The Competition Council of Latvia (CC) after sector inquiry into the regional retail market of medicinal products observes that during previous five years the key pharmacy chains have increased the number of pharmacies owned by them at the expense of individual or smaller pharmacy chains. Therefore, without change in the total number of pharmacies in Latvia, the market concentration has increased and the consumer choice has become more limited.

During the sector inquiry into the regional retail markets for medicinal products the CC studied the concentration of pharmacy chains in 14 towns of Latvia from 2011 to 2016. The authority established that during this period of time the number of pharmacies has been stable, but at least 180 transactions for the exchange of licences of pharmacies have taken place, when pharmacies changed their owners and places of location. It is to be established that in total there are five biggest chains represented in the above mentioned towns – AS Sentor Farm aptiekas, SIA A Aptiekas, SIA BENU Aptieka Latvija, SIA Latvijas aptieka, and SIA EUROAPTIEKA.

During the inquiry, the CC observed that the market power of the biggest pharmacy chains has significantly increased in several towns. For example, the market share of AS Sentor Farm aptiekas in Rezekne has increased by five times, but in Dobele, Gulbene and Madona – by almost two times.

Few market participants, such as AS Sentor Farm aptiekas and SIA Latvijas Aptieka, have expanded their operation in the territories of hospitals and close to them, which are to be considered as strategically important places, considering the huge people flow. The majority of pharmacies owned by pharmacy chains are located in the territories of Riga Eastern Clinical University Hospital, Children Clinical University Hospital, Pauls Stradiņš Clinical University Hospital and close to them, where pharmacies of the chain of AS Sentor Farm aptiekas form the majority. The smallest number of chain pharmacies are represented in the territory of Riga 1st Hospital and Jekabpils Regional Hospital and close to them.

When assessing the market development opportunities in the future, the CC expects that due to the normative regulation, including the Pharmaceutical Law and Cabinet Regulations No. 610 “Criteria for the Location of Pharmacies and Pharmacy Branches”, significant changes in the retail market of medicinal products are not possible. However, it is possible to redistribute the current market, like it has already happened before.

During the inquiry, the CC established that there are currently several towns, where pharmacy chains have 70 – 80%, in certain cases even 100% of market share, and therefore they are to be considered as the areas of risk. Taking into account concentration of the retail market of medicinal products, the CC indicates that it would be necessary to implement the procedure that would enable the state to review the events of the changes of owners and thus eliminate concentration of pharmacy chains. Therefore according to the opinion of the CC it would be necessary for the Ministry of Health of Latvia to review a possibility to adopt amendments to the special regulation that would provide to restrict acquisition of pharmacy licences in cases, when the transaction of the acquisition of a pharmacy fails to achieve the criteria for merger notification stipulated by the Competition Law and they should not receive a permit from the CC accordingly.

At the same time, in order it would be possible to prevent the excessive concentration of pharmacies, non-beneficial for consumers, and restriction of choice, the CC invites the responsible authorities to assess the possibility to expand the sale of non-prescription medicinal products outside of pharmacies, for example, in retail stores, on the internet or by establishing mobile outlets. Such a solution would not only increase the availability of medicinal products, including outside of more populated territories, but would also cause an additional competition pressure on the prices of medicinal products.