PHARMAC holding back New Zealand health care industry growth, says GlobalData

Despite disproportionate elderly population growth and an unsaturated market acting as key drivers, growth within New Zealand’s healthcare industry is being restrained by the country’s Pharmaceutical Management Agency’s (PHARMAC) emphasis on generics, says research and consulting firm GlobalData.

The company’s latest report forecasts New Zealand’s pharmaceutical market to reach a value of $779 million in 2020 from $587 million in 2012 - representing a compound annual growth rate (CAGR) of 4% - but revenue would be more impressive with a greater integration of multinational pharmaceutical firms.

PHARMAC, the body responsible for selecting which medications are subsidized for use in hospitals and communities across New Zealand, operates a system based on the issue of sole-supply contracts to applicants tendering the lowest bid. This has resulted in a pharmaceutical landscape with a significant portion of low-cost, often generic, products. However, while opening up the population’s access to low-priced medicines, the strategy has alienated much of Big Pharma and restricted the growth of New Zealand’s health care industry.