Measured in local currency terms, Australia's AUD10.07bn (US$7.74bn) pharmaceutical market is forecast to post a compound annual growth rate (CAGR) of 3.28% over the next 10 years (down from a rate of 4.5% forecast for the 2009-2014 period). The main drivers are an ageing population, rising birth and immigration rates, a growing economy, more chronic diseases and an increasingly sedentary workforce. However, the government has been attempting to slow inflation in healthcare spending by pressuring drug prices. In May 2010, the Australian government signed a four-year memorandum of understanding (MOU) with Medicines Australia, which represents drugmakers in the country. Under the terms of the agreement, Medicines Australia has agreed drug price cuts worth AUD2bn (US$1.76bn) for the government and AUD300mn (US$263.35mn) for consumers over a four-year period. According to BMI's calculations, the deal will help the government control public healthcare expenditure, which we forecast to hit US$68.7bn in 2010. Meanwhile, BMI expects the popularity of generic drugs in Australia to increase following the publication of a study conducted by health economists from the University of Sydney. The research shows that the country could save nearly AUD10bn (US$9.1bn) over the next decade if the uptake of generic statins ' which are used in the treatment of high cholesterol ' is encouraged. Reforms to Australia's healthcare system, which BMI expects to succeed, will also accelerate the uptake of generic drugs following patent expiry of the originator product. Despite attempts by the pharmaceutical industry to temper the growth of the generics market, the latter is expected to record a local currency CAGR of 9.05% over 2009-2014. While BMI expects this growth rate to ease to 6.66% over 2009-2019, this expansion remains considerably higher than the 2.87% CAGR of the overall market in the same period. Although the government is prohibited from favouring the prescription of generics over the next four years under the Medicines Australia agreement, price reductions in generic drugs secured by the same agreement should help boost demand for these products. In May 2010, the government added AUD2.2bn (US$1.9bn) to healthcare spending over the next four years as part of the 2010-2011 federal budget. About AUD772mn (US$671.3mn) of the total amount has been allocated to improving access to primary healthcare and GPs, while AUD523mn (US$451.8mn) is allocated to nurse training and support, AUD467mn (US$406.1mn) to revamping the healthcare and hospital system (including e-health) and AUD400mn (US$347.8mn) to increasing efficiency and performance. However, while the value of the sector will increase at a local currency CAGR of 5.86% over 2009-2014, public sector health expenditure will remain steady, while total healthcare spending as a percentage of GDP will increase only modestly. This is partly due to a modest growth in drugs expenditure going forward, on the back of increasing government eagerness to reduce healthcare costs through lower drugs subsidies.

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Australia Pharmaceuticals and Healthcare Report Q4 2010
Published on August 2010
Report Summary
Measured in local currency terms, Australia's AUD10.07bn (US$7.74bn) pharmaceutical market is forecast to post a compound
annual growth rate (CAGR) of 3.28% over the next 10 years (down from a rate of 4.5% forecast for the 2009-2014 period). The main
drivers are an ageing population, rising birth and immigration rates, a growing economy, more chronic diseases and an increasingly
sedentary workforce.
However, the government has been attempting to slow inflation in healthcare spending by pressuring drug prices. In May 2010, the
Australian government signed a four-year memorandum of understanding (MOU) with Medicines Australia, which represents
drugmakers in the country. Under the terms of the agreement, Medicines Australia has agreed drug price cuts worth AUD2bn
(US$1.76bn) for the government and AUD300mn (US$263.35mn) for consumers over a four-year period. According to BMI's
calculations, the deal will help the government control public healthcare expenditure, which we forecast to hit US$68.7bn in 2010.
Meanwhile, BMI expects the popularity of generic drugs in Australia to increase following the publication of a study conducted by
health economists from the University of Sydney. The research shows that the country could save nearly AUD10bn (US$9.1bn) over
the next decade if the uptake of generic statins ' which are used in the treatment of high cholesterol ' is encouraged. Reforms to
Australia's healthcare system, which BMI expects to succeed, will also accelerate the uptake of generic drugs following patent expiry
of the originator product.
Despite attempts by the pharmaceutical industry to temper the growth of the generics market, the latter is expected to record a local
currency CAGR of 9.05% over 2009-2014. While BMI expects this growth rate to ease to 6.66% over 2009-2019, this expansion
remains considerably higher than the 2.87% CAGR of the overall market in the same period. Although the government is prohibited
from favouring the prescription of generics over the next four years under the Medicines Australia agreement, price reductions in
generic drugs secured by the same agreement should help boost demand for these products.
In May 2010, the government added AUD2.2bn (US$1.9bn) to healthcare spending over the next four years as part of the 2010-2011
federal budget. About AUD772mn (US$671.3mn) of the total amount has been allocated to improving access to primary healthcare
and GPs, while AUD523mn (US$451.8mn) is allocated to nurse training and support, AUD467mn (US$406.1mn) to revamping the
healthcare and hospital system (including e-health) and AUD400mn (US$347.8mn) to increasing efficiency and performance.
However, while the value of the sector will increase at a local currency CAGR of 5.86% over 2009-2014, public sector health
expenditure will remain steady, while total healthcare spending as a percentage of GDP will increase only modestly. This is partly due
to a modest growth in drugs expenditure going forward, on the back of increasing government eagerness to reduce healthcare costs
through lower drugs subsidies.
Table of Content
Executive Summary . 5
SWOT Analysis 6
Australia Pharmaceuticals And Healthcare Industry SWOT .. 6
Australia Political SWOT . 7
Australia Economic SWOT ........ 7
Australia Business Environment SWOT ....... 8
Pharmaceutical Business Environment Ratings 9
Table: Asia Pacific ' Regional Business Environment Ratings, Q410 ....... 9
Australia Pharmaceuticals and Healthcare Report Q4 2010 Page 1/5

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Rewards ........ 10
Risks .... 11
Australia - Market Summary ..... 12
Regulatory Regime . 13
Table: Priorities Of the Therapeutic Goods Administrations Strategic Plan, 2006-2008 ... 14
OTC Switching Climate .. 15
Regional Regulatory Harmonisation 15
Recent Regulatory Developments ..... 16
Intellectual Property Issues ..... 17
Trade Agreements .. 18
Pricing and Reimbursement ..... 19
Table: Historical PBS Co-payments . 20
Price Cuts ..... 21
Additions to Reimbursed Drugs List . 22
Recent Pricing and Reimbursement Developments ...... 23
Table New PBS Formularies.... 24
Table: Top Ten Prescription Drugs in Australia, 2007 25
Industry Trends and Developments . 26
Epidemiology 26
Communicable Diseases . 28
Mental Health Issues ...... 29
E-Health ....... 30
Prescribing Patterns ....... 31
Private Healthcare Insurance .. 31
Biotechnology and Research .... 32
Recent Developments in the Biotechnology Sector ...... 34
Clinical Trials ........ 34
Recent Developments in the Clinical Trials Industry ... 35
Medical Devices..... 36
Table Examples Of Medical Devices Classifications ... 37
Recent Developments in the Medical Devices Sector ... 38
Industry Forecast Scenario ...... 39
Overall Market Forecast. 39
Key Growth Factors ' Industry 40
Key Growth Factors ' Macroeconomic ..... 42
Table: Australia - Economic Activity 44
Prescription Drug Market Forecast .. 45
Patented Drug Market Forecast ....... 46
Generic Drug Market Forecast 47
OTC Medicine Market Forecast ....... 49
Table: Pharmacy OTC Medicine Sales In Australia (US$), 2008 ... 50
Pharmaceutical Trade Forecast ....... 51
Other Healthcare Data Forecasts ..... 52
Key Risks to BMI's Forecast Scenario ....... 53
Competitive Landscape .. 54
Pharmaceutical Industry . 54
Domestic Pharmaceutical Sector ...... 55
Foreign Industry .... 56
Recent Company Developments ........ 56
Retail Pharmacy Sector .. 58
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Recent Developments in the Retail Pharmacy Sector ... 59
Company Profiles ... 60
Indigenous Companies: .. 60
Sigma Pharmaceuticals .. 60
Australian Pharmaceutical Industries........ 63
Alphapharm (incorporated into Mylan) ..... 66
Herron Pharmaceuticals . 68
Mayne Pharma (Hospira) ........ 70
CSL ...... 72
Leading Multinationals ... 75
Pfizer ... 75
Sanofi-Aventis ........ 78
GlaxoSmithKline .... 80
Merck Sharp & Dohme (Australia) ... 83
Novartis Australia .. 86
BMI Methodology ... 88
How We Generate Our Pharmaceutical Industry Forecasts . 88
Pharmaceuticals Business Environment Ratings 89
Risk/Reward Ratings Methodology ... 89
Ratings System ....... 89
Table: Pharmaceutical Business Environment Indicators .... 90
Weighting ...... 91
Table: Weighting Of Components ..... 91
Sources 91
Forecast Tables ...... 92
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