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Estonia Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Nov 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.
BMI View: Estonia’s pharmaceutical market will remain of marginal interest to multinationals, given its small population size and a modest growth outlook. BMI expects the market to post a five-year compound annual growth rate (CAGR) of 4.48% in local currency terms to 2015, with the following five years likely to witness only a slight increase in annual growth rates. Nevertheless, Estonia’s geographical proximity to Western Europe will ensure that the market continues to be supplied by leading foreign players.
Headline Expenditure Projections
- Pharmaceuticals: EUR229mn (US$304mn) in 2010 to EUR241mn (US$345mn) in 2011; +5.5% in local currency terms and +13.7% in US dollar terms. Forecast moderately up from Q411 on the back of stronger H111 sales.
- Healthcare: EUR840mn (US$1.11bn) in 2010 to EUR876mn (US$1.25bn) in 2011; +4.3% in local currency terms and +12.4% in US dollar terms. Forecast unchanged from Q411.
- Medical devices: EUR99mn (US$131mn) in 2010 to EUR106mn (US$151mn) in 2011; +6.8% in local currency terms and +15.2% in US dollar terms. Forecast unchanged from Q411.
Business Environment Rating: Of the 20 key markets in Central And Eastern Europe (CEE), Estonia remains in 10th place in BMI’s Business Environment Ratings (BERs) for Q112. Its overall score is also the same, at 52.7 out of the maximum 100 possible points. The score is, however, propped up by the country’s strong risk profile, as its rewards variable continues to be judged as below average for CEE. On a global scale, Estonia ranks 45th out of the 95 countries now included in BMI's pharmaceutical matrix.
Key Trends & Developments
- BMI has slightly increased growth projections for Estonia's pharmaceutical market for 2011. It now expects a 5.5% local currency year-on-year (y-o-y) increase, on the back of the strongerthan- expected growth in pharmaceutical sales in H111. According to the country’s State Agency of Medicines (Ravimiamet), H111 sales grew by 6.9% y-o-y in euro terms. This follows Q111 growth of 4.4%, with Estonia's pharmaceutical market at the time calculated to be worth EUR47.4mn in wholesale prices (excluding veterinary medicinal products).
- Television advertisements for medicinal products in Estonia have failed to comply with the maintenance of standards and quality of compulsory warnings related to the products, according to an investigation carried out by the State Agency of Medicines at the start of July 2011. The investigation revealed that the advertisements failed to display the information specified and to provide sufficient guidelines for the correct and safe use of the medicinal products.
BMI Economic View: Inflation remains persistently elevated in Estonia, as buoyant economic growth as well as lingering cost-push factors conspire to goad consumer prices higher. BMI expects headline inflation to have moderated through the final quarter of 2011, as food prices did the same. However, inflation remains uncomfortably high (at over 5%), and – with Estonia unlikely to see monetary tightening as a member of the eurozone currency bloc – this could pose greater economic problems further down the line.
Nevertheless, Estonia’s growth outlook seems brighter, with the the International Monetary Fund substantially raising its forecast and now expecting the country’s 2011 and 2012 real GDP growth to climb to 6.5% and 4.0% respectively (up from 3.3% and 3.7% in 2011 and 2012, respectively, as per April 2011 publication). BMI expects growth to ring in at 5.0% in real terms in 2011, followed by a 4.7% headline print in 2012, on the back of a combination of robust net exports, improved foreign investment and a recovery in domestic demand.
BMI Political View: According to Statistics Estonia, consumer confidence in the country fell to -8 in September 2011, a deterioration on the reading of -4 in August, as the mood amongst consumers darkened. The September print marked the most pessimistic confidence survey since April 2010. Lower confidence amongst households could weigh on domestic demand, in turn dampening Estonia's buoyant economic growth, which rang in at 8.4% in Q211. Low confidence will also translate into fewer purchases of non-essential medicines and medical services.
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