Tamro Lithuania

• Pharmaceuticals sales in Lithuania continued their strong growth, climbing by nearly 17% at CER to EUR 329 million in PPP during 2005.
  
  
• Tamro Lithuania’s net sales for the accounting year 2005/2006 amounted to EUR 84 million, down 6% from the previous 13-month financial year.

Operating environment and markets

The pharmaceutical market in Lithuania increased by 17% in 2005 and amounted to EUR 329 million in PPP. The main driver for the market growth was increased usage of more modern pharmaceuticals, as the average price per unit rose by 12%. Volume increase was at a moderate 4%.

The per capita consumption of pharmaceuticals was EUR 97 (83) at PPP. The Patient Fund continued to apply pressure on expenses for reimbursed pharmaceuticals. The Patient Fund’s delay in paying for reimbursed pharmaceuticals caused a financial burden for wholesalers. Shortage of cash and poor operating results forced two medium-sized pharmaceutical wholesalers to bankruptcy at the beginning of 2005.

The consolidation trend in the wholesale market remained at previous levels, with the five biggest wholesalers holding a 78–80% share of the market. However, vertical integration was significantly stronger, as leading retailers developed their own wholesale divisions, and wholesalers expanded into retail.

Pharmacy chains continued to expand and strengthened their position to up to 65% (55% in 2005/2006, 35% in 2004/2005) of the market. This led to bankruptcies of independent pharmacies and losses for wholesalers. Consequently, for small pharmacies the pharmaceutical market will remain very challenging in the years to come.

Financial performance and operations

Tamro Lithuania’s net sales for the accounting year in 2005/2006 amounted to EUR 84 million, down 6% from the previous 13-month financial year. Tamro accounted for 20% of the Lithuanian pharmaceutical wholesale market.

Tamro continued its expansion into retail by acquiring the pharmacy chain Ramuciu Vaistine in October 2005 and several other smaller units during the year. Tamro’s pharmacy chain Seimos Vaistine now includes 88 fully owned pharmacies.

Personnel

During the financial year, Tamro Lithuania’s payroll averaged 397 (251) employees. Retail employed 69% and wholesale 31%. Over 54% of the personnel have a university degree. Women make up 77% of the personnel. The average age is 45 years, and the average duration of employment is 4 years.

The recruitment policy of UAB Tamro is based on the candidate’s skills, responsibilities and motivation. The company offers realistic opportunities for career planning to those who are eager to seek it. Internal promotion is always the first choice when there is a vacancy.

Training courses and seminars were arranged primarily to improve management skills. Special training courses were organised for middle management to improve negotiation and project management skills.

Outlook for 2006

The government policy to reduce hospitalisation will result in higher outpatient pharmaceutical consumption. The pharmaceutical market is expected to grow by 12–15% in 2006/2007. Pharmacy chains will continue to grow above market rates and increase their market share at the expense of independent pharmacies.

Tamro continues to invest in retail to secure and improve its position in the pharmaceutical supply chain. The main target of Tamro Lithuania for 2006/2007 is to develop its leading market position in wholesale and further improve financial performance.