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Health and medical to France

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(Last updated: 20 Dec 2010)

Trends and opportunities

The market

With a pensionable population of 10.1 million people, France is one of the largest pharmaceutical markets in the world and one of the leading per capita spenders in Europe. In 2009, healthcare spending was estimated at €220 billion, equating to 11.5 per cent of GDP. As a result of France’s generous retirement laws and an ageing population, the demand for healthcare and pharmaceuticals continues to increase as the elderly face deteriorating health.

The French social security system has been accumulating a deficit over the past 25 years and is a source of growing concern for the French Government. Due to the heavy cost of the system, with a deficit estimated at approximately €23 billion for 2010, and the country’s economic situation, the French Government recently raised the retirement age from 60 years of age to 62. The government is also implementing cost-containing reform programs for the health sector, which include new measures to control spending on medical devices.

The French Government is focused on reducing pharmaceutical expenditure in order to cut the country’s healthcare budget deficit. In 2008, the deficit reached an estimated total of €4.1 billion. The government continues to push for reform via the promotion of cheaper generic drugs, encouraging even fewer prescriptions, cutting reimbursement for certain products and combating fraud.

France is one of the leading drug manufacturers in the world and is an important research and development site for major multinationals. There are more than 300 pharmaceutical manufacturers in France, employing around 100,000 people. The market is characterised by relatively low prices for Western Europe (some 15 per cent below UK and German levels), making the country popular with parallel importers.

The French population has traditionally used a large number of medicines. Results of prescribing trends in four EU countries suggest that while French patients do not visit doctors more often than their equivalents elsewhere, they rarely leave without a prescription. As of 2006, in an effort to reduce healthcare expenditure, patients who refuse generic alternatives for prescriptions may no longer benefit from state support.

Market structure and functioning

Until 2005, the French had access to an unlimited number of general practitioners (GPs) or specialists, which occasionally meant that a patient would visit many doctors in a vain attempt to receive a medical opinion that was acceptable to them. This resulted in unwarranted prescriptions and wasted resources. Now, GPs are seen as ‘gatekeepers’ who are the first point of contact for patients. If a medical condition merits further specialisation, it is the healthcare professional that makes the decision, rather than the patient.

Reimbursement rates are set according to medicine usage, 100 per cent for nonsubstitutable medicines for serious conditions, 65 per cent for medicines treating serious disorders and 35 per cent for medicines treating non-serious disorders.

Ninety-nine per cent of the French population are covered by the Statutory Health Insurance, a branch of the Social Security System. There are different schemes depending on the social and/or professional category of the individuals. Eighty per cent of the French population are protected by the General System, which covers employees and pensioners from trade and industry sectors.

The French market for medicines is divided into prescription-only, or non-prescription, over-the-counter (OTC) products. The large size of most of the pharmaceutical companies is due mainly to the need for substantial (and expensive) research and development, combined with high product sophistication, which pushes laboratories to merge.

Homeopathy is recognised by the French healthcare system, and remedies are reimbursable under applicable rules. However, only prescribed medicines are reimbursable. Sales of homeopathic remedies with potencies beyond 30C are forbidden.

In general, the number of qualified medical staff in France is increasing. However, the trend for non-medical staff has stagnated and in some sectors, such as anaesthesia-reanimation and obstetrics, there is a shortfall in qualified specialists.

The 'Carte Vitale' is a plastic smart-card that is progressively replacing the paper social insurance card. Use of the Carte Vitale is becoming more widespread but unfortunately not all healthcare professionals have the required equipment to read the card and be linked to the national network.

Pharmaceuticals

The French drug market is the largest by market share in Europe and is estimated at a value of €30.5 billion. On a regional basis, Western Europe’s attractiveness to pharmaceutical firms stems from the fact that the region’s countries are key revenue sources for ‘big pharma’, particularly for companies selling high-end products, as per-capita spending is substantially higher than in emerging markets. However, drug companies will face many challenges in Western Europe over the next decade, including the patent cliff, the need to reduce fiscal deficits, added regulatory hurdles and increasingly scrupulous cost-effectiveness assessments of new drugs.

France is home to many of the world’s leading pharmaceutical companies, including AstraZeneca Plc., Pfizer Inc. and GlaxoSmithKlein Plc., together accounting for approximately 15 per cent of the French pharmaceuticals market. Key buyers within the French market are end-users such as hospitals, clinics or other health services.

Pharmaceutical sales used for the cardiovascular system proved the most lucrative for the French pharmaceuticals market in 2009, generating total revenues of $6,712.6 million, equivalent to 18 per cent of the market's overall value.

The process of producing a novel drug is extremely costly to players, and involves a high level of intellectual knowledge, as well as expensive marketing strategies. New entrants may be enticed by growing revenues, however the presence of large international incumbents such as Pfizer Inc. and GlaxoSmithKline Plc. can be off putting. Recently large international corporations are finding other markets more attractive such as the US and Asia-Pacific markets.

Substitute products are few and far between. Alternative therapies have become popular in recent times; however they are heavily scrutinised by the medical profession. Generic substitute products have developed over time, but these are more of a threat to OTC medicines rather than prescriptive medicines.

Medical devices

Over the last few years, the medical device sector has been growing at a faster rate than the overall market. Total market demand in France for medical equipment was estimated at US$6,209 million in 2009, with imports accounting for US$3,288 million and total exports at US$2,234 million. Not all imported products are for the national market as some are re-exported, for example pacemakers.

Eighty per cent of the medical device consumption is derived from imports. Since 2002, the value of both imports and exports almost doubled and around two-thirds of French medical imports are now sourced from Europe, up from 46 per cent in 2001.

The best sales prospects for medical equipment include newly developed areas such as non-invasive surgery, orthopaedics, and disposable medical equipment. Healthcare professionals are highly optimistic about new technologies such as telemedicine, which is expected to have a major impact on medical care institutions.

The recent growth of American-style medical procedures and techniques in France such as (outpatient) same-day surgery can potentially benefit Australian medical product manufacturers.

Other sectors that offer potential for Australian exporters include:

  • Products designed for the elderly population (eg. incontinence products)
  • Care kits for nurses and medical professionals
  • Surgical equipment
  • Disposable equipment (disposable diagnostic)
  • Hospital waste treatment products

The acquisitions process in the medical industry has opened up new channels for distribution, which favour the importation of foreign-manufactured equipment on the French market. The opportunities for investment in this sector remain strong as the French Government in 2003 launched a A$17 billion investment program for French hospitals to modernise and renew their equipment, in particular imaging and radiotherapy equipment.

A five-year cancer plan was launched in 2003 and a similar plan for Alzheimer’s disease started in 2008, with €0.50 from every pharmaceutical product purchase going towards Alzheimer’s research.

The need for medical home-care and long-stay hospitalisation for the increasing elderly population will bring new prospects for the medical equipment market. Consequently, the demand for medical equipment and products that will assist new French healthcare controls will continue to increase.

However, there is also a counteracting force in this market; government initiative to reduce operational expenditure costs and to regulate the medical device expenditure in the same manner as pharmaceutical expenditure (with reduced reimbursement tariffs). For this reason, growth in the next few years is not expected to be strong.

Alternative medicines and therapies

French consumers are now more conscious of maintaining a healthier lifestyle and are expressing a desire to ‘return to nature’. The French Government is also encouraging people to self-medicate, which is resulting in a boom in the nutraceutical and functional food and beverage, phytotherapy and homeopathy industries.

An estimated 75 per cent of the French use acupuncture, homeopathy or osteopathy at some time in their lives. Doctors of traditional medicine in France continue to be sceptical towards natural therapies, however consumer support and acceptance of alternatives continues to grow.

This market offers great opportunities for Australian exporters as the Australian industry has some unique products in this area, thanks to its rich natural environment.

The major opportunities for Australian services include:

  • Ambulatory/outpatient surgery. This area of medicine has significant potential in France as it provides cost-effective medical services in an environment that is often considered more convenient and less stressful for patients than traditional hospitals.
  • Home healthcare. Home care is a luxury, but with further improvements in technology, this form of healthcare will become available to a larger proportion of the community. For this to happen, improvements are required in the level of equipment sophistication and the level of computerised information management within the French healthcare network.

Opportunities

Australian companies have already been successful in France with medical devices such as surgical instruments, disease diagnostics and software, however, broader opportunities exist.

Telemedicine, non-invasive surgery, orthopaedic equipment, and surgical and medical instruments are areas in which demand is expected to grow sharply in the next years.

ICT in the healthcare industry grew 7.5 per cent CAGR between 2005 and 2008 across France, Germany and the UK and remains an important growth sector for Australian companies looking to export their healthcare technologies overseas. In terms of growth rates, the IT spending of healthcare sector providers in France, as in Western Europe, will continue to outperform other markets. Strong examples of successful implementation are extremely important in this sector due to the high-risk uses of these technologies.

Similarly, France’s ageing population holds large opportunities for the healthcare industry. The percentage of the population aged over 65 is forecast to grow from 10.3 per cent in 2009 to 12.2 per cent by 2014.

Competitive environment

The French pharmaceutical market’s vast size and large per capita spending means it attracts a large range of multinationals and specialist pharmaceutical firms. Sanofi-Aventis, Servier and Ipsen are among the leading French-based drugmakers, while Pfizer and Novartis are among the largest foreign companies by sales. Pfizer is the second-largest drug-maker by sales in France.

Since 2000, the number of drug trials conducted in France has declined by about 25 per cent, with the country losing out to Eastern Europe and Latin America. The pharmaceutical and biotechnology industries have remained critical of France’s bureaucracy and flawed patent registration process. In an attempt to reverse the negative R&D trend, the French authorities outlined plans to stimulate ‘national champions’ through state intervention, recommending changes to France’s industrial policy and the establishment of an industrial innovation agency providing R&D funding.

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Tariffs, regulations and customs

France is part of the harmonised trade system of the European Union (EU). Common Customs Tariff (CCT) will be applicable to goods from non-EU countries, including Australia. The Integrated Tariff of the Community is applicable to goods from non-EU countries, including Australia. Most duties are ad valorem (%), based on the GATT Valuation Code (approximate CIF value).

Before shipping any goods to France, companies should obtain a written customs duty ruling from the French customs service. These rulings are called Binding Tariff Information (BTI). Obtaining a BTI is free and should prevent any conflict over customs or excise duty.

Value Added Tax (VAT) on medical products (equipment) is 5.5 per cent and 5.2 per cent on pharmaceuticals.

Access to the French biotechnology industry is limited by relatively strict national and European Union (EU) legislation. Biotechnology products for healthcare can only be imported through French or European pharmaceutical companies. Biotechnological pharmaceutical or diagnostic products can only be sold by a company located within the EU.

In France there are specific approval processes and licences for medicines and medical devices. It is important to check these procedures and seek advice from:

It is illegal to offer any product for sale or use that has not undergone the correct approval process.

The way products are packaged, sold and/or produced will dictate the tariff(s) that apply:

  • A medicine can only be commercialised after being granted a marketing authorisation delivered by the French Health Products Safety Agency after studies ensuring its efficiency, quality and safety.
  • Medical devices have to conform with European standards and are generally certified by their manufacturer. However, for high-risk items, a pre-market product approval can be compulsory.
  • Medical equipment must be registered on the Ministry of Health list, which complies with the Economic Committee of Health Products Act. Products have to be listed so they can be classified in terms of the benefits they offer patients. This classification takes into consideration:
    • The technical efficiency of the products
    • Their side effects and risks for users
    • Their positioning compared with other products and therapies available on the market
    • The type and characteristics of physical impairment for which the products are prescribed
    • The products’ benefits to public health

Registration on the list has to be completed with the generic description of the product and a list of the product's main major characteristics.

Industry standards

All information about what is required to meet French norms and standards are available from the French Standards Association (AFNOR, Association Française de Normalisation). Medical EC marking must be provided on each product.

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Marketing your products and services

Market entry

Depending on your product and your end-customers some market entry strategies into the health and medical industry in France include:

  • Appointing a distribution partner to handle importing and customer liaison.
  • Managing the customer base from Australia, with a European company warehousing and shipping to the customers.
  • Setting up an office in France.
  • Sending one of your staff to France as a representative.
  • Sharing distribution with another Australian company – preferably with a complimentary product range.
  • Manufacturing your products in France under contract or license.
  • Undertaking a joint venture with a French company.

Most of the Australian companies that have been successful in France have chosen to either set up an office in France, undertake a joint venture with a French company or appoint a distribution partner. Under the last option, the Australian companies benefit from the French distributor’s understanding of the market, their ideas in how best to present the products, their comments on packaging changes (with translations in French) and the placement of the product in the market.

French companies are looking for long-term relationships with their suppliers and working together to achieve sales targets. Thus Australian exporters should consider France as a long-term strategic market.

Smaller distribution partners often specialise in a particular product sector and may service customers on a regional basis or may only supply a certain type of customer.

Australian exporters can reduce the difficulties of market entry by fulfilling a specific niche requirement in the market. The medical devices industry has many niche product lines which require specific manufacturing and distribution skills. It is recommended that companies focus on a single product line or on a particular geographical area.

Attending trade fairs in France is also an excellent way to get an industry update.

The following is a list of recommended trade fairs:

  • Le Medec, held annually in Paris, is one of the most important health industry exhibitions in France. It attracts exhibitors and visitors from the following industries: pharmaceutical, medical equipment, medical office equipment, services, medical programs and medical publishing; and industry press and official bodies.
  • Hôpital Expo-Intermédica, held every two years in Paris, is another major healthcare trade fair and attracts around 750 international exhibitors.
  • Pharmagora is the major trade fair in France targeting the pharmaceutical industry.

The major driver in the French healthcare sector is cost/patient benefit. Almost all new products and services will need to demonstrate the following:

  • Recognised clinical trials
  • Reference sites or case studies
  • Practitioner support
  • Publication in respected industry journals
  • Compliance with European Union and French standards

With specific new products, the best way to introduce yourself to the market is generally by contacting the associations of practitioners and professionals (‘Collèges’). They are key opinion leaders.

While many French business people do speak English, it is imperative that manufacturers’ commercial product literature be translated into French. The promotional material used should clearly illustrate issues, as well as proving technical information about the product or service. Information and communication technologies known as e-medical products must also be available in French.

To sell the product in France, it is necessary that a product meets the requirements for reimbursement. To be eligible for reimbursement, the product not only needs to fulfil all these previous conditions, but manufacturers must also show evidence of their products’ benefits, efficiency or cost saving:

  • For medical equipment to be eligible for reimbursement it needs to be approved by the French Nomenclature and Pricing Authority.
  • Pharmaceuticals eligible for reimbursement must be sold at a fixed price, established by the Pharmaceutical Economic Committee after negotiations with the manufacturers.

Few technologies will succeed without support from the reimbursement system. The only exceptions would be technologies aimed at the private sector, such as cosmetic surgery.

Pricing information should be provided separately and in Euros where possible.

Due to the strict laws surrounding advertising, only over-the-counter brands are allowed to be advertised to consumers.

Most major companies have incorporated the Internet into their business strategy and have websites with a brochure format for products. Some have added an interactive sales facility for consumers. Business-to-business sales are also well developed in France especially in the pharmaceutical sector.

If you offer your products for sale to France or another European country over the Internet, you will need to comply with French and European laws. Information about using electronic marketing to facilitate your exports is available at e-Market Services.

Distribution channels

The French health and medical distribution network includes three main intermediaries:

  • Manufacturers/laboratories
  • Agents or authorised dealers
  • Distributors

The three major end users are hospitals, pharmacies and the retail sector. Products can be sold via more than one of these channels.

Pharmacies only sell products that have being granted the marketing authorisation (Autorisation de Mise sur le Marché). The French Government does not allow the retail sector to sell medicines, however, supermarkets can offer products considered ‘para-pharmacy products’. Examples of such products are first aid products (eg. band aids), pregnancy tests, condoms and insect repellents.

The distribution network in the French healthcare industry is keen to implement a barcode system in order to simplify the distribution process. As of January 1, 2011, new regulations created by the French Agency of Sanitary Safety and Health Products (AFSSAPS) will establish an improved coding standard for the French pharmaceuticals market.

The new standard is designed to improve the traceability of medicines distributed in France and to increase consumer safety. From now on, a Datamatrix barcode, containing the new CIP 13 standardised GS1 code, a batch number and the medicine expiry date will be printed on the production line as a replacement of the current French pre-printed CIP 7 standard.

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Links and industry contacts

Health and medical–related resources

Biofutur – www.biofutur.com
BioMed Central – www.biomedcentral.com
Doctor’s Guide – www.docguide.com
Egora – www.egora.fr (in French only)
French Agency for Innovation – www.oseo.fr (in French only)
French Pharmaceutical Industry Directory – www.lannuairepharma.com
Hosmat – www.hosmat.com
Le mensuel des maisons de retraite (home care) – www.ehpa.fr (in French only)
National Federation of Home Hospitalisation Establishments – www.fnehad.fr
Quotimed – www.quotimed.com (in French only)
Quotipharm – www.quotipharm.com (in French only)
Research Centre for the Healthcare Industry – www.credes.fr

Government, business and trade resources for France

Association of Pharmaceutical Laboratories – www.leem.org/medicament/accueil.htm
Directorate General for Customs and Excise – www.douane.gouv.fr/
French Institute of Health and Medical Research – www.inserm.fr/

Directorate General for Competition, Consumption and the Prevention of Fraud
59, bvd Vincent Auriol
75703 Paris Cedex 13
Tel: +33 (0) 1 4487 1717
Fax: +33 (0) 1 4497 3030

French Standards Association
(AFNOR, Association Française de Normalisation)
11, avenue Francis de Pressensé
93571 Saint-Denis La Plaine Cedex
Tel: +33 (0) 1 4162 8000
Fax: +33 (0) 1 4917 9000

National Association of Medical Doctors
(Conseil National de l’Ordre des Médecins)
180 Bd Haussmann
75389 Paris Cedex
Tel: +33 (0) 1 5389 3200
Fax: +33 (0) 1 5389 3201

National Association of Pharmacists
(Conseil National de l’Ordre des Pharmaciens)
4, avenue Ruysdael
75379 Paris Cedex 8
Tel: +33 (0) 1 5621 3434
Fax: + 33 (0) 1 5621 3499

Research and Development Association for the Pharmaceutical and Biological Industries
55 rue St -Germain
7000 Evreux
Tel: +33 (0) 2 3231 1078
Fax: +33 (0) 2 3231 1078

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Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.

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