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Lithuania Pharmaceuticals & Healthcare Report Q4 2006
Business Monitor International, Feb 2007, Pages: 49
The Lithuania Pharmaceuticals & Healthcare Report provides independent forecasts and competitive intelligence on Lithuanias pharmaceuticals & healthcare industry.
Lithuania’s pharmaceutical market is estimated to reach a value of US$447mn at consumer prices in 2006, up 10% year-on-year (y-o-y). Market growth has slowed, following 15% growth in 2005. The updated growth projections see the market reaching a value of US$582mn in 2010, an annual growth rate of 7.2%, similar to the average growth rate for the CEE. Imports continue to dominate the market, representing up to 95% of the market. Statistics Lithuania reported that pharmaceutical imports reached a total of US$296mn through August, growth of 14.7 y-o-y.
Continued growth will be driven by a mix of out-of-pocket spending and continuing reform in the country’s troubled state healthcare sector. The government of Prime Minister Gediminas Kirkilas has pledged to clean up corruption, an issue that continues to mar the reputation of an otherwise liberalised and dynamic Baltic economy. Healthcare corruption brought down the country’s previous government, and opinion surveys show that the healthcare system is the least trusted institution in the country. The healthcare sector received an 8.5% budget increase in the government’s 2007 budget, although this amount appears insufficient to push through much-needed investment in facilities while absorbing sharp increases in the salaries of healthcare workers.
The local production sector remains small but dynamic and primarily export-oriented. Sanitas surprised many observers with its successful acquisition of Polish generic drugmaker Jelfa. However, Sanitas was badly hit, in the short term at least, by a high-profile scandal, when a potentially fatal production error at
Jelfa was discovered in November. It is still too soon to assess the full financial damage and the damage to its reputation, although it may lead to a substantial one-time loss. In the retail pharmacy sector, leading pharmacy chain Eurofarmacijos Vaistines announced that it planned to open about 30 pharmacies in the
three Baltic States in 2007, as it saw sales increase 34% through 9M06, reaching LTL401mn (US$139mn).
Troubles in the state-run healthcare system continue to foster the development of private insurance and care. In the first transaction of its kind in the country, Swiss healthcare investment group Pro Hypocratus acquired Lithuania’s largest private healthcare provider Kardiolita in December 2006. The cost of the transaction was not disclosed, but Kardiolita had turnover of around US$5mn in 2005. The updated Business Environment Rankings for Central & Eastern Europe places Lithuania eighth overall out of the 14 major markets in the region, the same position as last quarter. Lithuania’s market growth potential is strong, but systemic political and economic risks, though diminishing over the long-term, remain key barriers for investors.
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