Tamro Latvia

• In January–December 2005, pharmaceuticals sales reached EUR 147 million in PPP, an increase of 14% at CER on the previous year.
  
  
• Tamro Latvia’s net sales for the accounting year in 2005/2006 amounted to EUR 87 million, down 9% from the previous 13-month financial year.

Operating environment and markets

The Latvian pharmaceutical market has maintained double-figure growth in recent years. The growth is attributed to increasing use of newer and more expensive medicines and increased state subsidies for medicines, e.g., to hospitals.

During 2005 the pharmacy industry in Latvia was affected by changes in legislation that introduced reference prices for reimbursed medicines and reduced the allowed mark-up percentage for wholesalers. These changes have resulted in sales growth and in a decline of the income level for wholesalers.

In 2005, pharmacies continued to consolidate around the leading pharmaceutical wholesalers. At the same time pharmacies have become financially stronger and showed a positive development trend, with the average sales of medicines to pharmacies increasing by 14%.

Financial performance and operations

Tamro Latvia’s net sales for the accounting year in 2005/2006 amounted to EUR 87 million, down 9% from the previous 13-month financial year. Investments in retail continued, and several pharmacies joined Tamro’s Gimenes Aptieka chain.

During the reporting period Tamro’s market share of sales to pharmacies reached 26%, which guaranteed second position in the Latvian wholesale market. In 2005, pharmacies’ sales showed a 20% increase compared to 2004.

Tamro is further developing its voluntary chain project Tamro Aptieku programma for independent and loyal pharmacies. The project includes marketing contracts with manufacturers, special campaigns for pharmacy customers, regular meetings in order to exchange experiences and joint out-of-office activities both in Latvia and abroad. The voluntary chain project has grown from 45 pharmacies two years ago to 210 member pharmacies in February 2006, and it covers nearly 26% of the Latvian retail market.

Educative courses for pharmacy managers and pharmacists are arranged 3–4 times a year around topics of relevance to the audience, such as commercial law, finance management and customer service. Yearly attendance is about 50 pharmacy managers. Monthly educative seminars are organised in Tamro premises to inform pharmacists about new products and manufacturers. About 700 pharmacists attend these seminars yearly.

Personnel

During the financial year, Tamro Latvia’s payroll averaged 276 (274) employees, of which 66% work in the retail business. Half of the personnel are under 40 years old and 85% are female.

Our employees are involved in competence development programmes and regularly attend sales and marketing workshops, improve their language and IT skills and build pharmaceutical and management practices. Ninety per cent of our retail pharmacists are members of the Latvian Association of Pharmacists.

Outlook for 2006

The pharmacy and wholesaler consolidation process is likely to continue, and this will strengthen the position of the top wholesalers.

The basis for achieving good results is our long-term relations with reliable partners as well as the ability to attract new customers. We aim to achieve good results both by increasing sales in Latvia and in the Baltic States in general and by continuing effective cost management.