Nova workboard

a blog from young economists at Nova SBE

Are pharmaceuticals becoming fast moving consumer goods?

The question might seem superficial and of obvious answer. In fact, it is more than true that a lot of policies were taken by European countries to face these so-called crisis years, even substituting the imports of more expensive medicines from Switzerland and other countries, to another ones less expensive. It is consequently and predictable that the consumption of generic medicines would increase, just like the so called “white”, “retail” brands emerged in those years of crisis, which is perfectly normal, since it is a natural reaction to a less disposable income. Nevertheless, it is important to notice that private labels can be different products, while generics have to follow some requirements in order to keep the same properties as medicines.

According to Infarmed, in 2012, Portuguese consumed more 5,8 million packs of medicines but spent less 190 million euros when compared with the previous year, which means that either Portuguese are buying more generics or they are paying less for the medicines, or even both (something similar happens with fast moving consumer goods, with people seeking for less expensive goods in order to consume more in quantity with the same money). Actually both things are happening. In fact, according to SNS, in the last five years patients have never saved so much, or spent so less, in medicines as this year. Although the prices of medicines started to decline before, this is also being driven essentially by the international review of the price of medicines, aligning Portuguese prices with the lowest in the rest of Europe; also it has been made an effort to incentive generics by reducing the patents of this type of medicines. As a consequence, the market share of the generics has grown (it has about ¼ of all the packs sold and 35% of the ones subsidized by SNS), a similar moving as retail brands in supermarkets for example. Until here, the similarities are pretty obvious, aren’t they?

What might complicate things is that study recently conducted by Infarmed concluded that in about 57% of the cases, it is the patient, the consumer that decides to not buy the cheapest one, going against the theories that some many times echoed in media saying that doctors were being biased to prescribe certain medicines from certain labs or brands, which became stronger when, after the change in the legislation into the obligation of prescribing the generic whenever is possible, the doctors themselves did not agree. Nevertheless this study proves the opposite, it proves that given the choice, there are a lot of consumers that prefer to not buy generics, either because they prefer one brand to the other, either because they prefer to pay more to have a premium product. (notion of experience good). In the end, is this much different from fast moving consumer goods? Certainty pharmaceuticals are not commodities, but are everyday products for some people…Is healthcare market starting to behave more like other simpler markets? Only future will tell that…

 

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Author: studentnovasbe

Master student in Nova Sbe

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