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Estonia Pharmaceuticals and Healthcare Report Q2 2011
Business Monitor International, Feb 2011, Pages: 79
Business Monitor International's Estonia 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 Estonia's pharmaceuticals and healthcare industry.
The economies of Lithuania, Estonia and Latvia were among the worst hit in Europe during the global economic crisis of 2007-2010 and the region's drug markets have not been immune to the performance of the wider economy. Despite stronger than expected pharmaceutical sales during the first nine months of 2010, BMI's projection that Estonia will post only marginal growth in 2010 has now been confirmed. The market is expected to return 2.7% year-on-year (y-o-y) growth for the full year, reaching a value of EUR233mn (US$309mn).
The key drawback to investment in Estonia's drug market is its small size and moderate-to-weak outlook for growth. However, compared to its Baltic peers, Estonia’s drug market expenditure per capita is relatively high at US$231 in 2010, compared to Latvia’s US$200 and Lithuania’s US$180. In addition, the market is projected to achieve higher growth rates than both of its Baltic neighbours over the next five years.
The attractiveness of Estonia’s drug market is reflected in BMI’s Q211 Pharmaceutical & Healthcare Business Environment Ratings (BERs). The country’s overall BE rating is 51.9, ranking it 11th in the region and above the average for Central and Eastern Europe (CEE) markets.
Estonia's pharmaceutical market expenditure forecast for 2011 is EUR242bn (US$327mn), experiencing y-o-y growth of 4.2% in local currency terms and 5.8% in US dollar terms. By 2015, Estonia's drug market expenditure is expected to reach EUR292mn (US$365mn). Over our five-year forecast period, BMI projects a compound annual growth rate (CAGR) of 4.63% in local currency terms and 3.34% in US dollar terms. On January 1 2011, Estonia became the 17th member of the European Monetary Union, abandoning the kroon in favour of the euro. With the kroon having been pegged to the euro since 1999 and the economy already maintaining a high degree of trade and investment integration with the eurozone, we maintain that euro adoption will primarily formalise existing macroeconomic linkages. As such, the direct impact on Estonian growth and investment is expected to be limited.
To facilitate currency conversions, unless otherwise stated, all figures in Estonia’s Q211 Pharmaceuticals & Healthcare Report have now been converted into euros. Some historic figures are shown in the Estonian kroon, but have been converted into the new currency as well as in US dollar terms.
Latest data confirm that the macroeconomic recovery in Estonia is gaining pace as expected, though we hold to our core view that economic growth will stagnate just below 2.5% in 2011 and 2012. Domestic demand conditions will remain weak for the foreseeable future as the housing, labour and credit markets remain mired in continued deleveraging. We highlight that euro entry will be an important factor bolstering foreign investor sentiment, though this will only mitigate the larger trends of stagnant private consumption and gross fixed capital formation growth.
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