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Lithuania Pharmaceuticals and Healthcare Report Q3 2009
Business Monitor International, July 2009, Pages: 72
The Lithuania Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Lithuania's pharmaceuticals and healthcare industry.
Total drug market expenditure in Lithuania will be affected heavily by the depreciation in local currency against the US dollar. Pharmaceutical market spending will increase from LTL1.7bn (US$701mn) in 2008, to LTL2.0bn (US$593mn) by 2013, with a compound annual growth rate of 4.04% in local currency terms, and -3.28% in US dollar terms. As we note throughout our forecasts in this report, local currency values will highlight a growing market, while US dollar values indicate a contraction. This is solely due to unfavourable exchange rates and should be considered when assessing the market as a whole. We also add that growth in the drug market is likely to be modest, in line with our forecasts for other emerging Europe countries. Lithuania is supported by a relatively static population with low per capita spending. However, increases in expenditure can be attributed to widening access to medical services and improved health awareness boosting the OTC sector.
Lithuania’s Ministry of Health is facing significant challenges relating to providing access to affordable medicines. With the state’s fiscal situation looking tenuous and medicine value-added tax (VAT) hikes due to be implemented in July 2009, the State Medicines Agency (SAM) has implemented a programme for improving availability and price reduction – largely geared towards attaining price reductions from pharmaceutical manufacturers.
VAT on medicines is set to increase from 5% to 19% from July 1 2009, as the government abolishes the preferential rate previously applied in order to boost much-needed fiscal revenues. While it is hoped that the rate hike can be averted through ongoing dialogue between the Ministry of Health and the government, Lithuania’s fiscal shortfalls make a reversal unlikely. As a result, the SAM has been in negotiations with drugmakers, hoping to negate the impact through price reductions – and successfully negotiating lower costs for 264 medicines. For those yet to agree price reductions, the Ministry has raised the possibility that their products may be removed from the 2009 reimbursement list. Manufacturers and distributors have also been cautioned that any increases must not exceed the 14% rise in VAT.
Following a review of pricing procedures in 2003, which uncovered the fact that prices in Lithuania were considerably higher than the EU average, prices are now calculated twice a year according to the centrally imported price (CIP) plus standardised trade mark-ups. The government only reimburses the base price, with consumers forced to pay all distributor mark-ups. Basic prices are calculated based on product class groupings.
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