In BMI's Business Environment Ratings (BER) for Q410, Germany retained its position as the most attractive pharmaceutical market in Western Europe, out of the ten countries surveyed. The ratings criteria serve to reinforce our estimation of the country's potential owing to its strong emphasis on the regulatory environment. On a global basis, Germany ranks fifth, behind the US, Australia, Canada and Japan. However, the German market ' valued at EUR37.84bn (US$53.30bn) ' will increasingly be seen as a challenge, especially for innovative drugmakers. The new government is discussing a raft of measures, some of which may signal an end to the free pricing of novel products in the country. In fact, the above factors, in combination with the pending patent cliff, are expected to result in a negative five-year compound annual growth rate (CAGR) for the German's pharmaceutical market, namely of -0.99% and -3.33% in local currency and US dollar terms, respectively. While some growth will return over our longer, ten-year forecasts, given the increased use of personalised medicine and biotechnology products, growth will remain subdued, at 0.36% and -0.83%, respectively. On the other hand, the expected development of the generics market will provide opportunities for strong players, with US major Pfizer also potentially entering into the fray, having recently being mentioned in relation to the possible sale of German generics specialists Stada Arzneimittel. Previously, Pfizer had targeted another German generics company ' Ratiopharm ' which was eventually acquired by Israeli generics giant Teva. In the meantime, the direction of the proposed healthcare reforms put forward by the new government is far from ensured. In July 2010, the future of the conservative coalition administration under Chancellor Angela Merkel is looking increasingly uncertain. Coalition bickering, falling approval ratings, and the loss of the all-important state of North-Rhine Westphalia in the first of a wave of local elections in May 2010 all suggest that Berlin's ambitious reform agenda is over before it has had a chance to begin. Key tests will be the ability to administer highly controversial budget cuts to the tune of EUR82bn by 2014, while taking a leading role in ensuring the future stability of the eurozone. The proposal to introduce fixed health insurance fees has already been shelved. In the meantime, the pharmaceutical industry can take comfort in the fact that Germany's economic recovery is in full swing, as the improving domestic consumer climate and strong foreign demand see the industrial sector firing on all cylinders. However, with the economy highly geared towards the export sector, Germany remains vulnerable to cyclical downturns in global demand. In fact, we caution that the anticipated slowdown in US and Chinese economic activity will weigh on Germany's growth outlook into 2011. This suggests to us that trend growth will come in below the currently projected 2.0% real GDP growth rate for this year, which will also have an impact on the availability of public healthcare finances.

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Germany Pharmaceuticals and Healthcare Report Q4 2010
Published on August 2010
Report Summary
In BMI's Business Environment Ratings (BER) for Q410, Germany retained its position as the most attractive pharmaceutical market
in Western Europe, out of the ten countries surveyed. The ratings criteria serve to reinforce our estimation of the country's potential
owing to its strong emphasis on the regulatory environment. On a global basis, Germany ranks fifth, behind the US, Australia, Canada
and Japan. However, the German market ' valued at EUR37.84bn (US$53.30bn) ' will increasingly be seen as a challenge, especially
for innovative drugmakers. The new government is discussing a raft of measures, some of which may signal an end to the free pricing
of novel products in the country.
In fact, the above factors, in combination with the pending patent cliff, are expected to result in a negative five-year compound annual
growth rate (CAGR) for the German's pharmaceutical market, namely of -0.99% and -3.33% in local currency and US dollar terms,
respectively. While some growth will return over our longer, ten-year forecasts, given the increased use of personalised medicine and
biotechnology products, growth will remain subdued, at 0.36% and -0.83%, respectively. On the other hand, the expected
development of the generics market will provide opportunities for strong players, with US major Pfizer also potentially entering into the
fray, having recently being mentioned in relation to the possible sale of German generics specialists Stada Arzneimittel. Previously,
Pfizer had targeted another German generics company ' Ratiopharm ' which was eventually acquired by Israeli generics giant Teva.
In the meantime, the direction of the proposed healthcare reforms put forward by the new government is far from ensured. In July
2010, the future of the conservative coalition administration under Chancellor Angela Merkel is looking increasingly uncertain.
Coalition bickering, falling approval ratings, and the loss of the all-important state of North-Rhine Westphalia in the first of a wave of
local elections in May 2010 all suggest that Berlin's ambitious reform agenda is over before it has had a chance to begin. Key tests
will be the ability to administer highly controversial budget cuts to the tune of EUR82bn by 2014, while taking a leading role in
ensuring the future stability of the eurozone. The proposal to introduce fixed health insurance fees has already been shelved.
In the meantime, the pharmaceutical industry can take comfort in the fact that Germany's economic recovery is in full swing, as the
improving domestic consumer climate and strong foreign demand see the industrial sector firing on all cylinders. However, with the
economy highly geared towards the export sector, Germany remains vulnerable to cyclical downturns in global demand. In fact, we
caution that the anticipated slowdown in US and Chinese economic activity will weigh on Germany's growth outlook into 2011. This
suggests to us that trend growth will come in below the currently projected 2.0% real GDP growth rate for this year, which will also
have an impact on the availability of public healthcare finances.
Table of Content
Executive Summary .5
SWOT Analysis ......... 6
Germany Pharmaceuticals And Healthcare Industry SWOT ........ 6
Germany Political SWOT .7
Germany Economic SWOT .............. 7
Germany Business Environment SWOT .......... 8
Pharmaceutical Business Environment Ratings 9
Table: Western Europe Pharmaceutical Business Environment Ratings For Q410 ..... 9
Rewards ........... 10
Risks . 11
Germany Pharmaceuticals and Healthcare Report Q4 2010 Page 1/5

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Germany ' Market Summary . 12
Regulatory Regime . 14
Intellectual Property (IP) Developments ...... 15
Recent IP Developments . 16
Pricing Regime 17
Table: Price Build-Up in the German Pharmaceutical Market ... 18
Recent Pricing Developments ........ 18
Reimbursement Regime ... 20
Recent Reimbursement Developments ........... 20
Parallel Imports .............. 22
Industry Developments ......... 23
Epidemiology ... 23
Communicable Disease ... 24
Healthcare Sector ........... 24
Healthcare Sector Reforms ............ 25
Krankenkassen . 27
Biotechnology Sector ...... 28
Medical Devices Industry .............. 30
Recent Developments in the Medical Devices Industry 30
Industry Forecast Scenario ... 32
Overall Market Forecast . 32
Key Growth Factors ' Industry ...... 34
Key Growth Factors ' Macroeconomic ........ 36
Table: Germany - GDP By Expenditure ....... 41
Prescription Market Forecast ........ 42
Patented Product Market Forecast 43
Generic Drug Market Forecast ...... 45
OTC Medicine Market Forecast .... 47
Medical Device Market Forecast ... 48
Pharmaceutical Trade Forecast .... 50
Other Healthcare Data and Forecasts .......... 51
Key Risks to BMI's Forecast Scenario .......... 52
Competitive Landscape ........ 53
Domestic Pharmaceutical Industry 54
Recent Company Developments ..... 55
Wholesale Sector ............ 58
Recent Wholesale Sector Developments ........ 59
Retail Sector .... 60
Recent Retail Sector Developments 63
Company Profiles ... 64
Domestic Manufacturer Profiles ......... 64
Bayer HealthCare ........... 64
Boehringer Ingelheim ..... 67
Stada Arzneimittel ........... 71
Grünenthal ....... 73
Merck KGaA .... 74
Leading Multinational Manufacturers 76
GlaxoSmithKline (GSK) .. 76
Pfizer 78
Novartis ........... 81
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Sanofi-Aventis .. 83
Merck & Co ..... 85
Country Snapshot: Germany Demographic Data ............ 86
Section 1: Population ...... 86
Table: Demographic Indicators, 2005-2030 . 86
Table: Rural/Urban Breakdown, 2005-2030 87
Section 2: Education and Healthcare ........... 87
Table: Education, 2002-2005 ........ 87
Table: Vital Statistics, 2005-2030 .. 87
Section 3: Labour Market and Spending Power ........... 88
Table: Employment Indicators, 2001-2006 ... 88
Table: Consumer Expenditure, 2000-2012 (US$) ........ 88
Table: Average Annual Manufacturing Wages ............ 89
BMI Methodology ... 90
How We Generate Our Pharmaceutical Industry Forecasts ....... 90
Pharmaceuticals Business Environment Ratings ......... 91
Risk/Reward Ratings Methodology 91
Ratings Overview ............ 91
Table: Pharmaceutical Business Environment Indicators .......... 92
Weighting ......... 93
Table: Weighting Of Components .. 93
Sources ............ 93
Forecast Tables ...... 94
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