Intellinews - Romania Pharmaceutical Report

The IntelliNews Romanian Pharmaceutical Report offers an extensive summary of the Romanian pharmaceuticals market, segmented into production and distribution. It includes a complete coverage of the latest developments, trends and corporate news, accompanied by thorough statistics and comments. This sector report is ideal to keep you abreast on recent company and industry news. Written by local professionals, it is a unique market and business intelligence analysis, tailored to save time by providing in-depth information, while helping you to make confident and informed business decisions. developments, trends and corporate news, accompanied by thorough statistics and comments. This sector report is ideal to keep you abreast on recent company and industry news. Written by local professionals, it is a unique market and business intelligence analysis, tailored to save time by providing in-depth information, while helping you to make confident and informed business decisions.

The lack of coordination between government and the majority of MPs might further deteriorate the capacity of conducting structural reforms that are urgently needed in the coming weeks for fiscal consolidation and for smooth continuation of the stand-by agreement with the IMF. The government has endorsed a budget planning for 2011 consistent with the aim of fiscal consolidation to a 4.4%-of-GDP deficit and given its commitment the target might be met as well as this year’s target of 6.8% of GDP. Nonetheless, the public sector including all of its branches remains highly inefficient as the government took no steps in this direction.

The fiscal consolidation plans are effective in cutting the budget deficit but they also further deteriorate the capacity of the public sector that is unable to set grounds for long-term growth. As regards the short-term growth prospects, the budget planning drafted by the government for next year earmarks more funds than usually for investments in H1 and the government promises to prioritize the public projects. This however depends on the public administration’s capacity, which is very low, and by the corruption level that was recently revealed by Transparency International as at least perceived as high.

The prospects for Romania’s economy are better than those of other countries in the euro area that face problems, since the budget deficit narrowed significantly and the economy is bottoming out, thus diminishing risks, IMF resident representative Jeffrey Franks stated. The statement was however aimed at toning down an alarming statement of the Fund’s chief Dominiuque Staruss-Kahn who placed Romania on a list of countries facing default. As regards the fiscal consolidation, we see no clear strategy and the economy bottoming out is still uncertain.

The GDP decreased by a real 2.5% y/y to RON 136.6bn (EUR 32.1bn) in Q3, and by real 0.7% q/q in seasonally adjusted terms, the statistics office reported confirming the flash estimates. Inventory replenishment continued in Q3 but there is still room for further re-stocking over next couple of quarters with positive impact on the GDP dynamics; the end of inventory cycle around mid-2011 would however partly offset the effects of other growth drivers. We remain therefore sceptical in regard to positive growth projections for next year as this depends mainly on the external demand and foreign investments. The first short-term data for October indicate steeper y/y decline in the last quarter of the year compared to Q3. The industrial output index increased by 1.4% y/y in October, decelerating sharply from 5.0% y/y in September and 4.5% in Q3. The construction works index decreased by 7.5% y/y in October, moderating from negative growth rates of 12.0% y/y in September and 14.3% in Q3. The retail sales index decreased by 7.6% y/y in October after a smoother 2.2% y/y decline in September and 4.3% y/y in Q3.

On the financial side, the bank's loan portfolio expressed in euros decreased for the second month in a row by EUR 245mn m/m in October, after two consecutive months of rise in Jul-Aug. The stock of bad loans, under the category of loss and doubtful loans (with payments overdue by over 60 days) increased by 52% y/y to RON 41.3bn (EUR 9.7bn) as at end September, which corresponds to 20.2% of the banks’ aggregated exposure. The stock of public debt, including the borrowing from Treasury reserves, increased by 32% y/y to RON 185.3bn, or by 30% y/y to EUR 43.4bn, at the end-Sep. The public debt thus reached 36.2% of the GDP projected officially for this year, up from 35.1% one year earlier and 28.5% as at end-Sep 2009.

Table of Contents :

Executive Summary
Politics
Relationships with IFIs
Real Sector
Fiscal Sector
Financial Sector
External Sector

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