BMI View : While Norway's reliance on pharmaceutical imports highlights opportunities for drugmakers looking to export medicines into the country, we note that the Norwegian pharmaceutical market has displayed very slow or no growth in recent years, which may ultimately hinder company export revenues. This is largely attributable to the Norwegian government's pricing and reimbursement policy, and the expiry of patents for high turnover drugs. Additionally, the share of total health spending on medicines is low in Norway compared with other OECD countries.
Norway's economic growth has been fuelled by an abundance of natural resources - the country is Western Europe's largest oil producer, and the world's second-largest natural gas exporter. Consequently, Norway's commodity exports are dominated by mineral fuels, mineral oils and products and their distillation, bituminous substances and mineral waxes, whose value reached US$112.35bn in 2012, accounting for 70% of total commodity exports (US$160.99bn).
Negative Pharmaceutical Trade Balance
Comparatively, in 2012, medicine exports were valued at NOK3.826bn (US$658mn). Norway's leading export partners include Singapore, Germany, Denmark, Ireland and the UK. According to UN Comtrade, in 2012, the country imported medicines worth NOK10.41bn (US$1.79bn). The leading import partners include Germany, Denmark, Sweden, Switzerland and the US.
|Reliant On Imports|
|Norway: Pharmaceutical Trade (US$mn)|
Import Reliance To Remain
BMI believes that Norway will continue to rely on pharmaceutical imports. While most major multinational pharmaceutical companies have a presence in Norway, including Algeta, Amgen, Takeda, Prime Pharma and Novartis, only a few drugmakers have established their own manufacturing units in the country. The domestic industry has had little government support and an increase in the foreign ownership of Norwegian drugmakers has invariably led to the reduction of domestic activities and considerable downsizing. Only one foreign company has built a new manufacturing site in Norway and this took place nearly 40 years ago.
Those who have an approved wholesalers licence according to the Norwegian Act on Medicinal Products clause 14, have permission to import pharmaceuticals from countries inside the European Economic Area (EEA). Import of pharmaceuticals from countries outside EEA requires an additional special licence from the Norwegian Medicines Agency. Before Norway joined the European Economic Area in 1994, the parallel import of pharmaceuticals was not permitted. In the first year of its membership Norway allowed parallel imports of non-patented drugs. Following this, the parallel import of patented pharmaceuticals became legal in 1995.
Non-Oil Exports Are Not Very Competitive
Norway's non-oil export sector suffers from an overvalued currency, and with the import bill running high, the non-oil current account balance is negative. As real wages continue to rise on the back of low inflation, and business fixed capital formation remains subdued, non-oil exporters are becoming less competitive, and the propensity to import is increasing. Although the krone has weakened and will remain around current levels in 2014-15, it would take further currency depreciation for net exports to really begin pushing higher.