Medical innovation holds promise of a healthier society

The pharmaceuticals market reached a value of around EUR 6.8 billion last year, after steady growth over the past five years. Romania’s market is also growing as a share of the Central and Eastern European (CEE) region. The European Medicines Agency (EMA) approved 38 new molecules from our country in the 2017-2020 period, representing 24% of the total medicines approved by the EMA in that time interval. Of last year’s total of EUR 6.8 billion, EUR 3.74 billion came from the retail market (pharmacies) and EUR 1.23 billion from hospitals. Interestingly, EUR 1.04 billion of the total represented non-prescription medicines (Consumer Health – CM Market), and EUR 796 million in revenue from OTC (over-the-counter) products, according to official data.

By Aurel Dragan

”More than 70% of the total market was represented by prescription medicines (a 14% growth in value vs 2022, volumes stable) and close to 30% was represented by the over-the-counter (OTC) and consumer healthcare (CH) products (11% growth in value vs 2022, with a slight growth in volumes of around 2%),” says Michel Eschenbrenner, General Manager at Servier Romania, who will be a speaker at the 2024 Innovate Healthcare event organised by Business Review.

Breaking down the prescription medicines group, the hospital products saw a 7% increase in value from 2022, but an 11% decrease in volumes, while retail prescription medicines grew by 14% in value and remained stable in volume. Although 75% of the value of the prescription medicines group is attributed to innovative drugs, by volume, the market is dominated by generic drugs, with 75% of the total. The main drivers of 2023’s growth in value on the pharmaceutical market were cancer drugs (more than EUR 200 million in growth), antibacterial and antiviral medicines (over EUR 120 million), and OTC and CH products (over EUR 180 million).

But even though pharmaceutical spending is growing, upon closer look, the numbers are worrying both from an investment perspective as well as in terms of the healthcare indicators.

From the financing point of view, total pharmaceutical spending per inhabitant in Romania stands at half of the EU average, with increasing issues resulting from the aging population, general poor lifestyle, and the large number of patients diagnosed with chronic diseases. Expenditure per capita, adjusted to purchasing power parity, was EUR 1,303 in Romania compared to an European average of EUR 3,319 in 2021, with only about 40% of the insured population actually paying health contributions.

“The healthcare system in Romania is underfinanced, with only 4.5% of the GDP being funded from public sources in 2024, unchanged from 2023 and close to the level of 2018, before the pandemic crisis. A budget allocation of 9% from the GDP for healthcare would bring us closer to the European standards and would be essential to covering the real needs of patients and the healthcare system,” Michel Eschenbrenner argues.

In terms of healthcare indicators, Romania’s mortality rate is very high—well above EU averages—due to treatable or avoidable causes. A Romanian who has reached 65 years old, whether they’re male or female, has only 4 years of healthy life left—half the European average. On average, women of the European Union enjoy 64 years of healthy life, while men’s healthy life average is 63.

CH and OTC Healthcare

Mihai Fugarevici, General Manager at Stada Romania—who will also be a speaker at BR’s Innovate Healthcare —notes that his company achieved outstanding performance in 2023 at the global level and was the world’s fastest-growing top-10 OTC Healthcare company.

“With an 8.6% global growth in 2023, Stada was well ahead of all other top-10 companies, growing by more than double the 3.9% market average, based on IQVIA data released in April 2024. This result is very strong considering the fact that we are not even in Consumer Healthcare in the US. Our agility and entrepreneurship in building country-specific hero brands with clear benefits are welcomed by patients and consumers alike. Stada Romania is mirroring the Group’s performance. We are the Generics Company with the best performance on the pharmaceutical market with an 82.4% growth in the RX portfolio, based on an IQVIA report released in March 2024. If we’re talking about overall growth, we can highlight the fact that it’s in double digits and way ahead of the rest of the pharma market (13.5%). For the time being, we are not ready to disclose our financial performance, but I am proud of the teams working across all divisions: RX (generic & biosimilar medicines), Specialty Healthcare (Parkinson’s disease treatment), Consumer Healthcare (OTC, supplements). Their dedication, commitment, and strength are highly appreciated, and I am grateful for their support. Considering our growth over the past 5 years, I am confident that our goal of being among the Top 5 generics producers in Romania in the coming years is realistic.”

Fugarevici adds that Stada is the only multinational company to have made a major greenfield investment in Romania in the past thirty years.

“Our most modern factory is based in Turda, Cluj County, and it’s a project worth more than EUR 70 million. The coordinates of the site are impressive: total area of 100,000 sqm, 30,000 sqm of built area, 12 state-of-the-art production lines, a full capacity of 160 million packshots per year, and a team of 400 professionals. We held the ground-breaking ceremony in November 2022, and we’ve now almost finished construction. We are in the fine-tuning phase and preparing for the GMP (Good Manufacturing Practice) authorisation. Our objective is to begin operating our plant in October 2024.”

Healthcare needs financing

The most important challenge for the pharmaceutical industry, and for the entire healthcare system, continues to be financing, which remains well below the European average—and this has adverse effects on Romania’s wider economy as well. The country’s development depends on investments, industry, and technology.

“There is, however, another essential aspect for the economy: Romanians’ health. Citizens who are in good health and have proper access to medical services and drugs can remain active in the economy for longer. Therefore, a sufficient allocation of funds and investments in the field of health would play a key part in a better and more stable future. For Romania to reach its economic potential, the health of the population must be treated as a national strategic resource. Better health results in stronger and more sustained economic growth,” Michel Eschenbrenner notes.

According to Servier, the rapid progress currently being made in the development of innovative, life-saving medicines is crucial, increasing quality of life and productivity and reducing the burden on both caregivers and the healthcare system. Recent statistical data shows that more than 30% of advanced countries’ economic growth over the past century has been attributed to improved population health. Furthermore, it is estimated that between 2020 and 2040, improvements in health indicators can add about USD 12 trillion to global GDP (an increase of 8%). In Romania, improving population health could add USD 26 billion in the economy by 2040, an additional 9% of GDP, which means an acceleration of GDP growth by 0.4% each year. Good financing of healthcare is an investment in the health and future of society, with a return of USD 2 to USD 4 earned for every dollar invested.

“In addition to the adequate funding of the healthcare system, it is important to implement systems that lead to evidence-based public policies. Spending transparency and the efficient use of data together with defining a set of performance indicators can lead to more efficient spending across the system,” the General Manager of Servier Romania explains.

The funding problem is further explained by MSD Romania’s General Manager, Marcelo Pascual Morales: “The situation is dramatic in oncology where, from an economic perspective, the cost of inaction against cancer in Romania has a negative annual impact estimated at around 3% of GDP, a weight comparable to that of the national education budget. At the family and community level, the losses are immense and often irreversible. For example, triple negative breast cancer, which most frequently affects young women up to 50 years old, annually generates over 46,000 potential years of life lost in Romania. It must be emphasised once again that, given their added value in terms of clinical results and patient quality of life, adequate funding of innovative treatments should not be perceived as an expense, but as an investment in the health, well-being, and future of Romanian society.”

Innovation for the future

Recently, Siemens Healthineers announced the first installation of Magnetom Flow in Romania, an innovative magnetic resonance imaging (MRI) technology designed to improve diagnostic capabilities and increase efficiency in patient care. This launch not only marks a historic moment for Romania but also directly contributes to positioning our country on the map of innovation, technology, and education. Following the international launch in Vienna at the beginning of February, the installation of Magnetom Flow at the Dorna Medical Clinic, which is set to open its doors in June this year in Borsa, is evidence of Siemens Healthineers Romania’s pioneering spirit in implementing this cutting-edge technology for the first time in our country.

Magnetom Flow brings significant advancement to the field of medical imaging, offering a range of essential benefits for patients and healthcare professionals. With its innovative technology, this MRI system enables high-quality imaging with superior resolution and remarkable clarity, facilitating precise diagnosis for various medical conditions. Its advanced imaging capabilities allow doctors to better identify and evaluate lesions and pathologies, leading to the selection of the most effective, personalised treatment strategies for each patient. Additionally, Magnetom Flow is Siemens Healthineers’ first 1.5 T MRI platform with a closed helium circuit, sealed-for-life, without a helium exhaust pipe—and in case of helium loss, it automatically restarts without any intervention from the Siemens Healthineers service team.

”The introduction of one of the first Magnetom Flow devices worldwide in Romania illustrates our commitment to enhancing healthcare through sustainable innovation. This system is designed with energy efficiency and reduced resource utilisation in mind. By investing in technologies like MAGNETOM Flow, we are not only advancing medical diagnostics, but taking a critical step towards our goal of making healthcare both high-quality and sustainable,” said Sonja Wehsely, Executive Vice President CEECA at Siemens Healthineers.

Magnetom Flow is also designed to reduce resource consumption. The Dry Cool technology, together with the enhanced energy-saving features, significantly reduce costs and energy consumption. Additionally, the compact size and absence of exhaust ducts make system installation easier and more economical in medical institutions, without requiring structural modifications that can incur significant costs. This sustainable approach not only protects the environment but also promotes a more environmentally friendly and responsible medical practice.

OTC and homeopatic market

In 2020 – the year of the Covid 19 pandemic, the CHC market grew compared to the previous year by +9.7% in units and +15% in value, up to 1.202 million Euros – in the foreground being the products with vitamins and those for immunity, but also pain relievers and cold products.

The post-pandemic period brought a weighting and then a slight decrease in the evolution in market units, against the background of the decrease in consumer concern regarding the Covid 19 disease, but also under the influence of the increasingly pronounced decrease in average purchasing power, caused by inflation. Thus, according to the market research published by IQVia, the evolution in units from one year to another was -0.9% in 2021, +10.2% in 2022, and -1.1% in 2023.

In the last year, against this quantitatively negative background of the consumer healthcare products market (CHC = Consumer Healthcare Products = -1.1% Y 2023 vs Y 2022), PlantExtrakt, as a producer of natural therapies, managed to grow. The same growth trend is observed in the case of other natural food supplement companies, so we could conclude that there is a consumer orientation towards natural health care products”, said Liviu Ungureanu, Managing Director at PlantExtrakt.

PlantExtrakt is a player in the Consumer Healthcare (CHC) market, which includes dietary supplements as well as medical devices and OTC (over-the-counter) drugs.

According to Liviu Ungureanu, in the last 10-20 years, Romania is recovering trends that were already manifested in the countries of Western Europe. Such as the propensity to consume nutritional supplements to maintain health, concern for daily well-being, and turning to natural therapies for health care. An intriguing fact related to this aspect is the tradition of our country related to the use of medicinal plants, a tradition that was for a time rejected, as if it were something bad. ”However, we are happy to note that the younger generations are starting to reintegrate natural products into their daily routine. As for the use of homeopathic medicines, in our country they penetrated especially after the revolution. Professor Dobrescu, from the Bucharest Faculty of Pharmacy, was one of our pioneers, who contributed to the cultivation of this science. Now we have two or three medical societies in the country, dealing with homeopathy and there is a formal structure for the training of specialists in this field, so we can say that here too we are recovering trends present in the rest of Europe”, explained Liviu Ungureanu.