This report covers the market developments in Q1/2014 and the data available as of May 2014. The pharmaceutical sales dropped on annual basis both in RON and EUR terms for the third quarter in a row in Q1/2014. In volume terms, the market shrank by 4.2% y/y over the quarter, steepening from the 3.6% y/y decline in Q4/2013 and compared to the slight 0.5% y/y advance in Q1/2013. Accordingly, pharmaceutical sales during the 12 months ending Mar 2014 slid in the negative area both in RON and EUR terms, recording the first y/y decline in over three years. The pharmaceutical sales have been negatively affected by legislative and regulatory constraints, among which the most important is the authorities’ repeated delay in endorsing the new reimbursed drug list. The milder winter also contributed to the diminishing demand. On the upside, the new regulations enforced by the government on delayed payments had positive impact upon the players’ activity, but overall the situation did not change significantly. The sales of over the counter drugs were the only segment that recorded y/y growth (in local currency) in Q1, yet the increase in value terms of the OTC segment is mainly explained by higher prices rather than rising consumption or the launch of new products. In volume terms, the OTC sales actually recorded the steepest drop over the quarter, namely 5.1% y/y. Under such circumstances, prospects for the pharma sales performance in full-year 2014 remain cautious. Market forecasts see some 0.3% y/y decline of the pharmaceutical market this year. Key points: • Pharmaceutical sales drop y/y in EUR, RON terms for third consecutive quarter in Q1/2014 • Pharma sales trailing 12 months slide in negative area • OTC segment is forecasted to continue performing above market average • Health ministry delays enforcement of revised subsidized drug list by autumn 2014 • Independent pharmacies team up to face competition from large chains