BMI View: Our five-year forecasts for the Swedish pharmaceutical market show a decline in its overall size, which is expected to fall to SEK42.02bn (US$5.64bn) by 2016. Key reasons for this pessimism include patent expirations and the subsequent entry of copy products, coupled with the government’s focus on cost containment through measures that will encourage the consumption of cheaper generic medicines. Nevertheless, population ageing as well as continued growth will continue to promote the use of pharmaceutical products in general and thus continue to attract a variety of industry players.
Headline Expenditure Projections
?? Pharmaceuticals: SEK42.84bn (US$6.60bn) in 2011 to an anticipated SEK42.15bn (US$6.18bn) in 2012; -1.6% in local currency terms and -6.3% in US dollar terms. Forecasts slightly lower than in Q212 on account of macroeconomic factors.
?? Healthcare: SEK320.50bn (US$49.36bn) in 2011 to an anticipated SEK328.23bn (US$48.12bn) in 2012; +2.4% in local currency terms and -2.5% in US dollar terms. Forecasts slightly lower than in Q212 on account of macroeconomic factors.
?? Medical devices: SEK21.04bn (US$3.24bn) in 2011 to an anticipated SEK21.85bn (US$3.20bn) in 2012; +3.9% in local currency terms and -1.1% in US dollar terms. Forecasts slightly lower than in Q212 on account of macroeconomic factors. Risk/Reward Rating: In our latest Pharmaceutical & Healthcare risk/reward rating (RRR) for Western Europe, Sweden rises from seventh to fifth position among the 10 countries surveyed, even though its composite score remained unchanged, at 57.6. The strength of its regulatory and general business environments provide a favourable basis for multinational involvement, resulting in a high risk score. However, negatives include the market’s maturity, small population – despite the high per capita expenditure on medicines - and downward pressure on pharmaceutical spending. Key Trends And Developments
?? In February 2012, a week after abandoning its late-stage cholesterol compound eprotirome, Swedish pharmaceutical company Karo Bio dismissed 16 of its 70 employees. The company said it made the decision to cut costs after ending the phase III programme for eprotirome, a thyroid hormone analogue with the potential to reduce bad cholesterol levels in patients already taking statins. The company said that, in combination with the 25 job cuts announced in November 2011, the reduction in staff will lead to annual savings of roughly US$2.6mn.
?? Industrial production in Sweden decreased by 7.1% year-on-year (y-o-y) in February 2012, according to the Statistics Sweden data. The largest production decline was seen in the nondurable consumer goods sector, which includes pharmaceuticals and contributes about 20% of the entire index. According to sources, the decrease could be linked to a fall in production in the pharmaceutical industry. For example, AstraZeneca said it has faced production issues because of a new administrative system, which means that the decline could just be temporary. BMI Economic View: The deteriorating economic situation in Europe has led us to slightly downgrade our Swedish growth forecasts, with the country expected to flirt with recession in 2012. We are forecasting real GDP growth of just 0.2% in 2012, followed by a modest recovery to 2.0% in 2013. Our previous forecasts for 2012 and 2013 were 1.6% and 2.2% respectively, but the deterioration in the eurozone’s economic outlook led us to re-evaluate those figure, given the small and open characteristics of the Swedish economy. Additionally, Swedish private consumption will suffer from the slowdown in European economic activity and an increasingly uncertain domestic outlook. On the other hand, we are forecasting real government consumption growth of 1.5% in 2012 and 1.2% in 2013, with upside risks, which should bode well for public healthcare.
BMI Political View: Sweden is rated among the most structurally stable countries in the world. Benefiting from an advanced level of institutional development, a long history of democratic governance and an established foreign policy based on neutrality, the country faces limited underlying risks to political stability over the long term. We stress, however, that Sweden is in the process of a shift in economic policy towards greater liberalisation and foreign integration, which is expected to continue until the early 2020s.

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