Healthcare, Regulatory and Reimbursement Landscape - Australia, Now Available on ASDReports

Friday 5 September 2014, Amsterdam

The Australian healthcare market is a mature market driven by universal healthcare coverage and good access to facilities such as government-subsidized medicines. The growing elderly population and its associated disease burden, well-defined regulatory guidelines, the usage of substitute drugs and the introduction of a new manufacturing policy will drive the growth of the pharmaceutical market in future. However, a focus on generic substitution and price cuts will restrict the growth of the market.

The pharmaceuticals market in Australia was worth approximately $18 billion in 2008. This total is expected to reach approximately $32 billion in 2020, increasing at a Compound Annual Growth Rate (CAGR) of 5.1% (Department of Industry, 2013a). The segments that dominated the market in 2013 were the drugs for the diseases of the Central Nervous System (CNS), cardiovascular, and respiratory system.  In June 2013, the largest firm by Pharmaceutical Benefits Scheme (PBS) sales was Pfizer, with sales equivalent to 12.4% of the value of total sales made to the PBS. The leading 10 suppliers by sales contributed more than 67% of the value of total sales made to the PBS. In June 2013, Alphapharm was the largest firm in terms of the number of prescriptions dispensed under the PBS, accounting for 13.3% (PBS, 2013). The population of Australia amounted to approximately 23.2 million in 2013, having grown at a CAGR of 1.6% from 2008. The elderly population is increasing in size and, as of 2013, accounted for 14.5% of the entire population. This population segment is growing at higher rate (3.6%) than the global average of 2.8% and the European average of 1.4% (UN, 2013). The prevalence of non-communicable diseases, such as cardiovascular disease, respiratory, metabolic disorder and cancer, has increased due to an increasingly sedentary way of life. In 2013, the government spent approximately $1 billion on R&D on medical and health science and exported $3.8 billion in pharmaceuticals. The government is taking initiatives to reduce the barriers restricting the manufacture of drugs and encourage exports by introducing new policies.

Medicare, which is Australia’s public health insurance scheme, provides free or subsidized healthcare services to the Australian population. The PBS component of Medicare provides access to a wide range of necessary and cost-effective prescription medicines. Medicare is funded primarily from general taxes and the Medicare Levy, which is based on taxable income. The increasing generic substitution and cost-cutting measures adopted by the government have had a negative impact on market growth. Since 2012, the government has reduced the prices of medicines listed on the PBS eight times, by percentages ranging from 1% to 90% (PBS, 2014a). On April 1, 2012, the biggest cut on the prices of medicines listed on the PBS was introduced, and the prices of approximately 1,000 brands of 60 popular prescription medicines were reduced (Maiden, 2012). Generic substitution by pharmacists has been permitted since 1994 and has reduced the overall value of the pharmaceutical market.

The value of the Australian medical devices market amounted to $5.9 billion in 2008 and is expected to grow at a CAGR of 4.9% to reach an estimated $10.4 billion in 2020. Major segments in the medical devices market in 2013 were In Vitro Diagnostics (IVD) with a 15.5% share, orthopedic devices with 13.2%, and ophthalmic devices with 9.6%. The market is driven by factors such as increasing awareness regarding early detection and diagnosis of disease, advancements in medical technology, and an increase in the size of the elderly population.