What impact will the economic environment  have on the pharmaceutical market in Greece?

Strict austerity measures have been introduced to reduce the government deficit, which will lead to reductions in public healthcare spending.

According to the EIU, Greece faces another year of negative growth in 2012, following three years of economic decline and plunging living standards. The economy should flatten out during 2013 and then grow modestly between 2014 and 2016. This forecast assumes that a large write-down of debt and continued government commitment to austerity make the public finances a little more manageable and that Greece remains in the euro zone.

In July 2011, a second bailout facility was agreed for Greece, which secured private-sector involvement (PSI). However, the accord is not sufficient to return Greece to solvency, and further write-downs will be needed to secure debt sustainability. The agreement on the revised austerity package, which consists of further spending cuts and tax rises, came at a political cost and further reduced the government’s majority. Previously, in April 2010, Greece requested activation of a lending facility with the IMF and euro zone states. In May 2010, the IMF, the European Central Bank (ECB) and the leaders of euro area member states agreed a 110.0 billion euro (US$156.5 billion) financing plan for Greece over three years.

The terms of the austerity packages, coupled with an increase in the use of cost containment measures, means that healthcare spending is likely to remain at relatively the same level over the coming years. This is despite the fact that large investments have been put into healthcare in recent years, although the sustainability of these was always questionable, with public hospitals running at ever-greater levels of debt and late payments to suppliers becoming more of a problem. It is estimated that the Greek authorities owe nearly 8.0 billion euros (US$10.0 billion) in outstanding hospital debts, and a number of pharmaceutical companies have begun legal action against Greek hospitals that have failed to meet payments on debts on drugs and medical products. In June 2011, it was reported that Roche stopped delivering medicines to Greek public hospitals that had not paid outstanding invoices since 1st September 2010.

However, the ageing population will ensure a need for pharmaceuticals, and there will be a continuing demand for new therapies so that patients can be treated more effectively. A reduction in funding from the public sector could also be counterbalanced by an increase in the involvement of the private sector.

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