Romania's OTC drug market is set to maintain its over 17% growth rate within the next 5 years if the economic growth remains steady, believes Nicholas Hall, chairman of Nicholas Hall & Company, which conducts market surveys for the industry.
"Romania ranks fourth in terms of OTC market growth, after Venezuela, Turkey and Argentina. All the latter countries have strong economies, but Romania has the advantage of having recently become an EU member," stated Nicholas Hall in an interview with ZF.
Investments by foreign pharmaceutical companies, along with tight competition, were among the factors considerably boosting the market, he added.
The OTC drug market stands at around 4.6bn dollars in Central and Eastern Europe. In terms of value, the biggest market is Russia (1.4bn dollars), followed by Poland (1.2bn dollars). Romania ranks fifth with sales standing at 251.5m dollars.
"With the exception of Novartis and GSK, global OTC industry players do not have a strong presence here, but intend to strengthen their presence in Central and Eastern Europe, which includes Romania," said Hall.
Regarding regional expansion, the leading companies first look at Russia and Poland (because of their size), then the Czech Republic, followed by Romania and the Baltic states. However, because of its rapid growth rate, Romania is increasingly becoming a more visible location on global giants' maps.
Hall also believes the retail segment is highly developed in Romania. Another factor that could drive the market up is the possibility of OTC drugs being sold via supermarkets. This is allowed in 15 European states. "(...) For producers, such a move would be attractive in terms of volumes, but would bring disadvantages in terms of profit margins," said Hall.
Unlike prescription drugs, OTC drugs can be promoted on all channels, with the budgets earmarked by companies accounting for over 15% of revenues, and even 20% in some cases. "Promotional investments will rise, not necessarily in percentages, but in terms of value, amid a growth in sales," said Adrian Lakatos, a partner at Nicholas Hall & Company for Central and Eastern Europe.
According to the data provided by Lakatos, OTC domestic drug consumption per capita stands at 11.53 dollars in Romania, while the entire market was worth 251.5m dollars in 2006. According to his estimates, the market could reach 700m dollars within the next 4-5 years. "On the long-term, growth is expected to slow down, but will still maintain a two-digit rate. Exports will continue to rise and drug prices will approach those in Western Europe," explained Lakatos. There will also be a trend to consolidate production and distribution activities.
The overall pharmaceutical market rose by around 19% in H1, to 3.05bn RON (915m euros), above players' initial estimates.
OTC drug market
Is set to maintain its over 17% growth rate within the next 5 years if economic growth remains steady
Investments by foreign pharmaceutical firms, along with tight competition, are among the factors considerably boosting the market
Another factor that could drive the market up is the possibility of OTC drugs being sold in supermarkets
Market could reach $700m within the next 4-5 years
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