The Danish healthcare market is showing healthy signs of recovery following the crippling global financial crisis of 2008, and Denmark's pharmaceutical sector is expected to grow by an average of 6.9% a year to reach $7.3 billion by 2020, up from $4 billion in 2011, says new research.

This anticipated growth will following three years of shrinking pharmaceutical revenues for the Danish industry, says the report, from GlobalData.

The study attributes the anticipated expansion of the nation's healthcare market overall to the growing elderly population. Statistics Denmark has reported that 16.8% of Danish citizens were aged 65 and over in 2011, and that this percentage is expected to reach 19.6% by 2020.

Additionally, Denmark's pharmaceutical market will be boosted by investment in innovative products, says GlobalData. Novo Nordisk, along with other Danish firms such as LEO Pharma and Lundbeck, currently invest 15%-20% of their revenues in R&D, while the country's biotechnology sector spent approximately $5.2 billion on R&D in 2011, the second-highest level in Europe, it notes.

However, the sector does face obstacles at home. Value-Added Tax (VAT) in Denmark is 25%, a higher level than in other European Union (EU) states, and wage levels there are higher than all other member-nations of the Organisation for Economic Cooperation and Development (OECD), with the exception of Norway. As a result, manufacturing and sales costs in Denmark are substantial, it says.

Meantime, in December the Danish association of the pharmaceutical industry, LIF, signed a new price-cap and price reduction agreement for hospital-only medicines with the Ministry of Health and Prevention and the Danish Regions, covering the period January 1 2013 to December 31 2015.

This new agreement extends a previous deal which ran from June 4 2009 to December 31 2012, and states that, over the next three years, the price cap for individual hospital medicines will generally be set at the level of their prices at May 18 2009.

Commenting on the deal, LIF notes that "it is a core issue…to emphasise that the agreement has been made in light of the special, general economic situation and resultant imbalance in public finances that have been characterising Denmark and other European economies" in recent years. "It is to be expected that, during the term of the agreement, actions will be taken by the regulatory authorities that will lead to price reductions in some of the European nations with which we in Denmark normally compare ourselves. This agreement takes account of such anticipated developments," says the industry group.

The deal lists the following comparator countries for Denmark - Sweden, Norway, Finland, UK, Germany, the Netherlands, Belgium and Austria - and, with prices expected to fall in these nations, the Danish price caps will be reduced by 2.5% on April 1 2013 and by 2.5% on April 1 2014.

In December 2011, LIF signed a three-year price cap agreement covering reimbursable prescription medicines sold through pharmacies, which provided for the existing price caps agreed for these products in 2008 to be maintained until April 1 2013. On that date, it will be increased by 1.5%, and a further 1.5% adjustment to the cap will be made on April 1, 2014.

Announcing that agreement, LIF chief executive Ida Sofie Jensen had said it had been "no easy decision" for the member companies. "Extending the price cap does provide the option of two small price adjustments of 1.5%, the first being in April 2013, but even that is considerably less than the general cost-of-living increases in society," she said.