The Pharmaceutical Market Evolution

Petru CrăciunZF Pharma – Bucharest2015, September 22nd

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Crisis Lessons - 1st Proposal

“Due to historical and recent evolutions,

as well as the EU membership of Romania,

the pharmaceutical market tends to follow

the price convergence of the European market

with all associated consequences

(price increase in local currency,

significant trade deficit

but stable price of treatment in euros)

and risks (parallel trade)”

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Crisis Lessons - 2nd Proposal

“There is no such thing

as a single administrative decision

to control the health needs;

the matter is so complex that no one is able

to predict its exact evolution in the mid- and long run.

The best way to ensure performance rewarding

is the healthy and fair competition

and the continuous update and adjustment

to all relevant evolutions”

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Crisis Lessons - 3rd Proposal

“Our common work is:

as an industry, to provide the right tools

(products) for treatment and prevention;

as health decision-makers,

to ensure a reasonable framework to achieve

an accessible and affordable treatment

for all Romanian citizens.

Let’s try to better adapt to the switch

from the offer-driven to the demand-driven

model of doing business”

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Rx Price Reduction Impact

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New Price Reduction – July 1st

New Price List: Average (non-weighted) Retail Price: - 9.4% 1st Quarter Impact (backward) Estimation:

Wholesaler level: - 9.2% Manufacturer level: -12.6%

2015 Market Impact Estimation: - 2.8%

Patient & HCPs Questions: Will product affordability improve? Will product availability be impacted?

Industry Questions: Is EU Single Price a Suitable Strategy? Is Romania – an EU country – a Market of Interest? Product P&L: Continuation/Discontinuation

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Short-term Forecast (July 2015 - June 2016)

Market Segment

MAT(2013 - S1)Real

MAT(2014 - S1)Real

MAT(2015 - S1)Real

MAT(2016 - S1)Forecast

MAT(2016 - S1)Δ

Total 515.2 504.1 543.0 548.6 1.0% Retail 489.7 479.4 516.6 521.8 1.0% Rx 332.1 324.0 341.8 344.8 0.9% OTC 157.7 156.4 168.3 169.7 0.8% Hospital 25.5 24.7 26.4 26.7 1.1%

Total 11,798.8 11,616.1 12,481.6 12,648.3 1.3% Retail 10,306.6 10,277.1 10,966.6 11,092.5 1.1% Rx 8,557.6 8,432.9 8,738.5 8,787.1 0.6% OTC 2,667.2 2,776.5 3,068.2 3,129.3 2.0% Hospital 1,492.2 1,339.1 1,515.1 1,555.9 2.7%

Total 22.90 23.04 22.99 23.06 0.3% Retail 21.05 21.44 21.23 21.26 0.1% Rx 25.77 26.03 25.56 25.48 -0.3% OTC 16.91 17.75 18.24 18.44 1.1% Hospital 58.59 54.31 57.35 58.25 1.6%

Units (mil.packs)

Value PPP (mil. RON)

Average Price PPP

(RON)

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Key Issues

“Common” Drugs: Not all products will survive at current prices Alternative products will be more expensive than the existing ones Total expenditure will not fall

“Premium” Drugs: Price difference makes them more attractive for “rich” EU markets Availability for Romanian patients will diminish Create stronger premises for tougher HQ decisions

Reimbursement: If reimbursement go below 50% of the value, market influence decrease “Common” drugs cannot pay for “Premium” drugs (claw-back)

Pricing: Latest by the end of 2016 we will be forced to review current pricing

Thank you for your attention

Email: petru.craciun@cegedim.com

www.cegedim.com