Market Report, "Switzerland Pharmaceuticals & Healthcare Report Q4 2013", published

The 2012-2017 forecast period is likely to witness the proliferation of government initiatives supporting the growth of Switzerland's generic medicines market, which will increasingly attract prominent international players in the field, as well as prompt local companies to get more involved in the segment.

Headline Expenditure Projections

* Pharmaceuticals: CHF6.58bn (US$7.02bn) in 2012 to CHF6.30bn (US$6.13bn) in 2013; -4.3% decline in local currency terms.
* Healthcare: CHF64.86bn (US$68.18bn) in 2012 to CHF66.11bn (US$64.38bn) in 2013; +1.9% growth in local currency terms.

Risk/Reward Ratings: In BMI's Q413 Risk/Reward Ratings (RRRs) for Western Europe, Switzerland stood in third position in the Western Europe matrix. Switzerland's score for the quarter stands at 71, well above the regional average of 67.

Full Report Details at
- http://www.fastmr.com/prod/689005_switzerland_pharmaceuticals_healthcare_report_q4.aspx?afid=303

Key Trends And Developments:

Multinational drugmaker Novartis posted a 1% increase in sales in US dollar terms (3% in constant currency terms) to US$14.49bn in Q213, up from US$14.30bn in Q212, with all divisions contributing to growth in constant currencies (cc): Pharmaceuticals (+1%), Alcon (+6%), Sandoz (+3%), Vaccines and Diagnostics (+18%) and Consumer Health (+12%). Excluding the impact of patent expiries, underlying sales grew 8% in constant currencies. This performance was fuelled by growth products such as Gilenya (fingolimod), Afinitor (everolimus), Tasigna (nilotinib), Xolair (omalizumab) and Jakavi (ruxolitinib), which together contributed USD4.5bn or 31% of net sales, up 13% over the Q212. Generics impacted sales by approximately USD0.8bn, mainly due to Diovan (valsartan) and Zometa (zoledronic acid). Currency had a negative impact of 2 percentage points, mainly from the weakening yen.

Roche's Q213 sales reached CHF11.6bn (US$12.5bn), a 5% year-on-year (y-o-y) increase in local currency terms (+4% in US dollars and +6% at constant currency (CC) exchange rate), from CHF8.6bn (US$9.3bn) in Q112. The firm did not release information about net income in its financial results release.

BMI Economic View: Having expected consumer prices to turn the corner in 2013, there is so far little evidence that the current run of deflation is near finishing. In light of the current data, we have pushed back our projection for a return to positive inflation to 2014 from 2013 previously. This will be driven by a recovery in domestic demand and loose monetary policy, with the SNB's discretionary management of the franc providing currency stability. However, we warn of the risk posed by a further sell-off in global commodity prices, which could yet fan Swiss deflationary pressures.

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