In BMI’s Business Environment Ranking matrix for Q408, Latvia is one of the five out of 17 markets in the Central and Eastern European (CEE) region, which are found in pole position. The development is a result of a gradual improvement in Latvia’s operating environment, with the country rising from sixth in Q208 to second in the following quarter, indicating considerable commercial opportunities for drugmakers. Key benefits of operating in the Latvian pharmaceutical market include a steady forecast growth over the coming five years, a high percentage of urbanised and pensionable population, and positive economic outlook, despite the small overall size of the market.

However, recent developments in the country are posing a shadow over the viability of some commercial operations in Latvia. More specifically, in June 2008, the Latvian government drafted a law that could have a serious negative impact on large pharmacy chains. The proposed legislation is designed to facilitate competitiveness in the sector by allowing only trained pharmacists to own a pharmacy store. While the law has the potential to meet its aim through the separation of supply and retail, which could also mean lower prices, its downside is the fact that both wholesalers and retailers would seek increased margins in order to compensate for the efficiency losses from the vertical disintegration.

The Latvian pharmacy retail sector has already undergone significant changes, following the enforcement of a new pharmacy law in 2007, which already places limitations on the expansion of European pharmacy retail chains in the country. Although the retail industry in Latvia is not as consolidated as in some other Central and Eastern European countries, there are still several large chains, which are most certainly not receptive to the latest proposals. Nevertheless, BMI believes the need for pharmacies in Latvia will increase over the coming years, reflecting the expanding of both prescription and over-the-counter (OTC) markets, which will continue to stimulate the growth of pharmacy retail.

In fact, BMI's Burden of Disease Database (BoDD) has identified Latvia as being the country most affected by infectious and parasitic diseases within the whole of the European Union (EU). In terms of disability-adjusted life years (DALYs) lost per 1,000 people, Latvia has 15.3 DALYs forecast to be lost per 1,000 people in 2008, which is considerably higher than that of the second-most affected country, namely Portugal. Generally speaking, the whole Baltic region scores poorly in this area, with tuberculosis (TB) being a particular problem, highlighting the potential for increased uptake of anti-infectives and vaccines.