The war impact on the CEE market and the uniqueness of the Baltics

The war impact on the CEE market and the uniqueness of the Baltics

A few weeks ago, we presented the global pharmaceutical market review. This time, we would like to update you on trends in EC Europe and the Baltics in particular.

The impact of War

First and foremost, the war in Ukraine is having a significant impact on the region. Before the War, we had five main political themes impacting the European landscape in 2022: digital transformation in Health Care, patient access to innovation, addressing product shortages, the rising importance of ESG (Environmental, Social, Corporate Governance), and improving the security of supply.

After the War started, the Ukraine crisis exacerbated inequalities. Shortly, issues already apparent will be highlighted and enhanced. We are already witnessing the demand spike in Eastern Europe, increasing costs and clawbacks to manufacturers, followed by rising costs to surrounding countries and disrupting clinical trials.

Inflation and energy cost are rising sharply across most major markets, which will be felt across the industry. Furthermore, we are witnessing the leave of Western companies: the first multinationals (Bristol Myers Squibb and Reckitt) left the market, transferring their businesses in Russia to 3rd parties. Likely, others will follow.

Costs are rising

In addition, we are facing changes in pharma treatment and launches. It becomes more costly and focused on individuals – specialty is outgrowing traditional and is now greater than half of the market by value in many European countries.

If talking about major drivers of pharmaceutical market growth to 2030, oncology remains the dominant therapy area. Also, cell, gene and RNA are at the frontier of innovation and applicable across multiple therapy areas. The recent trend remains, as digital health is taking an increasingly central role. In addition, areas of high-unmet need, e.g. Alzheimer’s, Parkinson’s and mental health disorders, present a moment of opportunity.

Recovery and resilience (RR) will significantly impact Health Care budgets and developments. The RR package currently has an overall budget of 672.6 billion euros, 312.6 of which are in the form of grants to be implemented by 2026.

Baltics market pulse

Baltic markets have grown over the last five years (+8,3%). The growing categories are Rx specialty +16% and OTC +16%.

Still, there is a significant gap in drug consumption between Lithuania, Latvia, Estonia and Western European countries. Overall, the political environment and demographic trends (especially ageing and richer society) are favourable in all countries. However, there is a 4% population loss in LT and LV due to a negative net migration rate and low fertility rate.

Overall retail market value is ~1.88 bn EUR in the Baltics. However, the inflation rate is the highest in at least ten years and keeps growing.

What is unique about the Baltics?

The Baltic market distinguishes by “chainification”: almost all big chains have their brands and develop new products. In Lithuania big part of private labels are not reported by distributors. Most chains have online pharmacies.

One more distinction is that the CH market in Baltics is highly developed, and consumers most likely choose a visit to the pharmacy vs a visit to the doctor’s office. Also, approximately 40% of all interactions with pharma representatives are expected to happen via digital channels.

Forecast indicates recovery trend for the all market by +11,3% in 2022 and +4,5% in 2023. Market prognosis for Lithuania shows growth from 4,8% to 6,5%, for Estonia from 5,5% to 9,1%, and Latvia from 1,5% to 3,1% in 2023.

Based on the IQVIA report, 27th of September 2022.

Estimated growth slowdown in the largest therapy areas and new consuming trends

Estimated growth slowdown in the largest therapy areas and new consuming trends

We at Norameda aim to keep a finger on the pharmaceutical market pulse and share the knowledge with our partners. So here are the latest statistics and trends.

Oncology sales on increase

According to the latest statistics, the main trends remain: oncology ($184 bn) and immunology ($126 bn) still are the largest therapy areas and highest growth contributors globally though both are set for slower growth over the next five years.

Despite the projected market slowdown, global oncology sales are expected to increase by 69% in the next five years. Trends are clear; immuno-oncology’s (IO) common use in regimens is set to overtake monotherapies by 2025, and antibody-drug conjugates are emerging with significant efficacy across a broad range of targets.

At the same time we are witnessing rapid growth from novel therapies: Cell and Gene, Digital Therapeutics, Microbiome, and RNA. Emerging Biopharma (EBP) drives innovation.

Maturing immunology market

For immunology, the fundamentals are changing as the therapy area matures: historic innovation is maturing, players are multiplying, and incremental value is falling. Unlocking multi-indicationality is key to success in immunology as major LOE events throughout the decade will challenge originators and disrupt the immunology treatment landscape.

Furthermore, European health systems will focus on introducing biosimilars faster to generate savings. Over $120bn exposed to LOE through 2030, with biologics becoming the most significant contributor.

It is important to note the Baltics are among the countries with the lowest per capita spending on protected biologics. The consequences of a high future disease burden follow.

Innovations and digitalization

Sadly, access to newly registered medicines remains unevenly distributed across Europe. While the European Union has approved 160 products, there are 41 approvals in Estonia, 28 in Latvia, 26 in Lithuania, and only 5 in Albania, compared to 147 product approvals in Germany. European Union average is 74 products available (46%).

The good news is the healthcare system’s digital maturity is accelerating. Switzerland, Ireland and Denmark are in the lead. Higher-scoring countries generally have similar characteristics: dedicated digital strategy and funding, well-managed data, national EHRs, empowered institutions, interoperable, and experimentation.

OTC and consumer shopping trends

The global OTC market is recovering from the Pandemic and  is expected to grow at +9.4% in 2022. The leading factor economies are opening and improving logistics. Minor OTC categories are slowing down slightly, but new areas such as ear care (+16,9), calming&sleeping / mood-enhancing (+8,6%), and eye care (+7,9%) are rising.

An observable trend, the “all-natural” consumer. People focus on “clean” products that are “organic” with an absence of harmful chemicals. Also, we are witnessing a shift to push for prevention: 95% of people agree that self-care is strongly linked to taking responsibility for one’s health.

A particularly striking change in consumers’ shift from Rx to OTC, i.e. self-medication is a new black.

Based on the IQVIA report, 27th of September 2022.