CZECH BUSINESS AND TRADE
Pharma Is One of the Most Advanced Sectors in the CR The pharmaceutical industry is a hi-tech manufacturing sector based on demanding research and development work, with massive financial means being invested in the development of new drugs each year (usually 15-20 per cent of annual revenue). Its production portfolio is very wide and comprises original drugs, which are protected by patent, and generic medicines, whose patent protection has expired. Because of high costs, leading manufacturers in the Czech Republic focus on generics, where this country belongs among the world´s best.
In 2017, pharmaceutical firms sold in the Czech Republic more drugs than in the preceding year. In that year, the total value of the drugs sold exceeded the CZK 70 billion mark, a 6-per cent increase year on year. The last time that such a high sum was spent on drugs was 10 years ago. This volume also comprises preparations sold to other countries, which were primarily manufactured for export, or were re-exported. In the latter case, businessmen buy the drugs in packages with Czech inscriptions, repack them or insert a leaflet in another language, and sell them in some other country at a higher price with profit. The volume of the Czech drug market with drugs being distributed exclusively in the Czech Republic increased by nearly 6 per cent and reached the sum of CZK 67.9 billion, according to the State Institute for
Drug Control. The prices and the number of the packs sold are strongly influenced by government policy. Restrictions and the rapid price reduction and compensation were also reasons of the great market failure in 2008. After 2008, the volume of the market dropped below CZK 60 billion, most probably by the effect of the regulation mechanism, and it took five years for it to stabilise above this level. In financial terms, the domestic drug market has been growing steadily since 2013. Economic Indicators In the period from 2008 to 2017, the development of selected indicators within the sector showed a fall in 2014 and 2015 in the number of units and employed persons. On the other hand, revenue, value added, productivity of labour and average wages in that period were growing and their growth continued until the end of 2017 (more recent data are not available). The price development was neutral and in 2012 it reached its peak. Stagnation, or rather a moderate price decline in the past few years, was caused by the situation in the drug market, which was stagnant or was slightly declining. In terms of efficiency, measured by Spread, the sector was doing best in 2008. Until 2011, the pos-
A special group termed “centre drugs” is undergoing a boom. These are expensive preparations administered exclusively in specialised centres, mostly modern biological drugs against cancer, multiple sclerosis and other serious chronic diseases.. These preparations are also leading the table of medicines earning the highest revenue. The preparation ranking first in the table is Humira, developed by AbbVie, which last year earned CZK 822.7 million in production prices from its sales to Czech healthitive and negative Spread values alternated. In 2012 and 2013, the value was moving slightly below zero. Between 2014 and 2017, the Spread values were positive, even though in 2017 the value was lower than in 2014. In 2017, the value of economic profit was positive, but in year-on-year comparisons, it declined (CZK -1.4 billion). The reason was a decline in the value of EBIT/Revenue, which caused a CZK 2.0 billion decline in EVA and was responsible for a decline in the value of EBIT/Assets (causing a decline in EVA by CZK 1.7 billion) and a decline in the value of ROE (decrease in EVA value by CZK 1.4 billion). Only group 21.2 (Manufacture of Basic Pharmaceutical Products) showed a positive EVA value in 2017.
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