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Estonia Pharmaceuticals and Healthcare Report Q3 2007
Business Monitor International, Oct 2007, Pages: 55
The Estonia Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Estonias pharmaceuticals and healthcare industry.
The Estonian pharmaceutical market, which experienced an unexpectedly strong growth in Q107, is likely to continue along the same path throughout the year. We forecast a 12.5% increase in the total market value during 2007, to US$233mn. Nevertheless, taking into account an array of factors, including increased healthcare spending and an upward adjustment in economic growth forecasts, we predict a five-year cumulative annual average market growth rate (CAGR) of 8.7% through 2011, with total market value expected to reach US$314mn at the end of 2011. However, in global terms, the market will remain small, limited by the 1.34bn population, as well as reimbursement restrictions.
Over the last decade, Estonia has increased its focus on providing public services, with a 10% annual increase in its healthcare spending. Such an investment is urgently needed as poor healthcare has been seen as a weak link in Estonia’s 15-year post-Soviet economic ‘miracle’. However, the country is still struggling with persistent rates of some infectious diseases, including the highest HIV infection rate in the EU by some distance.
The new governing coalition, in place since April 2007, has committed itself to a fiscally sustainable programme. Part of its strategy is a provision for increased social spending as well as stimulation of research and development (R&D), something made possible by rapid economic expansion in the Baltic ‘tiger economy’, which is forecast by the author to grow by 9.5% in the course of 2007. Specifically, the government has pledged to double R&D from a little over 1% in 2006 of GDP to 2% in 2011 under the ‘Knowledge Estonia’ programme. Consequently, Estonia’s ranking in the adjusted Q307 Business Environment Rankings for the 15 major markets of Central & Eastern Europe (CEE) improved from joint fourth to joint first, tied with the Czech Republic, Romania and Bulgaria.
In terms of its pharmaceutical industry, Estonia has recently witnessed a scale-down in manufacturing output, with largest local firm Tallinn Pharmaceutical Plant - part of Latvia’s Grindeks - moving some of its operations abroad. Other domestic players are mostly producers of basic and generic medicines, and no match to imports, which continue to account for the majority of healthcare expenditure. In the meantime, the small marketplace is seeing strong competitive pressures in the supply chain, with a concentrated wholesale market and chain-dominated retail pharmacy market limiting market expansion, although the country’s nascent biotechnology sector offers significant commercial potential.
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