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Estonia Pharmaceuticals and Healthcare Report Q3 2008
Business Monitor International, Sep 2008, Pages: 57
Our Estonia Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Estonia's pharmaceuticals and healthcare industry.
In our revised Business Environment Rankings for the 17 major markets of Central & Eastern Europe (CEE) for Q308, with the region now including Turkey, Estonia is found in a respectable sixth position, having been pushed down by one place by Latvia. However, largely due to its small population of just over 1.34mn, Estonia will remain a marginal market in the region, despite a forecast of steady 6% annual growth through 2012. On the other hand, some foreign companies are recognising opportunities in the country’s biotechnology sector, as well as its potential as an export base for Russia and other countries in the east.
In January 2008, US healthcare firm Cambrex acquired, through its Swedish subsidiary Cambrex Karlskoga, Estonian active pharmaceutical ingredient (API) producer ProSyntest, as it seeks to strengthen its European operations. Cambrex has identified ProSyntest’s location in Eastern Europe as a key reason for the purchase, largely on the basis of the low costs of operating in the region. Nevertheless, imports remain the main source of medicines used in the country, especially as exports have tailed off in the aftermath of the recent move of some of the operations of the largest local firm Tallinn Pharmaceutical Plant – part of Latvia’s Grindeks – abroad.
In the meantime, in a positive development, the Estonian government recently decided against cutting drug reimbursement in its supplementary state budget. Consequently, the growth in healthcare and pharmaceutical values in the course of 2008 should remain on target, especially given that 85% of healthcare expenditure is funded by the state. Due to growing concern over the economic outlook in Estonia, the government had been forced to issue a negative supplementary budget, although the majority of savings will be made through cuts in administrative costs outside the healthcare sector.
Companies active in the Estonian pharmaceutical market are predicting various levels of growth for the current year. On the one hand, pharmaceutical wholesaler Tamro, expects a 15% increase in values, similar to 2007. The chairman of the Association of Pharmaceutical Manufacturers (APME) was more cautious, however, suggesting growth would begin to slow down in future to below 10% or even 5%.
Our estimates put the growth at around 12% for the year, given that the healthcare sector is relatively sheltered from economic slowdowns. The fact that people need treatments for disease regardless of wealth will continue to drive spending on medicines, particularly in a government reimbursement-driven system such as Estonia's.
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