PHARMAC Holding Back New Zealand Healthcare Industry Growth

Wednesday 6 March 2013, Amsterdam

Despite disproportionate elderly population growth and an unsaturated market acting as key drivers, growth within New Zealand’s healthcare industry is being restrained by the country’s Pharmaceutical Management Agency’s (PHARMAC) emphasis on generics, says research and consulting a firm.

The company’s latest report forecasts New Zealand’s pharmaceutical market to reach a value of US$779m in 2020 from US$587m in 2012 – representing a Compound Annual Growth Rate (CAGR) of 4% – but revenue would be more impressive with a greater integration of multinational pharmaceutical firms.

PHARMAC, the body responsible for selecting which medications are subsidised for use in hospitals and communities across New Zealand, operates a system based on the issue of sole-supply contracts to applicants tendering the lowest bid. This has resulted in a pharmaceutical landscape with a significant portion of low-cost, often generic, products. However, while opening up the population’s access to low-priced medicines, the strategy has alienated much of Big Pharma and restricted the growth of New Zealand’s healthcare industry.

However, we expects an expanding elderly population to prove an important factor contributing to the country’s healthcare sector revenue, due to the larger amount of care they tend to require. Between 2012 and 2020, New Zealand’s population is expected to increase moderately at a CAGR of 0.6%, from 4.4 million to 4.6 million, but the portion of the population aged 65 and older is forecast to climb from 13.6% to 16.2% during the same period.

Healthcare, Regulatory and Reimbursement Landscape - New Zealand

This report provides information on New Zealand`s healthcare, regulatory and reimbursement landscape.