Latvia pharmaceuticals market will stagnate at $377 million in 2010, says BMI, due to govt austerity measures

Latvia's pharmaceutical market is currently overshadowed by sharp cuts as part of the government’s austerity package, which is aimed at securing European Union and International Monetary Fund financing. The country's economy may now be showing signs of a meek recovery but further cuts will help play out Business Monitor International's view that the pharmaceutical market will stagnate at 236 million lats ($377 million) in 2010.

Health care expenditure has been slashed by the government in a desperate effort to remain eligible for emergency loan packages, as well in preparation for potential euro-membership. The concomitant decline of the health care sector will see total drugs expenditure in 2010 remain flat against 2009 levels, while per capita expenditure will slim to $168.

The Latvian government's approval of a new round of budget cuts for 2011, coupled with a relatively favorable progress assessment by the European Commission, suggests that the fiscal consolidation program remains on track and that health care cuts will deepen. Even though the four-party ruling coalition appears to be stable for now, BMI warns that upcoming general elections in October 2010 remain a threat to medium-term consolidation. As a result of the fractious support for political parties in Latvia, with no one party appearing to have sufficient backing to form a parliamentary majority, another weak coalition is likely to be formed after the ballot, it says.