BMI View: The development of Latvia's market will be shaped by an increased emphasis on generic drugs; an implication of fiscal austerity measures. As a result, despite its transparent regulatory policies and business-friendly operating environment, the Latvian pharmaceutical market will continue to remain a modest prospect for drugmakers. Exports will also be impacted by regional tensions.
Headline Expenditure Projections
Pharmaceuticals: EUR319mn (USD428mn) in 2014 to EUR338mn (USD372mn) in 2015; +5.8% in local currency terms and -13.2% in US dollar terms. Forecast unchanged from previous quarter .
Healthcare: EUR970mn (USD1.30bn) in 2014 to EUR1.01bn (USD1.11bn) in 2015; +4.0% in local currency terms and -14.7% in US dollar terms. Forecast unchanged on previous quarter.
Risk/Reward Index: Latvia is ranked 13th out of the 20 countries surveyed in the Central and Eastern Europe (CEE) region in Q116. Its position in the rankings has improved one place from our assessment for the previous quarter. Latvia's overall score is 47.6 this quarter, unchanged from Q415, hence its improved position in the ranking is due to the declining attractiveness of its neighbours' business environment. Latvia's score remains below the regional average of 49.6, indicating the country's challenging business environment, particularly in terms of potential industry rewards and government expenditures. Consequently, direct multinational operations are limited and domestic companies, such as Grindeks, have looked abroad for growth opportunities.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||0.410||0.428||0.372||0.378||0.404||0.438||0.474|
|Pharmaceutical sales, % of GDP||1.37||1.36||1.40||1.39||1.36||1.34||1.32|
|Pharmaceutical sales, % of health expenditure||33.2||32.9||33.5||33.6||33.4||33.2||32.9|
|Health spending, USDbn||1.235||1.300||1.109||1.126||1.208||1.321||1.443|
Key Trends And Developments
Latvia's controversial 2016 budget will see cuts to healthcare spending as the government attempts to increase its military spending; this highlights a challenging business environment for drugmakers and healthcare providers operating in Latvia. The budget passed its first reading on November 3 2015 by a comfortable majority and is expected to take effect on January 1 2016.
The European Federation of Pharmaceutical Industries and Associations (EFPIA), the Latvian Association of International Research-based Pharmaceutical Manufacturers (SIFFA) and the Latvian Ministry of Health met in September to forge a stability pact and increase patient access to drugs. The meeting was aimed at implementing proposals contained within the letter of intent, signed between the Latvian government and the pharmaceutical industry back in June. The proposal is to facilitate a stable and predictable business environment in the pharmaceutical sector while enhancing access to novel drugs. The agreement mainly aims to explore ways to better manage the introduction of new and innovative medicines in Latvia, including the analysis of various funding models.
BMI Economic View
Real GDP growth accelerated in Q215, growing by 2.7%, up from 1.8% y-o-y in the first quarter of the year. Growth conditions have been challenging in recent quarters for Latvia, as the sharp deterioration in the Russian economy has led to a cooling of regional external demand. On a more positive note, the Russian sanctions on EU agricultural goods appear to have had an immaterial impact on Latvian exports and eurozone growth is beginning to pick up momentum, which should provide a modest tailwind for Latvian exporters.
BMI Political View
Security and external threats will dominate the bearing of Latvia's political risk outlook for the foreseeable future, while policy-making and continuity will remain stable. Externally, fighting in Ukraine has declined considerably, leading to a cooling of regional tensions and bringing forth the possibility of a lasting ceasefire. Nonetheless, Latvian concerns over an increasingly belligerent Russia are unlikely to fade as quickly. The government is pressing ahead with its plans to increase defence spending, although Defence Ministry State Secretary Janis Sarts has admitted that only one of the three planned projects to improve defence capabilities is likely to be completed within five years, even if the increase in defence spending is substantial.
The Latvia Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Latvia Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Latvia pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Latvia, to test other views - a key input for successful budgeting and strategic business planning in the Latvian pharmaceutical and healthcare market.
- Target business opportunities and risks in the Latvian pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Latvia.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.