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Latvia Pharmaceuticals and Healthcare Report Q4 2010
Business Monitor International, Aug 2010, Pages: 80
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.
Latvia’s pharmaceutical market is currently overshadowed by sharp cuts as part of the government’s austerity package, which is aimed at securing European Union and International Monetary Fund financing. The country’s economy may now be showing signs of a meek recovery but further cuts will help play out BMI’s view that the pharmaceutical market will stagnate at LVL236mn (US$377mn) in 2010.
Healthcare expenditure has been slashed by the government in a desperate effort to remain eligible for emergency loan packages, as well in preparation for potential euro-membership. The concomitant decline of the healthcare sector will see total drugs expenditure in 2010 remain flat against 2009 levels, while percapita expenditure will slim to US$168.
The Latvian government's approval of a new round of budget cuts for 2011, coupled with a relatively favourable progress assessment by the European Commission, suggests that the fiscal consolidation program remains on track and that healthcare cuts will deepen. Even though the four-party ruling coalition appears to be stable for now, we warn that upcoming general elections in October 2010 remain a threat to medium-term consolidation. As a result of the fractious support for political parties in Latvia, with no one party appearing to have sufficient backing to form a parliamentary majority, another weak coalition is likely to be formed after the ballot.
Indeed, the extent of healthcare provision in Latvia looks dire from many angles. The Latvian Trade Union of Health and Social Care Employees (LVSADA) had plans in late June 2010 to submit a complaint to the European Ombudsman regarding the European Commission and the Latvian government’s disregard for the country’s deteriorating healthcare sector. The union will argue that loan documents signed by both parties have ignored Article 35 of the EU’s Charter of Fundamental Rights, which promotes the right to healthcare as a fundamental social principle. The LVSADA will claim that healthcare cuts amounting to 25% between 2008 and 2010 effectively contravene the bloc’s policy. However, from 2011 onwards, a return to steady single-digit growth is projected through to 2014, with the market value reaching LVL258mn (US$354mn), equating to 1.51% of GDP. Over our new 10-year forecast period, growth in Latvia is set to result in a CAGR of 2.39% in local currency terms, which is higher than the five-year CAGR of 1.81% to 2014. However, devaluation of the lat will continue to hamper foreign involvement, with the market not returning to its pre-2009 US dollar values for the duration of the 10-year forecast period.
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