Estonia Pharmaceuticals and Healthcare Report Q4 2009

Estonia's pharmaceutical market is unlikely to be a prime target for multinational drugmakers expanding into foreign countries. Despite rapid economic growth in recent years, which has translated into strong headline growth for pharmaceutical expenditure, the country's population of just 1.34mn means that total market size will remain among the lowest in Central and Eastern Europe (CEE).

In BMI's Q409 update to the Estonia Pharmaceuticals & Healthcare Report, our new 10-year forecast model has been integrated. Despite the short-term economic difficulties faced by the Balkan state, the medium- to long-term outlook for pharmaceutical spending remains positive, with a compound annual growth rate (CAGR) of 4.3% forecast through to 2018.

BMI notes that Estonia has not been an exception to the general resilience shown by pharmaceutical sales in light of the global economic downturn. Instead, the depth of the country's economic slowdown has put enough pressure on spending to cause a contraction. Real GDP is forecast to contract by 11.2% in 2009, highlighting the limited effect this has had on drug expenditure. Figures from Q209 show that in the pharmacy sector, sales of prescription drugs fell by 0.2% (year-on-year) y-o-y, while over-the-counter (OTC) medicines were down 1.6%.

In 2008 the National Health Insurance Fund (NHIF) spent 3% under its budgeted allowance on reimbursed medicines, a marked improvement on the 5% overspend in 2007. Despite this, total expenditure still rose by 14.4%, a sign of more comprehensive coverage. Medicines fully compensated by the fund still account for the majority of NHIF drug spending, with the reimbursement level split remaining almost identical y-o-y from 2007-2008.

In BMI's Business Environment Ratings matrix for Q409, Estonia is ranked 13th, a reflection of the deteriorating environment for pharmaceuticals and healthcare companies. The country's pharmaceutical rating figure has continued to fall over the past few quarters, in line with worsening economic conditions and their impact on small markets.

BMI's Burden of Disease Database (BoDD) reveals that in terms of disability-adjusted life years (DALYs) lost to all diseases and injuries, Estonia is above average for the region. While the situation is likely to improve generally through to 2030, Estonia looks set to retain its above average status.

Communicable diseases account for a minimal, but growing proportion of the total disease burden. In 2008 the figure was calculated at just 8.4%, however, by 2030 this figure is set to rise to 11.2%.