BMI's Executive Summary

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According to IMS Health, the total Latvian pharmaceutical market grew 30.1% year-on-year (y-o-y), reaching a value of LVL47.26mn (US$90.9mn) in Q107. While the annual growth rate will continue to be in double-digit figures, BMI expects that the market will not replicate such a robust rate over the coming five years. The key reasons for the more conservative estimates are the broader economic worries and a lack of traction on healthcare policy. Even a smooth landing for Latvia's current boom should see overall growth and spending ease markedly by the end of the decade. In addition, the Latvian currency – which is pegged to the euro – is being pressured by strong growth in consumer spending and imports, resulting in a high current account deficit.

Prescription drugs continue to account for around 70% of spending on medicines, although this figure is forecast to decline to 65% by 2012 due to the increased uptake of OTC products. While hospitals remain main access point for healthcare, the modernisation of the primary care sector will gradually reduce the number of hospital-issued prescriptions. In the meantime, the government will continue promoting generics as a means of containing healthcare costs, with the segment forecast to represent some 54% of total market value by 2012, up from around 50% in 2007.

The BMI's adjusted Business Environment Ranking table for the 15 key pharmaceutical markets of Central and Eastern Europe (CEE), for Q108 Latvia received the same score as Poland and Slovakia. The three countries share the ninth place, with their pharmaceutical rating falling just below the average for the CEE region. Key limits to potential returns include the country's small and falling population numbers, relatively low per capita income of the population, corruption and limited reimbursement spending. On the other hand, market risks are relatively few, given the high degree of patent protection.

In terms of the country's pharmaceutical landscalpe, multinationals continued to dominate Latvia's domestic market, with GlaxoSmithKlein (GSK), Pfizer, Sanofi-Aventis, Berlin Chemie-Menarini and Roche taking the top five spots by sales, according to IMS Health. The country's second-largest domestic drugmaker, Olainfarm – which has a strong local market position – posted a strong sales and profits increase in 2007. The largest domestic drugmaker – export-oriented Grindeks – announced plans to seek a market authorisation for cardiovascular treatment Mildronate, its top-selling drug. Drugmakers are benefiting from the buoyant market, but they will be keenly aware that the good times may not last.

Contents

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Chapter 1 - Executive Summary

Latvia Pharmaceuticals & Healthcare Industry SWOT

Chapter 2 - Business Environment Rankings

Table: Central & Eastern Europe Generic Pharmaceuticals Business Environment Ranking

Business Environment Ranking

Economics - Long Term risk

Politics - Long Term risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Market Summary

Chapter 4 - Industry Trends & Developments

Regulatory Regime

Intellectual Property Developments

Pricing & Reimbursement Issues

Industry Developments

Healthcare Sector

Chapter 5 - Industry Forecast Scenario

Table: Latvia Drug Market Trends

Key Growth Factors - Industry

Table: Latvia Health Expenditure Trends

Key Growth Factors - Macroeconomic

Table: GDP, Output & Population

Prescription Market Forecast

Table: Prescription Market Indicators

OTC Market Forecast

Table: OTC Market Indicators

Generics Market Forecast

Table: Generics Market Indicators

Export/Import Forecasts

Table: Imports/Exports Trends

Other Healthcare Data Forecasts

Table: Other Healthcare Data Forecasts

Key Risks to BMI's Forecast Scenario

Chapter 6 - Competitive Landscape

Manufacturers

Table: Leading Products by Producers in Latvia 2005

Table: Leading Latvian Pharmaceutical Manufacturers

Wholesale

Retail

Table: Pharmacies & pharmacy market ratios

Chapter 7 - Company Monitor

Grindeks (includes Tallinn Pharmaceutical Factory)

BMI Forecast Modelling

How we generate our industry forecasts

Technical Process

Pharmaceutical Industry

Sources

Chapter 8 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Chapter 9 - Country Snapshot: Latvia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Competitive Landscape for Europe Pharmaceuticals and Healthcare: Sample of Companies Ranked

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Cross-border analysis of regulatory systems comparing the patenting environment, summarising regional pricing and reimbursement factors and monitoring the growth of the Pharmaceuticals sector across the region. Company SWOTs cover leading multinational and national drug companies operating in each market.

Network of European Pharmaceutical & Healthcare Sources

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BMI's Pharmaceuticals & Healthcare Reports are based on an extensive network of multilateral organisations, government departments, pharmaceutical & healthcare industry associations, chambers of commerce and company reports. Information sources include: