Drugmakers already nervous about Spain have a new reason to worry: The government announced a new round of spending cuts last week. The industry group Farmaindustria says new reference prices established Dec. 28 will cut pharma expenditures by more than €650 million, or about $850 million.
That's on top of €2.4 billion in cuts last year, Farmaindustria says, putting 2012 revenues some €3 billion lower than last year's. Add that Spain's public hospitals are far behind on their bill-paying—in some cases, 800 days late, Bloomberg reports—and you have a "critical" situation for drugmakers operating in that country, particularly smaller companies dependent on the domestic market.
No other sector has suffered as much from government austerity as the pharma business, Noticias reports. In three years, public spending on drugs could contract as much as 25% under the current measures. So, Farmaindustria is planning a lobbying push for a "stable and predictable" framework for the industry, now that the new ministerial officials are taking office.
Spanish companies such as Almirall and Faes need relief fast. Their sales and profits are dropping, and they've been cutting staff and investment to cope. "The entire industry is in danger," Farmacia's Humberto Arnes told Bloomberg. "It's impossible for drugmakers to recover in such a tough environment and many may have to relocate. The effects are devastating."