Romania's pharmaceuticals market is characterised by high growth and increasing levels of foreign direct investment ahead of planned EU accession. Generics represent around 30% of the market by value, although their share is likely to slip as the operating conditions in the country improve for foreign players. The over-the-counter (OTC) market is underdeveloped, accounting for a 20% share of the total, mirroring the historical reliance on public healthcare system for medicines. However, as the prices of medicines are set to rise with Romania's EU accession in January 2007, consumers will suffer in the short term, but ultimately benefit from the improved pharmaceutical supply. The rise in prices will also prevent parallel importers from plundering the country's wholesale medicine warehouses, leading to shortages of drugs in hospitals and pharmacies.
The value of Romania's pharmaceutical market in 2005 was US$1.4bn at retail prices, up by 18% year-on-year (y-o-y) on the back of improved customer access to drugs. For the remainder of 2006, the upturn is forecast to continue, with y-o-y growth expected to be between the current rate of 14.5% and 2005's 18% towards the end of 2006, with the figures illustrating the buoyancy of Romania's market. Strong annual growth (of just under 10%) is predicted in the next five years, making investment in the country more attractive. By 2010, the value of the pharmaceuticals industry is forecast to reach nearly US$2bn.
The adjusted Business Environment Rankings for Central & Eastern Europe place Romania first out of the 14 markets in the survey, which is a notable improvement compared to last quarter's fourth position and the previous quarter's 11th. The primary reason for the rise is the country's reassessed market growth potential which is higher than most of its neighbours. Romania, like other CEE nations, is also demonstrating improved political and economic risk as the region embraces EU membership. Penetration by foreign firms is increasing. The market share of imported drugs rose from 45% to 75% in the nine years to 2004, although these products accounted for only a fifth of the sales by volume. Recent high-profile acquisitions by Czech firm Zentiva and India's Ranbaxy, coupled with the exit of many smaller firms over the last couple of years, have transformed the domestic landscape, and will further boost the market. The pending privatisation of Antibiotice has received much attention from a number of prominent European and overseas companies, including German Phoenix and Canadian Acic Pharmaceuticals.