The economic downturn affected the market of OTC products in Central and Eastern Europe which in 2009 grow by only 1% y-o-y in euro terms. In the following years, between 2010 and 2012 the growth rate will be higher, and the market will grow at CAGR of around 10% to EUR 12bn in 2012, according to the latest report from PMR, a research and consulting company, entitled “OTC market in Central and Eastern Europe 2010. Comparative analysis and development forecasts for 2010-2012”.
Market worth EUR12bn in 2012
The effects of the global financial crisis have been seen in all CEE countries. This led to negative GDP growth in all of the countries analysed in 2009 (with Poland being the only exception), along with a rise in unemployment, stagnation or a reduction in wage levels and the depreciation of local currencies. The countries most affected by the crisis in the CEE region are the Baltic States (Estonia, Lithuania and Latvia) and, among the countries analysed – Russia and Ukraine. Poland’s economy has been less severely affected. Poor economic performance has also resulted in a reduction in demand for OTC products, as people tried to limit their spending on products which they can do without, and in the pharmaceutical industry this means spending less on dietary supplements and OTC drugs. “Due to the swine flu epidemic, however, sales of OTC products increased strongly in the last months of 2009 which resulted in the positive growth rates expressed in local currency of OTC products market in most of the countries. In euro terms, due to unfavourable exchange rates, the growth rates were in case of some countries negative” says Agnieszka Stawarska, PMR Pharmaceutical Market Analyst and the report co-author.In 2010 all economies, with the exception of Romania, are expected to recover and to witness positive GDP growth. Russia is expected to enjoy the most substantial growth (of around 4%), followed by Slovakia (3.7%), Ukraine (3.7%) and Poland (3%). Only in Romania a reduction in GDP is to be observed. The Romanian economy will shrink by 1.9% in 2010. The economical improvement will result in higher demand for OTC products. Therefore, according to PMR forecasts, between 2010 and 2012 the OTC products market will grow at around 10% annually on average (CAGR) and will exceed EUR 12bn in 2012.
Russia and Poland the largest OTC markets in the region
In 2009, as in previous years, almost half of the OTC products market value was generated by Russia. In 2009 Poland was the second largest OTC market in the region, with a share as a proportion of total sales of around 20%. Ukraine had a share of around 8% as a proportion of all OTC business on the CEE market, whereas for the Czech Republic the figure fluctuated around 6%.
Slovakia allows online sales of OTC drugs
One of the most important events on the OTC products market during the last year was the allowance of online and distance selling of OTC drugs and sanitary items in Slovakia, which was made legal by an amendment to the Medicines Act which came into force on 1 December 2009. Mail order is limited to drugs and medical devices available over the counter and not covered by obligatory health insurance. The Slovak Chamber of Pharmacies welcomed the change, saying that it would improve patient safety, as medicines ordered over the internet in the past were often delivered without the observance of basic logistics standards and were sometimes not even registered in Slovakia. The liberalisation of distribution of OTC medicines may also take place in Russia in the future. In August 2009 the Russian Ministry of Industry and Trade sent the Russian government its opinion, suggesting the implementation of allowing the sale of OTC medicines outside pharmacies. It argued that the sale of some drugs in retail outlets would result in an increase in the availability of such drugs for the public. Furthermore, the Ministry emphasised that a 5-10% reduction in the cost of OTC drugs is expected. “In Russia, however, allowing the sale of OTC drugs outside pharmacies could carry much more risk than in other countries. First of all, many drugs which have an Rx status in other countries are available without prescription in Russia. Some include potentially dangerous substances, the distribution of which needs to be controlled by qualified persons such as pharmacists” says Monika Stefańczyk, PMR Head Pharmaceutical Analyst and the report co-author. Secondly, the approval of OTC drugs for non-pharmacy channels would lead to the bankruptcy of many Russian pharmacies, as such products are an important source of income for many of them.
The forecasts for the years 2010-2012 were prepared taking into account the average 2009 exchange rate of the euro against the local currencies as this reflects the real growth of the markets analysed. The historical data are based on annual exchange rates (euro to local currency).
Total OTC market value includes sales of drugs and dietary supplements in pharmacy and non-pharmacy sales. OTC drugs and dietary supplements market value is computed for six countries: Russia, Ukraine, Poland, Bulgaria, Hungary and the Czech Republic. Excluding non-pharmacy dietary supplement market in Russia as non-pharmacy dietary supplements market is not well monitored and therefore impossible to estimate precisely. For Slovakia and Romania the whole OTC market included.
This press release is based on information contained in the latest PMR report entitled “OTC market in Central and Eastern Europe 2010. Comparative analysis and development forecast for 2010-2012”.
PMR is a British-American company providing market information, advice and services to international businesses interested in Central and Eastern European countries as well as other emerging markets. PMR’s key areas of operation include business publications (through PMR Publications), consultancy (through PMR Consulting) and market research (through PMR Research). Being present on the market since 1995, employing highly skilled staff, offering high international standards in projects and publications, providing one of most frequently visited and top-ranked websites, PMR is one of the largest companies of its type in the region.consumer retail, Eastern Europe, emerging markets, private equity