Table 1 Trade Balance (i mil.)

Transcription

1 TRADE BALANCE Year 2017 In 2017 the total exports of the country (including oil exports) registered a significant rise, after a slight decline over the previous four years. Particularly, total exports amounted to i billion registering an increase of 13.2% compared to Record exports were recorded even if oil products are excluded. Particularly, the value of exports excluding oil products increased by 7.1% in 2017 (or by i 1.32 billion), reaching i billion over the last year. At the same time, in 2017 total imports registered a remarkable increase (13.7%), amounting to i 49.03billion. If oil products are excluded, imports of other goods rose by 10.2%. As a result of the developments in the foreign trade of the country, the trade balance deficit worsened by 14.4% over the last year (2017: i billion, 2016: i billion). Despite the extremely adverse economic conditions Greek export companies managed to improve their performance, supporting the national economy and the country's effort to return to a growth path. Year 2018 (5 month-period) Greek exports retained their strength in 2018 as well. According to the latest (provisional) data of the Hellenic Statistical Authority (ELSTAT) over the first five months of 2018 the total value of exports (including oil products) reached i 13.4 billion versus i 11.8 billion during the respective period of 2017, registering a significant rise of 13.7%. If oil products are excluded, the respective value of exports has registered a rise as well (12.4%). As regards the destination of exports over the first five months of 2018, EU countries accounted for 52.7% of the total value, registering a rise of 11.1% compared to the respective period of Exports to Third Countries registered a rise of 16.6% during the same period, further enhancing their share in total exports by accounting for 47.3% in 2018 (5month-period) from 46.1% during the previous year. Exports of all general product categories followed an upward trend. The most significant rise regarded olive oil (42.8%), oil products - fuels (16.9%), industrial products (14.7%), machinery (13.3%) and chemicals (12.4%). Over the same period, the total value of imports amounted to i billion registering a slight rise of 0.4% compared to the respective period of 2017 (i billion). If oil products Diagram 1 Greek Export Performance Source: Hellenic Statistical Authority (ELSTAT) are excluded, the value of imports has registered a fall of 4%. The aforementioned data show there is further deterioration in trade balance by 15.2% over the first five months of 2018 compared to the respective period of GEOGRAPHICAL EXPORT DISTRIBUTION The total Greek exports (in value) reached i billion in 2017, registering a rise of 13.2% compared to the previous year. This is due to the significant rise of exports to Third Countries by 20.1%, which had a share of 46.9% in total exports. The respective share of exports to Third Countries in total exports in 2016 was 44.3%. Exports to E.U. countries have increased by 7.7% over the last year. The share of the European Union countries - members in the total value of Greek exports amounted to 53.1% in 2017, reporting a fall compared to 2016 (55.7%). By broader geographical area, the following is noted: The value of exports to EU -28 countries amounted to i 15.1 billion in 2017 from i 14.0 billion in 2016 (7.7% rise). Exports to other European countries significantly increased by 26.8%, due to the significant rise of exports to Turkey (44.4%). Table 1 Trade Balance (i mil.) Exports 21, , , , , , , , , ,463.5 Imports 64, , , , , , , , , ,026.6 Trade Balance -43, , , , , , , , , ,563.1 Exports as a % of imports 32.9% 33.9% 41.5% 50.0% 56.2% 59.2% 56.9% 59.7% 58.3% 58.1% Source: Hellenic Statistical Authority (ELSTAT) 1

2 Table 2 Geographical export distribution Share (%) in total exports EU-28* 43.8% 45.6% 53.3% 55.7% 53.1% Balkans and Turkey % 18.3% 12.4% 11.2% 12.8% Central and Eastern Europe, CIS 2 3.1% 3.1% 2.5% 2.5% 2.0% North America 3 4.2% 4.0% 6.1% 5.6% 5.1% Northern Africa and Middle East % 13.9% 14.8% 14.6% 15.0% East and South -East Asia 5 4.0% 4.3% 4.3% 4.2% 5.4% Rest of the world 13.2% 10.9% 6.7% 6.1% 6.7% Total exports 100.0% 100.0% 100.0% 100.0% 100.0% 1 Albania, Croatia, Bosnia-Herzegovina, Serbia - Kosovo, Montenegro, FYROM and Turkey 2 Ukraine, Belarus, Moldova, Russia, Georgia, Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan. 3USA, Canada, Mexico. 4 Morocco, Algeria, Tunisia, Libya, Egypt, Lebanon, Syria, Iraq, Iran, Israel, Jordan, Saudi Arabia, Kuwait, Bahrain, Qatar, UAE, Oman and Yemen. 5 Thailand, Indonesia, Singapore, Philippines, South Korea, Taiwan, Hong Kong, Japan, India, China. *EU-27 (2013) Sources: Hellenic Statistical Authority (ELSTAT), Pan-Hellenic Exporters Association, Table 3 The 20 major export markets of Greece in 2017 (i mil.) / Countries 2017 Share % 1 1 Italy 3, % 2 2 Germany 2, % 34 Turkey 1, % 4 3Cyprus 1, % 5 5 Bulgaria 1, % 6 8 Lebanon 1, % 7 6 USA 1, % 8 7 United Kingdom 1, % 9 9 Romania % France % Egypt % Spain % 1315 Saudi Arabia % FYROM % Gibraltar % 16 13Netherlands % China % Albania % Poland % Singapore % Exports of the top 20 countries 21, % Total Greek exports 28, % Sources: Hellenic Statistical Authority (ELSTAT), Pan-Hellenic Exporters Association, Exports to the countries of North America (USA, Canada, Mexico) registered a slight rise (2.6%), accounting for 5.1% of total exports in Exports to the Middle East & North Africa also followed an upward trend (16.3%) accounting for 15% of total exports in In the particular region, the top export destinations are Lebanon which reported a rise of 19.1% in exports, Egypt (slight rise of 0.7%) and Saudi Arabia (52.1% increase in exports). Diagram 2 Geographical export distribution (2017) As regards exports to the countries of Asia, they increased by 37.8% accounting for 6.3% of exports in The major destination countries are China and Singapore. Twenty (20) countries accounted for 75% of the total export value in Italy remains the most important destination of Greek exports (in terms of value) and ranks first again in 2017 among destination countries. Germany remains in the second place followed by Turkey which ranks Diagram 3 Top 8 export markets* in 2017 Sources: Hellenic Statistical Authority (ELSTAT), Pan-Hellenic Exporters Association, * Exports over i 1 billion Sources: Hellenic Statistical Authority (ELSTAT), Pan-Hellenic Exporters Association 2

3 Diagram 4 Distribution of exports by product category (2017) Source: Hellenic Statistical Authority (ELSTAT), Pan-Hellenic Exporters Association, third overtaking Cyprus which ranks fourth in 2017 (ranked third in 2016). Bulgaria, Lebanon, the United States, and the United Kingdom follow. The top ten are complemented by Romania and France. Exports to the ten aforementioned countries amounted to i 15,469.2 million in 2017, having a share of 54.3% in total exports over the last year. As regards the major destinations of Greek exports (in terms of value), the following is noted: Exports to Turkey registered a significant rise of 44.4%, while exports to Cyprus increased by 13.5% over the last year. Exports to Italy and Germany recorded a smaller increase (8.1% and 4.6% respectively). DISTRIBUTION OF EXPORTS BY PRODUCT CATEGORY Greek exports registered a significant rise in 2017 which is mainly due to the significant increase in the exports of fuels (30.0%), manufacturing products (9.7%) and raw material (26.2%). Exports of agricultural products dropped by 1.4%. Particularly, exports of fuels amounted to i 8.97 billion in 2017 from i 6.89 billion in Their share in the total export value increased by 4.1 percentage points, amounting to 31.5% in 2017 from 27.4% the previous year. Exports of manufacturing products amounted to i 12.1 billion in 2017 from i 11.1 billion in 2016 accounting for 42.6% Table 4 Distribution of exports by product category Share (%) in total exports Product Category Agricultural products 17.5% 17.2% 20.5% 22.4% 19.5% Food and livestock 13.2% 13.8% 15.1% 1 6.8% 15.0% Beverages and Tobacco 2.1% 2.2% 2.6% 2.9% 2.5% Animal or plant fats and oils 2.1% 1.2% 2.8% 2.7% 2.0% Raw materials 4.1% 3.8% 4.0% 4.0% 4.5% Non-food raw materials (excluding fuels) 4.1% 3.8% 4.0% 4.0% 4.5% Fuels 39.9% 38.4% 29.8% 27.4% 31.5% Minerals, fuels, lubricants etc. 39.9% 38.4% 29.8% 27.4% 31.5% Manufacturing products 36.4% 38.5% 43.4% 44.0% 42.6% Chemical and related products 9.4% 9.9% 10.5% 10.7% 10.6% Industrial products classified by raw material 13.5% 13.9% 16.0% 15.6% 16.0% Machinery and transport equipment 7.3% 8.3% 10.1% 10.2% 8.9% Miscellaneous manufacturing products 6.2% 6.4% 6.8% 7.5% 7.1% Miscellaneous 2.2% 2.1% 2.4% 2.2% 1.9% Products and transactions without classification 2.2% 2.1% 2.4% 2.2% 1.9% Total exports 100.0% 100.0% 100.0% 100.0% 100.0% Sources: Hellenic Statistical Authority (ELSTAT), Pan-hellenic Exporters Association, of the country's total exports over the last year (2016: 44.0%). The respective share of agricultural products dropped by approximately 3percentage points reaching 19.5% in 2017 from 22.4% in The value of agricultural exports amounted to i 5.5 billion in Exports of raw materials were lower (4.5% in 2017). As regards individual product categories, after oil products (the exports of which rank first), the top ten also include: medicines, olive oil, copper plates, frozen - processed fish, processed - preserved vegetables, pipes, cheese products etc. 3

4 CHEESE PRODUCTS STRUCTURE AND BREAKDOWN OF THE SECTOR The sector of cheese products consists of several businesses (manufacturers and importers), which differ in terms of their size, the level of market coverage and their distribution channels (cooperation with wholesalers, dealers, distributors, etc.). Large industries own organized distribution networks, covering almost the entire Greek territory. Medium and small sized manufacturers mainly cover the needs of local and regional markets, but also channel some of their products to other (geographical) markets. The sector also includes a significant number of small family cheese dairies which are exclusively of local scope. Over the last 15 years, the manufacturing sector has been significantly upgraded, focusing on the standardization of production, more effective management and enhancement of competitiveness, by offering a variety of cheese products. The sector of imports consists of a significant number of companies, many of which operate in the sector of dairy and cheese products or in the wider food sector. Some of them also cooperate with multinational companies in the dairy / cheese industry. Also, several smaller companies import cheese intended for professional use (e.g. restaurants, processing, catering, etc.). In the retail sector, the rapid growth of supermarkets, which had the lion's share in total sales, was a major development. This has led sector industries to turn to the standardization - packaging of their products even more so, as to better meet market trends. PRODUCTION Greece ranks 10th in the production of cheese among EU- 28 countries. The overall domestic cheese production (from manufacturing businesses as well as dairy farms) registered a significant rise during the period Nevertheless, in recent years annual growth rates are low (2017/2016:1.7%). The share of dairy farms in the total cheese production has reached approximately 25%-28% in recent years. Respectively, the share of manufacturing businesses has been increasing in recent years amounting to 72%-75%. The category of soft cheeses has held the largest share in the total production of cheese over time. Particularly its share Diagram 5 Exports of cheece products in the total production from manufacturing businesses reached 74.3% in Feta cheese accounts for the largest part of soft cheeses. The category of hard and semi-hard cheeses ranks second with a share of 14.5% in The category of whey cheeses is next, which had a production share of 11.1% in EXTERNAL TRADE Overall imports (in quantity) of cheese products followed an upward trend during , with an average annual growth rate of 3.4%. Semi-hard cheeses accounted for 51% of total imports in Hard cheeses follow with a share of 25% and soft cheeses with 14%. The main countries of origin of cheese products are the Netherlands which accounted for 32.9% of total imports and Germany (28.3%) in Romania and Italy follow with 7.9% ÑÈÐ 4.7% respectively. Exports of cheese products have registered a rise over time during the last decade, with an average annual growth rate of 7.3%. Particularly, in 2017 total exports increased by 11.4% compared to "Feta cheese and telemes" have the largest share, accounting for 76.8% of total exports in Hard and semi-hard cheeses follow. Regarding the major destination countries of Greek cheese products, Germany accounted for the largest part of exports in 2017, with a share of 33.4%, followed by the United Kingdom (15.2%), Italy (9.3%) and Sweden (5.2%). The certification of 21 Greek cheeses and mainly of feta cheese as P.D.O. (Protected Designation of Origin) products has been crucial regarding the ascending course of cheese exports in the last few years and the further development of export performance. DOMESTIC MARKET The size of the total domestic consumption of cheese products (in quantity) increased during by an average annual rate of 4%. During it registered a fall, while during the market started increasing. Over the three-year period the market started stabilizing (2017/2016: 0.8%). The largest part of the total consumption of cheese products is covered by Greek cheeses over time. Their share in the total market has been around 62%-63% over the last two years. Diagram 6 Market Index of cheece products in Greece Source: EL.STAT 2008=100 Source: ICAP Group S.A. 4

5 The consumption of imported cheeses has presented an increase in recent years, with a share of about 35%-38% in total consumption over the last five years. Standardized cheese products accounted for approximately 13% of domestic cheese consumption in Supermarkets and other retail stores accounted for 52% of total cheese sales in Catering businesses, restaurants e.tc. are estimated to have accounted for the remaining 42%. SWOT Analysis Strengths l Cheese products constitute a main diet component with high nutritional value and they are considered a "fundamental" part of the Mediterranean diet for all ages. l They present a relatively low elasticity of demand in terms of price and available income. l The great tradition of Greece in the production of dairy products. l The variety of cheeses available on the market and the high quality of these. l The significant number of P.D.O. (Protected Designation of Origin) cheese products. Weaknesses l The fragmentation and dispersion that characterizes the primary milk production involves high collection and transportation cost of raw material (milk) for the dairy industries. l Fluctuations in the price of raw material (milk). l The lack of sufficient and organized control systems regarding the quality of cheese products as well as the origin of the raw material that is milk. Opportunities l The expansion of exports to new geographic markets (e.g. Asia, the Middle East). l The certification of feta - cheese as well as of other cheeses as P.D.O. (Protected Designation of Origin) products, may promote export activity. l The development of innovation in products (e.g. packaging, variety of products etc.) may further enhance exports even in the countries where Greek businesses are already active. Threats l The possibility of a future decline in the domestic milk production and potential increases in raw material price. l The development and availability of substitute products made of vegetable fat. l Reduction of consumption expenditure of households and their shift to cheaper products (e.g. private label). l The increase of "concentration" in the organized retail industry (supermarkets), with all that it implies for the bargaining power of sector companies. l The "confusion" of foreign consumers between feta cheese and white cheese leads to a limitation of its share in foreign markets. PROSPECTS Cheese products are considered a "mature" market in our country and constitute a main component of daily diet. Thus, no significant changes are reported from year to year. The assessed products have relatively low annual rates of change compared with other foodstuffs. Sector manufacturers step up their efforts to increase their exports, seeking new markets for their products (e.g. Asia, the Middle East, etc.), while increasing their penetration in the markets where they already export their products (European countries, the USA, Canada, etc.). Given the current situation, the main lines which sector companies are expected to follow in order to increase their sales or even maintain their position in the market, are: q Development of new high added - value products. q Expansion of product variety and focus on potential consumer needs. q Expansion of the distribution network of products, seeking presence in more retail outlets. q Systematic marketing actions and stronger efforts to promote Greek cheese products, particularly in countries abroad. q Reduction in bad debt risk arising from transactions with various outlets. q Adaptation of their commercial policy in the current market conditions (increase offers). q Rationalization of operating costs. COSMETICS STRUCTURE AND BREAKDOWN OF THE SECTOR The cosmetics sector in Greece is comprised of a great number of companies, both manufacturers and importers, the majority of which are engaged in more than one product categories (body cosmetics, face cosmetics etc.). Many businesses also operate in other sectors, such as pharmaceuticals and parapharmaceuticals, chemicals, detergents etc. Some sector importers are large-scale companies, subsidiaries of well-known foreign groups, which have significant market shares in the international market. The distribution channels serve as an element to distinguish sector companies from one another. In the mass market and selective distribution channel, competition is particularly intense, as most products are distributed via these channels. PRODUCTION The value of the domestic production of cosmetics (in wholesale prices) followed a downward trend during , registering an average annual decline rate of 2.5%. Nevertheless, as of 2014 this trend was reversed as the value of total production increased by an average annual growth rate of 5.5% during the period Skin care products had the lion's share in total production as they accounted for 44.4% in 2017, followed by hair care products with a share of 31.5%. EXTERNAL TRADE Total imports of cosmetics (in value) followed a downward trend during the period , with an average annual reduction rate of 8%. Nevertheless, since 2014 imports have gradually started recovering. In 2016 total imports increased by 2.7% compared to the previous year. During the same year the category of skin care products had a share of 41.6% in total imports (in value) followed by hair care products with a share of 23.3%. Exports of cosmetics registered a rise during , increasing by an average annual growth rate of 7.5%. Skin care products accounted for 72.7% of total exports in 2016 followed by hair care products with a share of 14.5%. The major destination countries of cosmetics in 2016 were 5

6 Cyprus, France, the United Kingdom, Italy and Germany which jointly accounted for 46.3% of total exports. DOMESTIC MARKET The domestic market of cosmetics (in wholesale prices) followed a downward trend during , registering an average annual rate of -7.7%. This decline is due to the reduction in the consumers' available income resulting from the country's economic recession. Thus, the demand registered a fall and consumers turned to cheaper solutions. However, in 2014 the market started recovering while its value increased by an average annual rate of 2.7% during Skin care products have constituted the major category of cosmetics over time. Over the last two years ( ) they are estimated to have accounted for approximately 54% of total sales (in value), followed by hair care products with a share of 27%. The mass market distribution channel is estimated to have accounted for 48% of total cosmetics sales followed by the channel of pharmacies with a share of 21.5%. Selective distribution had a share of approximately 17%. Strengths l The good reputation of Greek cosmetics manufacturers abroad, mainly of natural products, is important. l The relatively high brand loyalty on behalf of consumers mainly for cosmetics distributed via the selected distribution channel. l The organized and extensive distribution network across the country. Weaknesses l The number of businesses that operate compared to the size of the Greek market (demand potential) create over-supply conditions. l The great dependence of the demand for various products on the available income. l Many categories of cosmetics are not considered basic necessities. Opportunities l Entry into new foreign markets. l Introducing promotional actions (promotions, discounts) that may contribute to maintaining and increasing sales. l The use of the Internet (e-commerce) as an alternative product promotion channel. Diagram 7 Exports of cosmetics ( ) l The development of new products (natural, organic cosmetics, etc.). l Addressing a broader spectrum of buyers/customers (male consumers, older age customers etc.). Threats l The economic situation of the country and its consequences (reduction of the companies' liquidity, increase of bad debts, shrinking of bank financing) create problems for sector companies. l Reduction of consumption expenditure of households and their shift to cheaper products. l Competition and oversupply of products combined with the economic recession result in the fall of prices, compressing the profit margins for businesses. PROSPECTS The reduction in the households' available income due to the economic recession in Greece, led consumers to reduce cosmetic purchases in previous years (before 2014). Products which are not considered basic necessities were mostly affected. At the same time, many consumers turned to more affordable products or products offered at discount or via offers. However, in recent years there has been a recovery in the market, a trend expected to continue in the coming years. In relation to product distribution channels, the pharmacies' channel presents the highest annual growth rate, which in the last few years has gradually gained a larger share. Prospects for e-commerce are also positively affected by the increase in both the number of online shoppers and the number of e-shops of sector companies, especially as regards well-known brand names of cosmetics. Given the current situation, the main lines which sector companies are expected to follow in order to strengthen or even maintain their position in the market, are: q Adaptation of their commercial policy in the current market conditions (promotion actions, discounts to consumers). q Use of e-commerce taking advantage of new technologies and trends in retail sales. q Development of new qualitative and more affordable products. q Investments in Research and Innovation. q Stronger extroversion in order to enter new markets abroad. Diagram 8 Market Index of cosmetics Source: Hellenic Statistical Authority (EL.STAT.) 2008=100 Source: ICAP Group S.A. 6

7 MARBLES - GRANITES STRUCTURE AND BREAKDOWN OF THE SECTOR The marble industry has a long tradition (from antiquity to nowadays) in Greece, while the quality and variety of marble in our country is well known worldwide. The granite, which is a competitive product of marble, is exclusively imported, as there is no mining activity in Greece for this stone. The Greek market includes a large number of businesses, among which there is intense competition. The sector also includes some vertically integrated units. The domestic marble market is fragmented. Thus, even larger companies' shares are low. The main feature of the sector is the intense extroversion and the continuous increase in the total value of marble exports over the last decade. Companies dealing with the import and processing of granite are few and several of them also operate in the sector of marbles. Mining quarries exist in many regions of the country, each of which has stones of different color and quality. The majority of the active marble quarries in the country are located in East Macedonia & Thrace (60,0%), in the Peloponnese (8.9%) and Central Greece (7.9%). PRODUCTION The domestic production of marble has fluctuated over the last decades. Particularly, during the period production increased at an average annual rate of 4.6%, following a significant decrease (approximately 33%) of production in In recent years, domestic production has been steadily rising due to increased demand for exports. Due to the various problems and constraints that exist in this sector, such as the institutional framework requiring environmental protection measures, etc., the existing marble deposits of the country are not fully utilized. At the same time, the increase in demand for cheaper competitive products often leads to a reduction in the mining activity of sector companies. Most of the total production takes place in Macedonia. The most important white marble center covers the prefectures of Drama and Kavala (including Thassos). EXTERNAL TRADE The total marble imports (by quantity) registered a significant rise during , with an average annual growth rate of 32.6%, while from 2008 to 2012 there was a sharp decline (with an average annual rate of -20.2%). In the next five years ( ) imports reported annual fluctuations. Particularly, in 2017 imports increased by 3.5% compared to 2016, while in terms of value the rise reached 13%. Imports of crude marble accounted for the majority of total imports with a share of 86%-87% over the last two years. The Greek marble industry holds a dominant position in the international market with exports rising sharply after 2009 both in terms of value and quantity to cover the "gap" resulting from the sharp fall of sales in the Greek market. It is worth noting that marbles belong to the 50 most important Greek exported products worldwide. Total marble exports increased during by an average annual rate of 16.8% in quantity and 15.3% in value. The country's most important trading partner over time has been China, which imports almost exclusively crude marble. Particularly, marble exports to China accounted for 63.1% of total quantity and 54.3% of total value. Other major markets that absorbed Greek marbles were the USA and the United Arab Emirates. Imports of granite followed an upward trend during , while from 2009 onwards they have been declining. Over the last decade total granite exports have reported severe fluctuations. The major destination countries are Germany, Bulgaria and Italy. DOMESTIC MARKET The domestic market of marble shows a cumulative decrease of 53% in 2017 compared to The decline in demand is due to the sharp decline in construction activity and the reduction of the disposable income of households over the last decade, due to the economic situation of the country (recession period). Large sector companies, due to reduced domestic demand, have boosted their export activity. In 2017, 57% of produced marble blocks was exported and 48% was marketed within the country. Similarly, consumption of finished marble products has declined in recent years. The demand for granite is covered by imports as no quarrying takes place in our country. The majority of the imports up to 2008 concerned crude granite, which was then processed by sector companies for the production of finished granite products, which were destined for the Greek market. However, from 2009 onwards, as a result of the fall in construction activity, granite imports (mainly crude) have registered a significant decrease. SWOT Analysis Strengths l High availability (in terms of quantity and quality) of stones (marble) for extraction in Greece. l The quality of Greek marble is internationally wellknown and established since ancient times. Weaknesses l There are no granite rocks in Greece, thus raw material is entirely imported. Diagram 9 Exports of marble * forecast Source: EL.STAT. 7

8 l The products under review entail a high transportation cost, which results in an increase of the cost of production and the price of finished products. l The dependence of demand on the course of the building-construction activity of our country. l The bureaucracy regarding the licensing of quarries. Opportunities l Further expansion of marble exports to foreign countries. l The construction of large planned projects in the domestic market (e.g. Athens metro extension, Metro Thessaloniki). l Investments in Real Estate projects. Threats l The sharp decline in building - construction activity in Greece. l Shrinking of the disposable household income and reduction of consumption expenditure. l The economic situation of our country and its consequences (reduction of companies' liquidity, increase of bad debts etc.). PROSPECTS The unfavorable condition of the Greek economy in recent years, which has led to a significant decline in building and construction activity in the country, has resulted in a sharp fall of domestic consumption of marble and granite. However, due to their intense export orientation, the leading sector companies have increased their production in recent years, continuously expanding their share in world marble exports, a trend that is expected to continue in the coming years. Given the current situation, the main lines which sector companies are expected to follow in order to increase their sales or even maintain their position in the market, are: q Further expansion of export activity through entry into new markets. q Greater dispersion of sector sales in order to reduce dependence on specific countries and customers. q Enriching the variety of products offered. q Focus on improving mining / processing technologies and / or developing new ones to improve the use of non-tradable marble and by-products. Diagram 10 Market Index of fresh vegetables and fruit in Greece 2008=100 Source: ICAP Group S.A. PHARMACEUTICAL COMPANIES STRUCTURE AND BREAKDOWN OF THE SECTOR The pharmaceutical sector has been one of the most significant of the Greek economy. The assessed market consists of a significant number of companies (manufacturers and importers). Many firms have strong long-lasting presence in the market, while some of them are subsidiaries of multinational groups. Sector industries place great weight on the expansion of their partner distribution network. Pharmaceutical companies channel their products into hospitals and pharmaceutical warehouses which then channel sector products into pharmacies and (on a smaller scale) to other pharmaceutical warehouses. It is pointed out that, companies with strong presence in the sector make significant investments in research programs relating to therapeutic areas with strong margins for progress. According to estimates, the domestic R&D (Research and Development) expenditure per year is i million. PRODUCTION The value of domestic production of pharmaceuticals increased by an average annual rate of 10.5% during , while in the next two years ( ) production dropped by an average annual rate of 6.7%. However, the Greek pharmaceutical industry "adapted" quickly to the new conditions of the domestic market (growing demand for generics, exports, etc.). Thus, in 2013 the total value of domestically produced drugs registered a significant rise (by 12.5%). In the next three years ( ) the respective value reported small annual fluctuations. EXTERNAL TRADE The total value of imported pharmaceutical products followed a downward trend during , while in the next two years ( ) imports increased by an average annual growth rate of 2.8%. Imports of medicines from E.U. countries have accounted for the majority of total imports over time (2016:86.3%). The major countries of origin are Germany, the Netherlands and France. The total value of exports of pharmaceutical products increased by 9.1% during , while during exports reported slight fluctuations (2016: 2.5%). The majority of exports are directed to EU countries. Specifically, in 2016 the EU countries accounted for 85.6% of the total value of exported medicines. The major destination countries are Germany, the United Kingdom and Cyprus. The trade balance of medicines remained in deficit during since the value of imports more than offset the respective value of exports. DOMESTIC MARKET The value of the domestic market of medicines (sales of pharmaceutical companies to hospitals and pharmaceutical wholesalers/pharmacies (in wholesale prices) increased over the decade , with an average annual growth rate of 14.1%. However, the course of the Greek economy in recent years (recession period) and the successive reductions in medicine prices resulted in a reduction in market value from 2010 onwards. In 2016 the reduction rate amounted to 6.7%, while a further fall of sales but at a lower rate is expected for During 2016 approximately 41% of the overall market value regarded medicines sold directly to hospitals, while the 8

9 remaining percentage regarded medicines sold to pharmacies. According to estimates, generics accounted for 22% in value and 32% in volume of the total consumption (via pharmacies and hospitals) in SWOT Analysis Strengths l Medicines are indispensable products with stable demand. l The increasing demographic ageing ratios of the country. l The international and domestic pharmaceutical industry includes powerful business groups that systematically invest in research and development (R&D). l The cooperation with developed and well-established distribution channels (pharmaceutical wholesalers) with wide geographic coverage. Weaknesses l Controlled profit and the price which is defined by law restrict (to an extent) the growth prospects of the examined companies. l Long payment delays and accumulated debts on behalf of the Public Sector (hospitals, social Security funds etc.). l Continuous changes in legislation (implementation of new provisions, delay in approving new medicines, etc.) l High administrative costs / fees. Opportunities l Evolution of biotechnology and promotion of new pharmaceutical products. l The expansion of export activity and improvement of business' extroversion. l The further penetration of generics in the domestic market. l The expansion of the list of OTC medicines (over-thecounter medicines). l Strengthening of the brand names of the pharmaceutical companies and their products. Threats l The "Memorandum obligations" of the State to maintain low public pharmaceutical expenditure. l Revaluation of medicines affects their availability and consequently the revenues / profitability of businesses. l The bad debt and market liquidity problems. l Imposing high rebate/escalated clawback mechanisms on sector companies. PROSPECTS The recessionary trend of the Greek economy in recent years has inevitably had a negative impact on the dynamic pharmaceutical sector. Compliance with the obligations under the Economic Adjustment Programme for the rationalization of pharmaceutical expenditure, created new circumstances and conditions in the market of medicines. Reductions in medicine prices in order to reduce public pharmaceutical expenditure, led to a decrease in the total value of the assessed market. According to declarations of competent bodies, the State is oriented towards the maintenance of public pharmaceutical expenditure at slightly lower levels during the period This development, in conjunction with the launch of new reductions in drug prices is expected to keep the market of pharmaceutical products at a downward path during the examined period. Also, a major emerging problem for pharmaceutical companies is imposing high rebate/escalated clawback mechanisms on sector companies. Under current market conditions, sector companies are estimated to revolve around the following main axes in order to strengthen or even maintain their position in the market: q Redesign of the strategy (e.g. strengthening of brands, promotion of new pharmaceutical products). q Cooperation between domestic pharmaceutical industry - State to support a framework of entrepreneurship and attraction of new investments. q Making investment movements (mainly in Research and Development) to develop innovative products and production processes. q Improvement of business' extroversion via the expansion of export activity (for domestic manufacturing units). q Rationalization of operating expenditure and reduction of bad debt risks which result from transactions with customers (hospitals, pharmaceutical wholesalers etc.). Diagram 11 Exports of pharmaceutical products ( ) Diagram 12 Market Index of pharmaceutical products in Greece Source: Hellenic Statistical Authority (EL.STAT.) *forecast 2008=100 Source: National Organization for Medicines, ICAP Group S.A. 9