Estonia's Pharmaceutical Market Value Grows 5.3% Y/Y in 2011; Legal Change Set to Bring Down Co-Payments

Estonian Pharma Market Growth Speeds Up in 2011

The value of the Estonian pharmaceutical market grew 5.3% year-on-year (y/y) in 2011, according to data from the Estonian State Agency of Medicines (Ravimiamet), to reach a total value of EUR204.40 million (USD271.13 million). The figures are based on quarterly reports compiled by licensed pharmaceutical wholesalers, and IHS Global Insight assumes therefore that the figures given are based on ex-manufacturer prices. This represents an increase in the dynamic of the Estonian market's growth compared with last year, when growth stood at 2.6% y/y, following a market decline of 1.4% y/y in 2009.

Hospital Markets Singled Out for Growth

In terms of market segments, the largest market for wholesalers, representing 72% of their market in 2011, was pharmacies, with the total value of wholesaler sales to pharmacies reaching EUR147 million. The value of the hospital market in terms of wholesale sales was EUR50.6 million, representing 25% of the market. Ravimiamet reports that the hospital market saw a particular boost in sales during 2011, while in the case of pharmacies, sales were more or less constant compared with 2010.

In volume terms, some 86% of Estonia's market in 2011 was accounted for by prescription drugs sold in pharmacies, and 13% by over-the-counter (OTC) medicines. The hospital sector made up only 1% of the market's volume, Ravimiamet reports, adding that the growth in terms of volume last year came in the prescription drug sector, underlining the fact that growth in the value of the hospital sector is driven by increasingly expensive products.

Looking at particular therapeutic areas, the largest in terms of sales—using anatomical therapeutic chemical (ATC) classifications—was antineoplastic and immunomodulating agents (ATC code L), which accounted for 18% of the market, followed by cardiovascular system agents (group C), which made up 15% of the market. Sales of antineoplastic and immunomodulating agents were up 23% y/y in value terms during 2011, while in contrast, there was a drop in the sales of cardiovascular medicines measured by value, of 10% y/y, according to Ravimiamet.

Co-Payments Set to Be Reduced on Hundreds of Medicines

Meanwhile, Estonia's Minister of Social Affairs, Hanno Pevkur, has announced that following a forthcoming change to the health insurance act, there will be a significant reduction in co-payments for patients on around 240 medicines on the reimbursement list, reports Estonian newspaper Eesti Päevaleht. The source reports that according to an explanatory memorandum on the planned forthcoming changes, the reduction in co-payments will come to an average of around 22% of the average prescription cost. The reductions in co-payments relate to medicines that are subject to a 50% patient co-payment.

Outlook and Implications

Estonia's pharmaceutical market grew in 2011 by double the rate at which it grew in 2010, following its decline in the crisis year of 2009. It is likely that as figures for 2011 come in for other countries in the Central and Eastern Europe (CEE) region, Estonia will prove to be one of the more dynamically growing markets, as austerity measures take their toll in many countries.

Judging by the fact that the hospital market was the focus of most of the growth in the Estonian pharmaceutical market during 2011, in value terms—and considering the large rise in the sales of antineoplastic and immunomodulating drugs—it can be seen that in Estonia, as in many CEE markets, sales of high-cost innovative medicines used in a hospital setting are driving the market's growth. It is likely that growth will continue to be focused in the hospital sector, while in the outpatient sector, although Estonia's Health Insurance Fund continues to be relatively innovation-friendly, there is a focus on increasing the use of generics, which continue to account for a very low proportion of the country's pharmaceutical market today, at only around 20% by value and 35% by volume, on the basis of wholesale distribution statistics (see Estonia: 7 November 2011:Government Campaign to Boost Use of Generics Continues in Estonia).

Meanwhile, a reduction in the level of co-payments required by patients on medicines for which 50% of the price is covered by the Health Insurance Fund is likely to result in a small boost in the sales of these medicines, which represent almost half the market for prescription medicines. Currently, around 35.6% of the cost of prescription medicines is shouldered by patients in Estonia; development of the potential of the generics market is likely to help reduce this to some extent.