Boston, MA -- (ReleaseWire) -- 10/17/2012 -- BMI View: Despite a downward revision to our overall assessment of the size of Latvia's pharmaceutical market, we remain cautiously optimistic about the development of the market and our historic revisions have not had an overly significant impact on our growth projections over our five- and 10-year forecast periods. We have maintained our growth rate for 2012 of 4.0% in local currency terms, but we warn this is equivalent to a 5.2% contraction in US dollar terms. High out-of-pocket contributions to healthcare remain the key source of spending on medicines. We envisage further tightening of government budgets, in line with the commitment to fiscal austerity and joining the euro.
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Headline Expenditure Projections
- Pharmaceuticals: LVL206mn (US$405mn) in 2011 to LVL214mn (US$384mn) in 2012; +4.0% in local currency terms and -5.2% in US dollar terms. Historic expenditure figures revised, local currency y-o-y growth forecast broadly in line with Q312.
- Healthcare: LVL893mn (US$1.76bn) in 2011 to LVL926mn (US$1.66bn) in 2012; +3.7% in local currency terms and -5.4% in US dollar terms. Local currency forecast broadly in line with Q312.
- Medical devices: LVL78mn (US$153mn) in 2011 to LVL81mn (US$145mn) in 2012; +3.7% in local currency terms and -5.4% in US dollar terms. Local currency forecast unchanged from Q312.
Risk/Reward Rating: Despite its composite score being some 3.0% lower in relation to the previous quarter, Latvia is again ranked 10th out of the 20 markets surveyed as part of the emerging Europe region in the Q412 Pharmaceutical Risk/Reward Ratings (RRRs). While Latvia offers a favourable risk profile, supported by a business-friendly operating environment, its pharmaceutical market value is expected to shrink in 2012, as measured in US dollars, which negatively impacts its potential commercial rewards.
Key Trends And Developments
- We have revised our assessment of the Latvian Pharmaceutical market, including historic and current figures. We now calculate that the size of the market reached LVL205.75mn (US$405mn) in 2011, down from our previous figure of LVL284.01mn (US$559mn). Our revised figure reflects the market's turnover for medicines reaching a consumer (through general pharmacies, medical treatment institutions, hospitals, veterinary health care establishments and other consumers at final prices including VAT), rather than our previous assessment that was based on total medicines turnover in the country at final prices including VAT, which included resales between distributors and therefore did not adequately reflect the dynamics of the market. The Latvian State Agency of Medicines (Zalu Valsts Agenturas, ZVA) remains our primary source for pharmaceutical consumption data.
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