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Lilly says Spain and Italy delaying pharma payments

Warns Europe's economic situation could hit its 2012 financial results

Lilly says it has experienced payment delays from healthcare systems in Spain and Italy and warned investors the European economic situation could hit its 2012 business results.

Governments across the region are looking to cut healthcare spending as part of their austerity measures, and Spain and Italy are not alone in taking steps to reduce their pharmaceutical spending.

In a filing to the US Securities and Exchange Committee, Lilly says it has experienced payment delays from a number of healthcare systems, including “regions within Spain and Italy”.

“The on-going euro area financial crisis has heightened our sensitivity to such trends, and we continue to monitor the countries' and regions' creditworthiness,” the company said.

“Both domestically and abroad, high sovereign debt levels, sluggish growth, rating downgrades, and on-going fiscal deficits have spurred efforts at fiscal austerity, notably in Spain, Italy, and Greece.

“We continue to monitor the potential impacts of the economic environment; the creditworthiness of our wholesalers and other customers, including foreign government backed agencies and suppliers.”

In Spain the country's pharmaceutical industry body Farmaindustria, which has been in talks with authorities to defer payments, said the National Health System owes pharmaceutical companies more than €6.3bn. Nearly a quarter of this is owed by just one region, Andalusia.

Across all regions the average payment delay is 525 days, and Farmaindustria said “Spain's international image is crumbling” when it doesn't pay off its debts.

It wants to see payments from 2012 'normalised' and legally binding deadlines put in place to guard against further rises in the level of debts.

Greece's troubled economy has already caused problems for a number pharma firms, and last year companies including Roche and Sanofi limited drug deliveries to hospitals because of unpaid debts.

More recently the Hellenic Association of Pharmaceutical Companies (SFEE) warned that inflating levels of hospital debt could threaten the supply of medicines and even force some pharma companies out of business.

29th February 2012

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