BMI View: Latvia's pharmaceutical and healthcare markets will be shaped by the country's ongoing fiscal austerity measures. Already severely underfunded, the healthcare sector is facing additional cuts which are proving highly unpopular with the public. Conversely, the pharmaceutical sector will experience significant growth in 2016, due to price increases rather than rising consumption. This will likely result in increased cost-containment initiatives, repressing patented medicine growth in the longer term.
Headline Expenditure Projections
Pharmaceuticals: EUR425mn (USD471mn) in 2015 to EUR466mn (USD499mn) in 2016; +9.6% in local currency terms and 5.8% in US dollar terms. Forecast unchanged from previous quarter .
Healthcare: EUR1.03n (USD1.14bn) in 2015 to EUR1.07bn (USD1.15bn) in 2016; +4.3% in local currency terms and 0.7% in US dollar terms. Forecast unchanged from previous quarter.
|*figures rounded to two decimal places. f = BMI forecast. Source: WHO, State Agency of Medicines (ZVA), AESGP, BMI|
|Pharmaceutical sales, USDbn||0.538||0.471||0.499||0.529||0.551||0.576||0.612|
|Pharmaceutical sales, % of GDP||1.72||1.74||1.87||1.94||2.00||2.05||2.10|
|Pharmaceutical sales, % of health expenditure||41.6||41.3||43.4||44.8||45.8||46.4||46.7|
|Health spending, USDbn||1.293||1.141||1.148||1.180||1.203||1.242||1.310|
In BMI's Q117 Pharmaceutical Risk/Reward Index (RRI), Latvia has jumped up in the rankings in the Central and Eastern Europe matrix, from 13th to 7th out of 21 markets. This follows a significant increase in its score, moving up to 56.2 from 50.6 in Q416, which compares favourably with the regional average (51.1). The increase in Latvia's RRI score is due to medicine price rises in the patented medicine sector, boosting the country's growth outlook. However, the market retains some challenges, most notably from the small absolute size of the market. Consequently, direct multinational operations are limited and domestic companies, such as Grindeks, have looked abroad for growth opportunities.
In October 2016, the ruling coalition agreed on a new financing model, which will not involve private healthcare insurers.
In September 2016, the OECD released a report of Latvia's healthcare system which reported that one in five people forgoes healthcare because of the cost.
Highlighting the export-focused nature of Latvian domestic industry, Olainfarm purchased 24% of Belarusian drugmaker, with a view to a further 48% in September 2016.
BMI Economic View
The rise in economic confidence and industrial production points to a growth pick-up in H216, supported by recovering exports. Over the medium term, the solid business environment should ensure economic growth outperformance in a European context, in spite of the ongoing demographic decline. We forecast real GDP growth to come in at 2.3% in 2016, which will accelerate to 3.2% and 3.5% in 2017 and 2018 respectively.
BMI Political View
The new government, formed from the previous coalition with little sign of rupture, will lead to a large degree of policy continuity from the previous government. Support for EU membership remains solid and a large proportion of Latvia's ethnic Russians are relaxed with the country's Western-looking view. The most significant threat to political stability remains the potential for Russian aggression.
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.