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Lithuania Pharmaceuticals and Healthcare Report Q1 2010
Business Monitor International, Jan 2010, Pages: 70
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.
The publisher believes the 2010 outlook for Lithuania’s pharmaceutical market is fairly negative. Despite an almost inevitable uptick in relation to an extremely poor 2009, where the country was one of only a few globally to witness sales contractions, the road to recovery will likely be long. the analyst’s Business Environment Ratings for Q110 see Lithuania ranked 16th out of the 20 markets surveyed in the Central and Eastern Europe (CEE) region, with only Latvia, Moldova, Belarus and Uzbekistan scoring worse. From a regional perspective the outlook for pharmaceutical companies in Emerging Europe has improved marginally.
Lithuania’s pharmaceutical market is small by regional standards. Per-capita spending is high, however, owing to the country’s small population. In 2008 Lithuania spent approximately 1.5% of GDP on medicines, below average for the region. The Lithuanian economy was one of the worst performing in the world through the first nine months of 2009, with GDP contracting by 15.7% year-on-year (y-o-y) through September. This has had a major impact on pharmaceutical spending, with the government seeking to restrain price increases through accords with the industry. Fiscal restraints and declining consumer spending have substantially reduced the capacity to purchase drugs, particularly higher-end products. Demographic and epidemiological growth factors are positive indicators for the market, as are the country’s regulatory and intellectual property (IP) regimes.
Despite the country’s negative economic outlook, monthly consumer price index data for 10M09 shows that prices of pharmaceutical products increased by 4.8% y-o-y on average, compared with 11.1% in 2008. While this suggests strong pricing pressures, we note that 2008 increases were well above the norm, with the first double-digit increases since 1997.
While the increases are considerably less than those witnessed in other CEE countries, the government has moved to bring in additional price controls in 2010. In Q409 an amendment to the Pharmacy Act which would introduce regulations to non-subsidised drugs was proposed in Parliament. The changes aim to limit the high supply chain margins charged throughout the country. A report published by the Ethical Pharmaceuticals Companies’ Association (EFA) revealed that nine out of ten drugs in pharmacies in Lithuania were approximately 15% more expensive than in Estonia, despite being purchased at the same manufacturer price. Margin differences ranged from 3% to 43%.
Owing to Lithuania’s less than rosy market outlook – a situation shared by other Baltic States – domestic manufacturers will have to increasingly look to foreign markets as a route for revenue growth. A good example of this is biotechnology company Fermentas, which announced that it had opened a subsidiary in China in Q409. The move will facilitate the company achieving its objective of strengthening and further boosting biotech product sales in the Asian region through enhanced logistics, accounting and customer advisory activities.
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