaceuticals and APIs (Active Pharmaceutical Ingredients). The company is structured acround four international regions: India; Europe, Commonwealth of Independent States (CIS) and Africa; Asia-Pacific and Middle East; Latin America; and North America. It has manufacturing facilities in each region and owns a number of subsidiaries and affiliates. Ranbaxy Laboratories is headquartered in New Delhi, India. For the fiscal year ending December 2004, Ranbaxy Laboratories recorded revenue of $1.2 billion, a 17% increase over the 2003 figure of $974 million. Profits after tax and minority interest for the 2004 fiscal year were $154 million compared to the 2003 figure of $163 million.

6.6

Ratiopharm Inc. Ratiopharm is one of Europe's largest generics manufacturers, with subsidiaries and representatives in 24 countries worldwide. The company offers around 750 different preparations, which are available in 38 countries and sells over 350 million packs of medicine annually. Ratiopharm is headquartered in Ulm, Germany. In fiscal 2004 the company generated revenues of $1.5 billion, of which about 57% came from its German operations.

Spain - Generics © Datamonitor (Published August 2005)

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LEADING COMPANIES

6.7

STADA Arzneimittel STADA Arzneimittel is a European pharmaceutical company that produces generic and brand name drugs, as well as specialty pharmaceuticals. STADA is headquartered in Bad Vilbel, Germany. Whilst most of the company’s business is in Europe, it is branching out into the US and Asia. In the fiscal year ended December 2004, the company generated revenues of $1.1 billion, an increase of 18.6% on the previous year. The company generated a net income of $66.2 million during fiscal 2004, 19.6% higher than in fiscal 2003.

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MARKET FORECASTS

CHAPTER 7

7.1

MARKET FORECASTS

Market Value Forecast In 2009, the Spanish generics market is forecast to have a value of $907.1 million, an increase of 88.6% since 2004. The compound annual growth rate of the market in the period 2004-2009 is predicted to be 13.5%. Table 4:

Spain Generics Market Value Forecast: $ million, 2004-2009

Year

$ million

€ million

% Growth

2004 2005 2006 2007 2008 2009

480.9 559.4 642.3 728.7 816.9 907.1

387.1 450.4 517.1 586.6 657.7 730.3

18.60% 16.30% 14.80% 13.40% 12.10% 11.00%

CAGR, 2004-2009:

13.5%

Source: Datamonitor

Figure 4:

D AT AM ON IT O R

Spain Generics Market Value Forecast: $ million, 2004-2009

% Growth

1,000 900 800 700 600 500 400 300 200 100 0

20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2004

Source: Datamonitor

2005

2006

2007

2008

% Growth

$ million

$ million

2009

D AT AM ON IT O R

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MACROECONOMIC INDICATORS

CHAPTER 8 Table 5:

MACROECONOMIC INDICATORS Spain Size of Population (million) , 2000-2004

Year

Population (million)

% Growth

2000 2001 2002 2003 2004

40.0 40.1 40.2 40.2 40.3

0.20% 0.20% 0.20% 0.20%

Source: Datamonitor

Table 6:

D AT AM ON IT O R

Spain GDP (1995=100), 2000-2004

Year

1995=100

% Growth

2000 2001 2002 2003 2004

120.2 123.4 125.9 128.9 132.8

2.70% 2.00% 2.40% 3.00%

Source: Datamonitor

Table 7:

D AT AM ON IT O R

Spain Inflation, 2000-2004

Year

Inflation Rate (%)

% Growth

2000 2001 2002 2003 2004

4.0 2.7 4.5 2.6 2.4

-32.50% 66.50% -42.70% -6.20%

Source: Datamonitor

D AT AM ON IT O R

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MACROECONOMIC INDICATORS Table 8:

Spain Exchange Rate, 2000

Year

Exchange Rate ($/€)

2000 2001 2002 2003 2004

0.06698 0.06506 0.94245 1.12943 1.24208

Source: Datamonitor

D AT AM ON IT O R

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CONTENTS

CHAPTER 9

9.1

FURTHER READING

Sources This report is based on a combination of primary Datamonitor research, including online, face-to-face and telephone interviews with consumer and industry players, and secondary research using various sources (including trade associations, news providers and others).

Industry Associations Asociación Nacional Empresarial de la Industria Farmacéutica C/ Serrano, 116 28006 Madrid Tel: 34 91 563 13 24 Fax: 34 91 563 73 80 http://www.farmaindustria.es EGA - European Generic Medicines Association P.O. Box 193 B-1040 Brussels Tel: 32 2 736 8411 Fax: 32 2 736 7438 http://www.egagenerics.com

9.2

Related Datamonitor Research Datamonitor Industry Profiles Global Generics ($200) Generics in Europe ($200) Generics in Asia-Pacific ($200) Generics in France ($200) Generics in Germany ($200) Generics in the United Kingdom ($200) Generics in Italy ($200) Generics in Belgium ($200) Generics in the Netherlands ($200)

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