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The Latvia Pharmaceuticals & Healthcare Report

Research and Markets ( has announced the addition of “Latvia Pharmaceuticals & Healthcare Report Q4 2006” to their offering.

Latvia’s pharmaceutical market is one of the fastest growing in the CEE region and market growth was expected to have reached 15% in 2006, reaching a total value of US$394mn in final consumer prices. This follows growth of 23% in 2005. The fast-growing market reflects both price growth and increased coverage, putting the state health insurance fund under sustained pressure. Back in 2005, pharmaceutical spending by the state health insurance fund grew by 44% as coverage while the number of covered prescriptions grew 17% and costs continued to rise inexorably in 2006. The Latvian market is expected to grow at an 11.3% compound annual growth rate (CAGR) through 2010, one of the fastest rates in the region. In value terms, the market should grow from US$343mn in 2005 to US$578mn in 2010.

Policy in the country is enjoying an unprecedented period of continuity, as the People’s Party under Prime Minister Aigars Kalvitis secured re-election in recent months. It will have a clear shot to try to press promised reforms. The government has pledged to expand reimbursement coverage and has earmarked EU structural aid for reforming the healthcare system. Investment, a relatively transparent regulatory system and positive economic and political outlook are all factors underpinning the country’s strong pharmaceutical growth forecast.

The market is not without its challenges, of course. The reimbursement system is strained, and there is still much work to be done in improving primary care facilities and overhauling hospitals. The country’s double digit GDP growth raises fears of overheating in the economy. Labour markets are getting tighter, with a shortage of skilled workers looming, particularly in healthcare, where many workers have moved to better jobs abroad. Those left continue to press for higher wages, and industrial action remains a threat as the government pursues restructuring. In the retail sector, Latvia’s market has seen pharmacy chains rapidly consolidate in the market around leading players owned by Senator Farm and Finland’s Tamro, although the market has not yet reached the saturation point seen in neighbouring Estonia. However, the

Government has moved to limit new pharmacies with new rules in late 2006.

Local leading producer Grindeks dismissed worries in December 2006 that a new EU chemicals directive could impact production of its best-selling cardiovascular medicine mildronate in Latvia.

Earlier, some analysts had speculated that the new regulations could force the company to move production to Russia. The other major local producer, Olainfarm, announced in Q406 that it plans to enter the Latvian wholesale market in 2007. The move should allow it to build on its existing deep local market knowledge and widen margins that have been squeezed by the country’s tight wholesale and retail markets. Meanwhile, Lithuania’s Sanitas has announced plans to open a representative office in Latvia, largely to promote sales of pharmaceuticals from its recently required Polish affiliate, Jelfa.

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