Pharmaceutical industry in Romania

MachinesTechnical ArticlesSouth-East European INDUSTRIAL Мarket - issue 2/2023 • 27.06.2023

With average annual sales of RON 8,3 billion, the pharmaceutical business in Romania is thriving. The pharmaceutical industry’s value chain has grown dramatically in the past years across all segments. There are 22 production facilities in the sector that get public subsidies. Terapia, a medication manufacturer situated in Cluj-Napoca, is the biggest enterprise in the sector. Depending on turnover, Mediplus is the largest player in the distribution of drugs and medication. The business is a part of the 1994-founded A&D Pharma corporation, which also owns the Sensiblu network of pharmacies. Ten regional warehouses and a nationwide logistics hub make up Mediplus’ logistics network.


A total of more than 20 factories in the country have endured the test of time and are now making an impact on a dynamic and a saturated market that is expected to reach EUR 3 billion and is dominated by many multinational corporations.
The two oldest factories, Terapia and Biofarm, have a history of almost a century, with the second recently undergoing a nationalization process. Most of the pill production units are owned by big international groups, with only one producer (Antibiotice Iasi) being controlled by the state through the Ministry of health.


Sector overview

The total imports of pharmaceutical products by Romania from other countries amounted to USD 3,83 billion in 2019, the Embassy of India in Bucharest reports. The total exports in the segments by Romania to other countries were worth USD 928,65 million in the same year. The major items of import include medicament mixtures put in dosage, human and animal blood, pharmaceutical preparations, dressing packaged for medical use, etc. Major export groups are tablets, liquid substances for oral administration (syrups, internal solutions), topical preparations, lotions, gels, sprays, etc.

“The Romanian pharmaceutical market remains a booming industry, full of opportunities and attractive for foreign suppliers. Until recently, the local pharmaceutical market was considered to be fragmented, but lately wholesale and retail segments have brought together their forces in order to achieve important commercial consolidation.
In the pharma industry, the operational process is complex and has to involve several business units in order to accomplish the high-level standards of the European Union (EU). In order to sell a certain medical product, an entire commercial chain (production of drugs – suppliers, transportation – distributors, points of sales – drugstores) will have to satisfy the consumer’s needs”, report analysts state.

According to a recent survey by the Bucharest University of economic studies, the convergence of IT and healthcare is another trend that will impact the big pharma model in Romania over the coming years. Recent research, cited by the report, states that different factors, such as the increasing complexity of the industry, new technologies, the availability of highly qualified experts, the increasing pressure and costs, can lead to a vast and open innovation development in the sector.

The international pharmaceutical enterprises, operating in Romania, established an association that supports the interests the companies in their relations with the local government. It also facilitates the access of Romanian consumers to the technological advances of the pharmaceutical industry related to new drugs in the R&D area. According to the association’s official site, the International association of international medicine suppliers (ARPIM) currently has 29 international members, including: Amgen, AstraZeneca, Bayer, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, Merck Sharp & Dohme, Novartis, Pfizer, Sanofi, etc. Another significant branch organization in the sector is the Romanian Association of industrial drug Manufacturers (PRIMER).

Foreign suppliers usually seek to lower their overall costs by locating numerous factories across the country. As a result, the majority of expenses are directed towards research and development. The foreign suppliers go even further by locating their factories in Romania and taking advantage of the country’s affordable and qualified labor force and favorable geographic location. They export directly from Romania to the closest countries in Europe in order to save extra costs associated with transportation.


Current development

According to a study titled “Pharmaceutical industry in Romania: main tendencies and impact on society and economy”, conducted by the Institute for economic forecasting (IEF), in Romania in 2010 there were over 180 pharmaceutical producers (domestic and foreign), out of which 10 controlled over 60% of the market. Only 30 of the roughly 330 producers on the Romanian pharmaceutical market in 2016 were domestic firms. Over half of the market share today is covered by the top 10 businesses.

A report by the Embassy of India in Bucharest, reviewing specifically the development of the industry in 2018 and 2019, informs that the value of medicines delivered to patients in Romania in March 2019 was RON 17,98 billion at the distribution price, 6,2% more than in April 2018.

“In the same period, the total volume of drug consumption was 641,4 million boxes, increasing by 3,2% in relation to the previous year. In the first quarter of 2020, the total volume of medicines released to patients amounted to 179,1 million boxes, an increase of 9,7% compared to the first quarter of 2019. The increase was generated by both the retail channel (10%) and to a lesser extent, by the hospital channel (3%).

In the first quarter of 2020, the total value of medicines released to patients amounted to RON 4,81 billion, up 3,5% compared to the first quarter of 2019. At the same time, prescription drugs in retail pharmacies were increased of 10,5% compared to the first quarter of 2019. By segments, the growth rates in RON were -7,1% for prescription drugs, 26,8% for OTC in pharmacies and 19,2% for hospitals”, the official statistics reported show.

The Romanian pharmaceutical market experienced steady growth dynamics between 2018 and 2019. The top local drug distributors were Mediplus Exim SRL, with a turnover of RON 3,9 billion, followed by Fildas Trading SRL (RON 3,6 billion), Alliance Healthcare SRL, Farmexim SA and Sanofi Romania SRL. Cumulatively, these five companies had a turnover of over RON 14 billion in 2018, respectively 42 percent of the total turnover generated by local distributors.

According to a KeysFin’s report, the turnover in Romania’s pharmaceutical industry – including production, distribution and retail – surged by nearly 13% in 2020 to RON 67,8 billion (EUR 14,12 billion), as this is one of the industries that thrived during the coronavirus (COVID-19) pandemic period. The average annual growth rate of the industry, over the past more than a decade, has been over 7% per annum. “There are sectors likely to thrive, such as the pharmaceutical industry, that has grown steadily over the past 10 years and that will probably reach another all-time high soon”, the marketing agency forecasts.


Companies and market prospects

Official reports, ranking the top 50 pharmaceutical companies in the country by value, include international players like Multinationals MSD, Sanofi and Novartis. Regional players such as the Romanian firm Antibiotice, the Slovenian Krka and the Czech-headquartered Zentiva are also represented in the lists.

The pharmaceutical sector in Romania consists of 22 factories, concentrated in nine cities, most of which are located in Bucharest and Targu Mures, according to the Association of generic drug manufacturers in Romania (APMGR). Bucharest-based companies include Biofarm, Zentiva, Labormed, Actavis, Laropharm, Infomed Fluids, Sintofarm and SlaviaPharma, and Gedeon Richter, Bioeel, Sandoz and Vim Spectrum are situated in Targu Mures. Indian pharma companies, such as SunPharma, Dr. Reddy’s Labs, Sunwave Pharma and Prime Healthcare, are also present in Romania, the Indian embassy in Belgrade informs.

Currently Romania is one of the biggest markets for pharmaceuticals in Central and Eastern Europe (CEE), the official website of the International trade administration (ITA) states. It shows how underdeveloped it is that it spends less per person on medicine than more well-known Central European countries like Poland, the Czech Republic and Hungary. Romania is predicted to keep developing and present significant business opportunities, but challenging pricing and reimbursement regulations continue to obstruct market expansion and corporate involvement, ITA concludes.

Romanian pharmaceutical sales in 2021 totaled USD 4,4 billion, or USD 232,6 per person – 1,6% of GDP and 26,7% of health spending. In the same year, spending on prescription drugs made up 75,1 percent of all medication expenditures, with patented drugs accounting for 31,5% of that total (43,5 percent). OTC medicine sales totaled USD 1,1 billion in the same year, accounting for the remaining 25% of the market, ITA’s report also says.
Romania’s excessive spending on medications as a percentage of healthcare costs draws attention to the ongoing underfunding of the healthcare sector. The amount spent on drugs per person in Romania is more than that of its neighbors in the Balkans and on par with Bulgaria, although being lower than that of more developed markets.


Import and export capacities

In 2021, Romania exported USD 1,24 billion in pharmaceutical products, making it the 35th largest exporter in the segment worldwide. In the same year, pharmaceutical products were the 17th most exported article group from Romania. The main destination of pharmaceutical products exports from Romania are: Germany (USD 200 million), Czech Republic (USD 110 million), Hungary (USD 101 million), Russia (USD 84,8 million), and Netherlands (USD 73,2 million), the Observatory of economic complexity (OEC) reports.

The fastest growing export markets for pharmaceutical products of Romania between 2020 and 2021 were South Korea (USD 37,4 million), Hungary (USD 29,3 million), and Netherlands (USD 27,7 million).

In 2021, Romania imported USD 4,7 billion in pharmaceutical products, becoming the 30th largest importer of pharmaceutical products in the world. In the same year, pharmaceutical products were the 6th most imported article group in the country. Romania imports pharmaceutical products primarily from: Germany (USD 1,35 billion), Hungary (USD 636 million), Switzerland (USD 597 million), Belgium (USD 314 million), and France (USD 294 million), OEC also informs.
The fastest growing import markets for7 pharmaceutical products for Romania between 2020 and 2021 were Germany, Hungary and Belgium, and the fastest growing export markets for Romania were South Korea, Hungary and Netherlands.

Over the last couple of years, the pharmaceutical industry has been experiencing a rapid and significant growth in Central and Eastern Europe (CEE), Statista Research Department reports. In 2019, Romania’s pharmaceutical market had a revenue of EUR 3,5 billion, making it the second biggest pharmaceutical market in the CEE region after Poland. Over the last decade, pharmaceutical distribution has remained the most valuable industry subsector, followed by pharmacy trade and production. Estimated figures show that Romania’s pharmaceutical industry revenue peaked at RON 66,6 billion in 2020, with pharmaceutical distribution accounting for a 66 percent share.

Another global marketing agency, IBIS World, recently published a report, focusing on the pharmaceutical industry statistics in Romania for the 2008–2026 period.
In 2023 the basic pharmaceutical product manufacturing is valued at USD 2,6 billion and is ranked 15th in Europe in 2023 (of 24 total EU countries). It is the 29th largest sector in the country in 2023 (out of 298 total industries that IBIS World tracks). The market size has grown 13,4% per year on average between 2018 and 2023.

There are currently over 19 000 people employed in the basic pharmaceutical product manufacturing sector in Romania. The average pharmaceutical business in the country has 66 employees and now employs more workers than it did five years ago, the marketing agency also points out.

Today there are around 290 basic pharmaceutical product manufacturing companies in Romania. The number of enterprises in the sector has grown by approximately 17% per year on average over the five years, IBIS World concludes.