Lithuanian market growth stymied by lack of political will

The growth rate compares with a rate of nine per cent in Q3 2006, which saw the market reach a total value of USD 447m.

The Research and Markets report forecasts the average five-year annual growth rate between 2006 and 2011 at 6.5 per cent, with total market value reaching USD 612m by 2011.

The report warns, however, of the political situation in Lithuania, citing current weak government control of the fast-growing economy, as well as fresh elections yielding more workable arrangements before the next round of scheduled parliament polls in October 2008.

The country's poor public services, which include healthcare, require urgent attention in spite of attempts by successive governments to develop a modern primary sector, with doctors providing a gatekeeper function to specialists.

While Lithuanian president Valdas Adamkus seems committed to reducing corruption, power struggles are blamed for preventing movement on much needed economic and social reforms. Despite this backdrop, the new multiparty governing coalition has put forward a platform based on investment in social services.

In the adjusted Business Environment Rankings for the 15 major markets of Central & Eastern Europe (CEE), Lithuania still ranks joint tenth on a par with Latvia and Slovakia. The country's position has not changed, mostly due to relative improvements in other markets.

Lithuania is expected to fully harmonise national with EU pharmaceutical legislation by the end of 2007, which should further facilitate market entry for foreign companies.

At the moment, the country's drug manufacturing sector remains small and export-oriented. Multinationals will continue to supply the bulk of branded medicines through imports, although no plans are being made for establishing local manufacturing facilities. The strong local demand for generics is fuelling the expansion of large CEE companies in the Lithuanian market.