Zentiva: decree lowering reimbursement rate suspended

Zentiva is holding a press conference on its future plans today (21/9) at 10.00am CET. Separately, the Health Minister Milada Emmerova suspended the planned decree assuming a reduction in the reimbursement rate. Emmerova said that the decree (in its current form) was not in line with the Social Democrats’ policy. We believe that healthcare reform would have to be implemented sooner rather than later as the Government presses for a reduction in healthcare spending. While the reform may have a short-term negative impact on Zentiva's sales and margins, we believe the company may gain in the mid-term due to a substitution effect (an increasing preference for cheaper domestic generic drugs over imports and original drugs reflecting pressure to lower healthcare expenses while maintaining healthcare standards).

Tomáš Gatěk