HE Spanish pharmaceutical industry faces future challenges inflation effect to be regulated price industry. Employer Pharma industry reported this Tuesday that he had undertaken a global additional costs of around 1,500 million euros over two years (2021-22) due to the increase in energy, maritime transport and raw material prices. Since Pharmaceutical prices have been regulatedlimited ability to reflect cost increases. As a result, pressure is mounting in the industry for the Government, which came out of the polls on July 23, to carry out a gradual increase in the prices of state-financed drugs.public health system. According to Farmaindustria’s calculations, cost overruns skyrocketed to €1,000 million in 2022, equivalent to 5% of the industry’s global turnover. A study conducted by the International Financial Analysts (AFI) assures that “the rise in production costs over the past two years has put a significant part of the Spanish pharmaceutical fabric in distress”, affecting “manufacturing capacity and investment”. from these companies
Pharmacy is operating regulated price market. Therefore, they could not reflect the cost increases to the price increases. Although energy costs have decreased in the sector at the moment, they think that the snowball effect on the income statement will increase further in the coming months. In this context, there has been a gradual increase in stock depletion in pharmacies, due to the fact that most of the production in the pharmacy sector is directed to countries with high prices. The same drug can be sold in Germany for up to seven times higher prices. According to the AFI, the impact of inflation will “continue through 2023 and increase with compensatory salary adjustments from the last collective agreement at the beginning of 2024.”
The report prepared by the employer Pharma industry with International Financial Analysts (AFI) confirms the impact of inflation in the sector, despite measures agreed between the Spanish Government and European authorities to set a cap on the price of gas. The estimated extra cost of €1,500 million is higher than all R&D expenditures in the industry (€1,267 million) in 2020 or the annual labor costs of 25,000 employees in the Spanish pharmaceutical industry (one of the most staffed sectors). . talented). According to Afi’s analysis, according to data from the Trade Registry, this will predominantly affect small and medium-sized Spanish companies, which represent 47% of the sector’s production value and employ 35% of the sector’s employees in our country.
The main reason for this effect was the increase in electricity, gas and oil prices, which means that the energy bill of the pharmaceutical industry will increase by approximately 820 million euros over the two years 2021-2022. The bulk of the extra cost (67%) occurred in 2022, when companies in the industry faced an energy bill five times higher than in 2020. The pharmaceutical industry’s energy bill represented 4.9% in 2021 and 2022 and 7.7% of total costs respectively, more than double what was normal in other years.
The increase in shipping prices in 2021 and 2022 cost the pharmaceutical industry an additional €83m, largely due to the increase in freight prices on the sea routes connecting Spain to Southeast Asia. The impact of frictions in value chains is more split between 2021 and 2022, but that accounted for 55% of the total cost last year. In addition, the study says that many companies from various sectors reflect high energy costs on the prices of their products, which is reflected in the increase in the cost of raw materials used in pharmaceutical production processes. As a whole, the extra cost associated with the increase in the cost of raw materials will be around €200 million in 2021 and €400 million for the whole of 2022.
Foreign trade
Afi research warns that this effect of inflation could affect the Spanish pharmaceutical industry’s external competitiveness, as any change in production costs “could change the competitiveness of drug prices”. Spanish pharmaceutical exportsbecause they may have become more expensive than their competitors in the main target markets”. It should be noted that exports of pharmaceuticals are one of the strongest aspects of the industry – they make up more than 70% of the pharmaceutical industry. Spanish – and drugs are already the third most exported product in Spain.Report, 2022 This reflects the fact that exports and imports of pharmaceutical products in the same period were 30 and 15 times higher, respectively, than those recorded in 1995. Spain’s total trade has only increased fivefold.
This continuous increase in conversion and procurement costs for pharmaceutical industry facilities, along with regulated sales prices, is putting much of the industry’s business fabric in a difficult position. sufficient economic margin to fully bear these extra costs.
This Salary increase It will be around 12% obtained from the wage guarantee article of the collective bargaining agreement of the chemical industry. The salary adjustment would mean an impact on the pharmaceutical industry of an average of 2.3% of its turnover in 2024, without taking into account the impact of the overall increase in SSI premiums. This additional cost that companies will have to undertake in 2024, if implemented as a whole, will reflect more on companies that produce more added value and provide more employment in the country.
Source: Informacion
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