According to IMS data published in the Spanish trade paper El Global, the retail generics market in Spain grew by 15% in 2010 to reach a total value of just over €1bn. Net of discounts, we believe that the figure is closer to €800m but even so, it represents a positive outturn for a market that has been hit hard by price cuts. Looking at the volume figures, the market grew by 21%, driven by new launches and an increase in generic penetration.
One of the interesting features of the Spanish market is the extent to which it remains dominated by local players, who are generally outperforming the multinational companies. Thanks to its acquisition of ratiopharm, Teva scraped into first place for 2010, overtaking Cinfa, but it will find it difficult to hold on to this position through 2011 given the high level of redundancy in its portfolio, which consists of legacy products from not only ratiopharm but also Bentley and Pliva. All the more so given that the Spanish market is moving increasingly towards a fully unbranded model, making it more difficult to sell multiple versions of the same drug. After Teva and Cinfa, which have market shares of 21% and 20% respectively, come Stada (10%), Normon (9%), Sandoz (8%), Kern (8%) and Mylan (7%). The remainder of the top 10, Esteve, Alter and Invent, have a combined share of 7%, meaning that six of the top 10 companies are Spanish and that the leading companies have a total combined market share of 90%. The local companies are also mostly growing more quickly than their international peers. Cinfa’s sales were up 19% compared to Teva’s 11%, while Normon managed 17% growth and Kern 35%. Stada also did well, with revenues (according to IMS, which doesn’t really reflect the changing impact of discounting) up 23%, while Sandoz managed 6% and Mylan did rather better with 14%. The smaller companies, on the other hand, mostly performed quite badly.
In our view, the Spanish market – like many others – is set to become increasingly polarised, with those companies that have net revenues of €100m or more generating sufficient profit in absolute terms to cover their infrastructure costs, allowing them to compete in an increasingly harsh pricing environment, while smaller firms struggle to survive. This view is generally borne out by the 2010 market data, which shows that Spain remains a growth market overall, but not for everyone.
Posted on 1st March 2011