Summary
The Lithuanian pharmaceuticals market was worth US$406mn at consumer prices in 2005, a 15% increase compared to 2004. The updated growth projections see the market reaching a value of US$582mn in 2010, implying an annual growth rate of 7.2%, equal to the average growth rate for the CEE. Still, sources have expressed concern that even current reimbursement spending levels are unsustainable. At the same time, pressure is growing for funding to deal with acute problems in the hospital system. A financial crisis in the state insurance agency (i.e. Sodra), as has occurred in a number of CEE markets, must be seen as a real risk to the current growth scenario. The OTC market is set to remain the most dynamic segment, growing from 30% of the total market in 2005 to 35% by 2010, despite government moves that subject vitamins and minerals to a higher rate of VAT than in the past.
The country's troubled healthcare sector remains an area of acute concern and the subject of harsh criticism from the highest levels. President Valdas Adamkus has made healthcare reform a central plank of his presidency, although under Lithuania's constitutional system he has limited direct powers. In recent months he has called for devolving more power from the counties to municipalities as well as for a re-think of in-patient co-pays, which he criticised for hindering medicines access. Adamkus represents a voice of continuity, as the country's fourteenth post-independence government, a centre-left coalition, was sworn into office in July. Meanwhile, informed sources say there are real concerns about the financial viability of the current reimbursement system.
The updated Q3 Business Environment Rankings for Central & Eastern Europe place Lithuania ninth overall out of the 14 major markets in the region, the same position as last quarter. Lithuania's market growth potential remains high, however its level of economic risk also remains high relative to other CEE EU member states. Uncertainty pervades the current outlook, as noted above, until a sustainable healthcare sector reform programme is enacted. The updated rankings also reflect changes in the relative attractiveness of other CEE markets. Russia's strong showing is a positive one for Lithuanian producers as the country is a key export destination.
With multinationals accounting for up to 95% of the market in value terms, export markets are key for local industry. Sanitas has been one of the boldest firms, and finally gained control of larger Polish drugmaker Jelfa , Sanitas has predicted it would achieve sales of LTL221mn (US$81.4mn) for full-year 2006, three-and-a-half times its 2005 levels thanks to the addition of Hoechst-Biotika , Altisana and Jelfa to its consolidated results. In H106, the company saw sales of LTL46.16mn (US$17.01mn). In the retail pharmacy sector, Norfos Vaistine was established in Q106 as a joint venture between hypermarket owner Norfos Mazmena and pharmacy chain Gintarine Vaistine and is building a network of 45 'N' branded outlets within existing hypermarkets. The first six N pharmacies opened in five cities in July.
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