The International Pharmaceutical Market

Until a few years ago, developed countries in particular, such as the USA, Japan, and those in Europe, were by far the most important markets for pharmaceuticals; yet the picture is increasingly changing: Thanks to the strengthening economies of Latin America, Eastern Europe, India, and China – as well as im- proved health care and the subsequent living conditions in other regions of the world – the outlook is shifting. While drug expenditures have stagnated or at best seen moderate increases in traditional industrialized nations, some growth rates in other regions of the world have been well over 10 percent annually. In Germany, expenditures on pharmaceuticals have been stagnating for several years – amounting to an approximate yet stable 1.7 percent of total gross domestic product. This places Germany in the middle of all surveyed OECD countries. In terms of total healthcare spending, Germany is actually ranked in the lower half of all countries compared.

With a manufacturer’s share of 52 percent of the retail price, Germany is located in the bottom segment of a European ranking. Together with legally mandated manufacturer and pharmacy discounts, the tax rate in Germany amounts to 31 percent of the retail price, making it the highest in Europe. In most other European countries, the tax burden on pharmaceuticals is reduced or waived entirely.

The share of the "big three" – the USA, Europe, and Japan – will continue to decrease according to most experts. The rest of the world, which is currently about a quarter of sales, will grow in importance.

Global pharmaceutical sales have almost quadrupled since 1992. The USA, with around 36 percent, is still the world’s largest single market, followed by Europe and Japan. However, the share of the “big three” has decreased. The rest of the world combined accounts for around one-quarter of sales, perhaps even a bit more considering the unreliability of certain data in many countries. The Latin American and Asian markets are developing most strongly. In 2011, growth in these countries was between 13 and 18 percent, while the market in Europe shrunk by 1 percent.

In an international comparison, Germany ranks in the middle-to-upper range for per-capita expenditures on pharmaceuticals. When taking into account economic performance (measured as gross domestic product) or other healthcare spending, Germany falls into the lower-to-middle range of the comparison scale.

The Pharmaceutical Industry in Germany

Germany: The Perfect Location for Research, Production and Sales - a publication by GERMANY TRADE & INVEST and vfa
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