ROMANIA'S DRUG PRICES FALL AS HEALTHCARE CRISIS CONTINUES

Official statistics for July 2005 indicate that Romania's consumer prices for pharmaceuticals were 0.3% lower than in June. Meanwhile, healthcare prices increased by 2.6% in the month. Headline inflation was 0.1% in the month.

The data appears to support the view that Romania's drug price freeze is continuing -- as is the country's healthcare funding crisis. In May, the country's association of drug distributors and importers threatened to suspend credit to the ailing state-owned hospital sector. Multinationals have also complained that patented, branded drugs are only reimbursed at the 50% level.

Nevertheless, Romania is becoming an increasingly important low-cost manufacturing location for some drugmakers, as the country borders a number of higher-growth eastern European Union (EU) member states. However, the US$1.3bn local market has been slow to modernise, with acquisitions by foreign companies driving a painful consolidation process. The country hopes to join the EU in 2007, but remains behind schedule on implementing key market reforms.