Abstract
BMI calculates the Latvian pharmaceutical market to have been worth LVL256mn
(US$512mn) in 2008,
and by 2013, drug expenditure is expected to reach a
value of LVL352mn. In US dollar terms, however,
as a result of the
weakening lat, drug market spending will fall to US$428mn in 2009, before
rising again
to US$482mn in 2013 (a figure below the 2008 market
value).
In BMI’s Business Environment Ranking matrix for Q309,
Latvia is found in a lowly 16th position out of
the 20 markets surveyed in
the Emerging Europe region, sandwiched between Lithuania and Moldova. In
relation to the previous quarter, Latvia has moved up one place. The
country’s overall pharmaceutical
rating is below average, due to its
small and falling population numbers that limit its overall size, and an
economy that is highly exposed to external risk.
The volume of drugs sold
in Latvian pharmacies decreased by 6-8% in April 2009, compared with
March.
A slowdown in the prescription drug market and the overall largely
payer-driven pharmaceutical market
could therefore be partially
attributable to the economic downturn and the decline in disposable
income.
BMI notes that Latvia’s reimbursement system covers a
relatively limited range of medicines, even by
CEE standards, and remains
hindered by a lack of government financing. BMI’s drug expenditure
forecasts highlight a slowdown in the country’s pharmaceutical market
growth in 2009 to 5.29% –
compared to 10.25% in 2008 and a
staggering 18.77% in 2007.
From March 2009, the cost for a general
practitioner has increased to LVL1 (US$1.90) from LVL0.5
(US$0.90), for
healthcare specialists it has increased to LVL5 (US$9.50) from LVL2 (US$3.80)
and for
hospital fees to LVL5-12 (US$9.50-22.70). The increase in the
healthcare fees is in line with BMI’s view
that Latvia is committed
to reforming its hospital sector in a bid to contain costs. According to the
Baltic
Course, people in the country go to hospitals twice as frequently
and stay in hospitals twice as long. The
government is emphasising the
development of preventive medicine and homecare, and the decision to
increase fees may impact growing healthcare expenditure in Latvia.
Latvia’s pharmaceutical exports reached a value of US$256mn in 2008 and
by 2013, we expect this to
rise to US$272mn, equating to a 1.18% compound
annual growth rate (CAGR). Pharmaceutical imports
were valued at US$470mn
in 2008 and it is calculated that they will reach a value of US$497mn by
2013,
equating to a CAGR of 1.12%. BMI believes that a greater focus on
exports by Latvia’s smaller
indigenous drugmakers could
significantly raise the country’s export profile and provide
substantial
turnover gains for the domestic industry. Excluding the top
two manufacturers – for which exports
account for 92.5% of turnover
– the smaller drugmakers’ exports account for only 32.6% of
total
turnover.
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