Make no mistake - despite what many regard as good prospects for the coming years, general managers of multinationals doing
business in Portugal are very concerned. Over the 10 years prior to the beginning of 2006, inflation in Portugal climbed 35%
and the prices of pharmaceuticals grew by only 7%. Drug prices have been frozen since 2002, and the industry has experienced
two consecutive 6% price decreases since September 2005. In addition to that, the Portuguese pharmaceutical market is a very
competitive one. Among the country's roughly 200 players, the market leader, MSD, holds a market share of 6.4%.
MSD's building in Portugal: MSD Portugal consolidated its market leading position in 2006
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According to data provided by the consulting firm IMS Health Iberia, the Portuguese market struggled to reach a 4.7% sales
increase during 2006. This growth was largely driven by the evolution of generics (which reached a 16% market penetration
by the beginning of 2007), the boost in OTC products since they were cleared for sale in non-pharmacy outlets, and new products
brought to the market.
The good news is that, according to the IMS Health prognosis, the next four years should be better than the last two. The
Portuguese pharmaceutical industry should expect a growth rate of approximately 6% in the retail business and 9% in the hospital
business until 2010 - that is, unless the government decides to follow the path of further price reductions.
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So, Why Invest in Portugal?
Gilda Parreira
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Ironically one of Portugal's major weaknesses is also one of its major attractions. The country's pharmaceutical purchases
represent a large proportion of its public health expenditure – around 28%, which is among the highest in Europe. It is, in
fact, as Minister of Health Antonio Correia de Campos points out, "a world reference. Spreading the figures," he says, " 1.5
billion (US$2 billion) is spent on ambulatory care plus 0.8 billion (US$1 billion) in hospitals." The 2.3 billion (US$3 billion)
spent on pharmaceuticals out of 8.7 billion (US$ 11.5 billion) "is a considerable amount," he concludes.
A Competitive Advantage for Portuguese Producers
Antonio Barros Ferreira, executive director of the 100% Portuguese company Lusomedicamenta, has a positive perspective on
the local pharmaceutical players. "The fear often channeled by the companies operating in Portugal is related to the future
of the Portuguese market, not the Portuguese industry," he says. "Obviously, we are also affected by these constraints in
the Portuguese market, but not on the same scale. I believe that, although it is a difficult process, more and more Portuguese
companies will shift their capabilities to exports, and that will guarantee the sustainability of the Portuguese pharmaceutical
industry."
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