Tamro Estonia

• In January–December 2005, total pharmaceuticals sales in Estonia amounted to EUR 129 million in PPP. Market growth was only 5%.
  
  
• Tamro Estonia’s net sales for the accounting year in 2005/2006 amounted to EUR 55 million, up 3% from the previous 13-month financial year.

Market environment and competitive situation

Market growth slowed down considerably during 2005 compared to 2003–2004 when the market grew 20%. The slowdown was due to regulatory changes in the Estonian reimbursement system, stronger focus on generic substitution and implementation of reference prices.

In 2005, the competitive situation remained fierce in the pharmaceutical wholesale market, with 80% of the market divided between Tamro Eesti and Magnum Medical and its affiliated companies. In 2005, the further vertical integration between pharmaceutical wholesalers and pharmacies continued.

In 2005, many new pharmacies were opened in anticipation of the restriction on pharmacy openings that will enter into force on 1 January 2006. In 2005, Estonia had 524 retail pharmacies, which is one of the lowest average number of pharmacies per capita.

Financial performance and operations

Tamro Estonia’s net sales for the accounting year in 2005/2006 amounted to EUR 55 million, up 3% from the previous 13-month financial year. In Estonia Tamro continued to build up its presence in the Estonian retail market by acquiring several pharmacies.

Tamro’s pharmacy chain Apteek1 has become the largest Estonian pharmacy chain, with 190 pharmacies. Together they hold a 34% share of the Estonian retail market.

During 2005 Tamro Estonia improved its web ordering environment. Now 50% of the total lines ordered are processed online. Estonia implemented a new ERP system, including thorough staff training. In pharmacies, Tamro extended its pharmacist training programmes and Apteek1 pharmacy marketing campaigns.

Personnel

During the financial year, Tamro Estonia’s payroll averaged 209 (164) employees. Tamro Estonia organises Apteek1 pharmacy chain quarterly training days for both pharmacy managers and pharmacy workers. These very popular training days usually include topics that improve professional expertise and concern, for example, pharmacy management, consultative selling and customer service. Apteek1 pharmacy personnel are also encouraged to participate in the Estonian Pharmacist Union’s training days, and they receive financial support for this.

Outlook for 2006

In 2006, the government will continue its policy of cost optimisation in health care. This will result in slower market growth and can lead to lower margins in wholesale and retail.

As the opening of new pharmacies has been restricted since 2006 and pharmaceutical consumption is relatively low, the price competition between existing pharmacies and pharmacy chains is likely to continue and accelerate.