Health & Healthcare

Will Australian Pharma ever be the same again?

23 Feb 2011, by Informa Australia

Melbourne, 22nd February 2011 – The Australian pharmaceutical industry landscape is set to dramatically alter as a result of government changes to the Pharmaceutical Benefits Scheme (PBS), suggests independent market analyst, Datamonitor.

Datamonitor’s outlook for the future includes withdrawn products, a struggling generics sector and wholesaler reorganization, as PBS reforms take effect.

Erin Brady, Australian healthcare analyst at Datamonitor, comments: “As further statutory price cuts and ‘expanded and accelerated’ price disclosure is applied to substitutable medicines by the PBS, downward pricing pressures will affect everyone in the industry. Some however will suffer more than others.

“The local generics sector will need to seek new efficiencies to continue competing in the Australian prescription pharmaceuticals market, and wholesalers must asses their strategic options in a changing market landscape.”

Innovator and generics manufacturing companies have very different opinions of the latest PBS reforms package.

Innovator companies were involved in negotiating a memorandum of understanding (MoU) with the government in relation to the reforms, and are positive about the predictability this will provide the industry over the next four years to 2014.

Generics companies, however, were not included in any negotiations and staunchly opposed the bill.

Erin adds: “The generics sector claims that the price cuts and price disclosure requirements will greatly hinder their sector going forward. Indeed, all the price reductions target medicines in F2, the formulary that generic medicines fall under. As a result, prices may become too low for manufacturers to bear and some product withdrawals could be expected.”

The pharmaceutical wholesaling industry has also been hit hard by PBS reforms, as suppliers alter trading terms to reflect decreased prices, and one major supplier (Pfizer) has decided to cease using wholesalers and distribute direct to community pharmacies.

“While Australian patients should benefit as downward pressure is put on drug prices, pharmacists will suffer decreased margins as wholesalers cut discounting, putting pressure on revenue margins”, concludes Erin.

Get all the latest on Informa news and events

Informa Australia is the nation's leading event organiser. Our events comprise of large scale exhibitions, industry conferences and highly specialised corporate training.

Find out more


Join Our Newsletter
Informa Insights

Stay up-to-date with all the latest
updates, upcoming events & more.