Zentiva: New drug decree could come into force by 1 April 2007

Coalition intends to pass on CZK 2.5-3bn drug expense to patients by a new drug decree to be launched from 1 April 2007. The intention of the regulator is to increase the price of cheaper drugs by lowering reimbursement and lower price for previously more expensive drugs, however no further details were given - according to Daily MF Dnes.

According to MAFS (International association of pharmaceutical companies) the drug consumption decreased to CZK 39.602bn in 2006 (-0.5% y/y or CZK 203) from 39.805 in previous year (2005). Number of sold packages declined even more to 310m from 323 (-4% y/y).

Our view:
We believe the new drug decree could have some negative impact on Zentiva as its has low per pox prices, and we see their sales could set back if patients would have to finance higher portion of drug. However, in the lack of exact measures proposed by the politicians, it is hard To access the formulating law.