When the economic times in Spain were really good a decade ago, drugmaker Almirall did something its brethren in the domestic pharmaceutical business now wish they had done. It began going global.
So as its peers reel from the delayed payments and drug spending cuts by the Spanish health system, Almirall is relatively unscathed. That is because 57% of its sales come from international markets, and that is expected to grow to 75% by 2014, Chief Financial Officer Daniel Martinez tells Bloomberg.
The company's current products include skin treatments and Sativex, a drug for multiple sclerosis. But it has applied in the U.S. and Europe to sell two new medications, ilinaclotide, for irritable bowel syndrome, and aclidinium bromide, a drug for chronic lung disease.
Its success is being noted. Faes Farma is pumping up sales through a licensing agreement in Japan for bilastine, an allergy treatment that Pfizer ($PFE) already licenses in Latin America and Menarini Group's Invida sells in Asia, Bloomberg says. Laboratorios Farmaceuticos Rovi has built its international sales to about 40% and is expanding on that as fast as it can. Its drugs include the blood thinner Bemiparin.
Spain is a relatively small market for the largest drugmakers and so the slow payments of Spain's hospitals are manageable for them. But for domestic makers that rely on the government for the bulk of their sales, it is a bad situation getting worse. It is estimated that government drug purchases next year will be 35% lower than 2009 as it tries to cut its budget deficit. It expects to save €7 billion by switching to generics, and last week the health ministry published a list of 426 drugs it would no longer buy as it tries to slice €458 million ($576 million) from the budget.
While international sales appear to be the only good answer, Humberto Arnes, director general of the trade group Farmaindustria, acknowledges that is not easily done by any company and particularly not for those that lack a big portfolio of products or the marketing muscle to sell in other countries. Plus with many European countries also clamping down on public drug purchases, the closet markets beyond its borders don't hold terrific prospects.
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