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Latvia Pharmaceuticals and Healthcare Report Q2 2010
Business Monitor International, Feb 2010, Pages: 64
Business Monitor International's Latvia 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 Latvia's pharmaceuticals and healthcare industry.
BMI calculates the Latvian pharmaceutical market to have been worth LVL244mn (US$482mn) in 2009, assuming a year-on-year (y-o-y) decrease of around 4.9% in local currency terms. Spending on medicines was negatively impacted by adverse economic conditions, which led to an increase in unemployment rates and cuts in reimbursement bands, among other issues. In fact, BMI expect the recession to have hit Latvia’s pharmaceutical expenditure hardest of the 71 drug markets BMI surveys on a global scale. Therefore, in BMI’s Business Environment Rating (BER) matrix for Q210, Latvia is found in a lowly 15th position (out of the 20 regional markets), trailing its Baltic neighbour Estonia once again, but placed above Lithuania.
In 2010, BMI expect Latvia to post minimal growth in local currency, owing to protracted economic difficulties and high unemployment levels, which topped 22% at the end of 2009. However, from 2011 onwards, a return to steady-but-low single-digit growth is projected through to 2014, with the market value reaching LVL278mn (US$381mn), and equating to 1.64% of GDP. Generics will be prioritised by government policies, increasing their share of the total market from just under 28% in 2009 to 30.75% in 2014, and to almost 32% in 2019. In the meantime, over their new 10-year forecast 2009-2019 period, growth in Latvia is set result in a compound annual growth rate (CAGR) of 3.01% in local currency terms, but of -0.68% in US dollars due to the falling worth of the lat.
At the same time, although the authorities are working towards strengthening primary care, the programme of hospital closures and salary reduction poses a major threat to healthcare provision, as it is resulting in an exodus of qualified personnel. In January 2010, an expert from the Latvian Medical Association reported a three-fold increase in the number of doctors who left the country to work abroad. More worryingly, medical specialists and experienced practitioners were also leaving throughout 2009, in contrast to previous years when only newly-qualified, less experienced doctors went abroad.
In the light of challenging operating conditions within the Latvian pharmaceutical market, many researchbased foreign players will choose to stay away, while local companies will continue to search for revenue abroad. For example, in January 2010, the country’s second-largest domestic player, JSC Olainfarm, announced plans to develop new export markets in 2010, having recently inaugurated a representative office in Vietnam and struck an active pharmaceutical ingredients (APIs) supply deal with Canada and Australia. Olainfarm already records 80% of its turnover from foreign sales, realised through representative offices in Russia, Uzbekistan, Belarus and Lithuania, as well as through local partners in other Commonwealth of Independent States (CIS) countries, Estonia and Poland.
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