EXPANSIONS TO BOLSTER AUSTRALIA'S HEALTHCARE FIRMS

Australian healthcare and pharmaceutical firms are set to significantly improve their financial results from 2006, according to international reports. The country's FTA with the US, recent merger activity and a growing international presence are all expected to boost the sector's prospects.

In a sign of the sector's solid outlook, the healthcare index of the Australian stock exchange has risen by 17% this year, more than double the rise across all industries. The country is home to blood products major CSL and healthcare group Mayne, which has recently demerged its healthcare and generics operations. Australia's generics sales were estimated at some US$870mn in 2004.

There is also some evidence that price factors in the major firms' home market have boosted efficiencies, and driven international expansion in order to offset the market's relatively low-cost environment. Meanwhile, Australia's drug prices are starting to rise in real terms, and local demand for diagnostics, generic drugs and medical devices is reported to be growing solidly.