Liaa Kjiimija Iistaa
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Latvian Chemicals and Pharmaceuticals Manufacturers Latvijas Investîciju un attîstîbas a©entüra Investment and Development Agency of Latvia LIAA Latvian Chemicals and Pharmaceuticals Manufacturers Latvia in Facts International memberships: EU and NATO since 2004, WTO since 1998 Capital: Riga Other major cities: Ventspils, Liepaja, Daugavpils, Jelgava, Jurmala Population (2005): 2.3 million Area: 64 589 km2 Language: Latvian (official), Russian, English and German are also widely spoken Currency: 1 ‘Lats’ (LVL) = 100 ‘santims’ Exchange rate: 1 LVL = 1.42 EUR (fixed rate as of January 1, 2005); 1 LVL = 1.77 USD (average in 2005) GDP growth (2005): 10.2 % GDP in current prices (2005): EUR 12.713 billion Accumulated FDI (2005): EUR 4.035 billion Accumulated FDI per capita (2005): EUR 1 759 Source: Central Statistical Bureau of Latvia, 2006 CONTENTS THE CHEMICALS AND PHARMACEUTICALS INDUSTRY IN LATVIA . 2 Introduction . 2 Foreign Trade . 3 LABOUR MARKET DEVELOPMENTS AND HUMAN RESOURCES . 4 R&D POTENTIAL . 5 MAJOR PRODUCT LINES . 6 COMPANY PROFILES AND R&D INSTITUTES . 7 PROFESSIONAL ASSOCIATIONS . 24 PROMOTION OF ENTREPRENEURSHIP, INVESTMENT AND FOREIGN TRADE . 24 1 THE CHEMICALS AND PHARMACEUTICALS INDUSTRY IN LATVIA Introduction Latvia’s long experience and traditions, strong manufacturing The main chemical manufacturing branches today include: base and high–level R&D competence makes the country’s • fibres chemical sector particularly attractive for business activities. • pharmaceuticals Latvia's chemical industry is made up of two main segments — • paints production for export of pharmaceuticals, raw materials and • varnishes part–processed products (e.g. casein, glass fibre and its • soaps and cosmetics products) and the manufacture of paints, industrial and • rubber and plastic products household chemicals for domestic and regional markets. The chemical industry accounts for 5.5% of total value added As an outcome of history and traditions, Latvia possesses a within the manufacturing sector. It is the 7th largest manu- strong manufacturing base in fine chemicals and pharma- facturing industry in Latvia and shows one of the highest ceuticals, producing a wide range of items, ranging from pe- growth rates in comparison with other sectors (approx. 15% trochemicals and man–made fibres to paints and household in 2005). chemicals. Latvia was the principal location for these sectors Rubber and plastic products comprised the largest share of in the former Soviet Union, with 25% of all new Soviet drug the industry’s output in 2005 (52.1%) followed by pharma- technology designed here. Thus, every 4th medical ceuticals, medical and phyto–chemical goods (28.6%). preparation manufactured in the former USSR and intended According to the Latvian Chemical and Pharmaceutical Indus- for the USSR market was actually made in Latvia. try Association's data, production output increased across all sub–sectors in 2005. The most significant increase was in the pharmaceutical sector, 32.5%, whereas plastics and rubber increased by 29.2%. Output by Sector, 2005 Output Changes by Sector, EUR mln 120 100 Paints and lacquers 8.4% Others 6.7% 80 Organic chemicals Pharmaceuticals, 4.2% medical and phytochemical goods 28.6% 60 Rubber and plastic products 52.1% 40 20 Source: Central Statistical Bureau, 2006 0 Chemical Paints Pharmaceuticals Soaps, Plastic substances and lacquers and medical detergents. and rubber goods cosmtetics Source: Latvian Chemical and Pharmaceutical Industry Association, 2006 306 companies were active in the sector in 2004, 50 more The number of people employed in the Latvian chemical than in 2003. Mainly these are small and medium enterprises. industry is about 6 200, which is more than 5% of the total Those companies who have identified their specific niche and number employed in manufacturing. 50% of them are university spin–offs have the best prospects. employed in the pharmaceuticals & medicines sector, 1 110 are senior experts and researchers. 2 Foreign Trade Sector exports have shown consistent growth. In 2005, they The EU is the main export market for chemical and allied increased by 29.7% compared to 2004. The increase in industry products (59.7%) and for plastic and rubber export volumes was across all product groups with the products (74.6%). In the other direction, 34.5% and 21.5% exception of organic chemical compounds. The share of respectively of these products were exported to CIS markets exports in the sector’s output was 51.9% by value in 2004. in 2005. The leading export products are pharmaceuticals making up 31.9% of total industry exports, followed by plastic products (21%) and glass fibre (16.1%). Export Changes by Sector 2003—2005, EUR mln 80 70 60 50 2003 40 2004 30 2005 20 10 0 Perfumery and Organic Paints and Synthetic Glass fibre Plastics Pharmaceuticals cosmetics chemical varnishes fibre compounds Source: Central Statistical Bureau of Latvia, 2006 Exports by Sector, 2005 Exports (including pharmaceuticals) by Country, 2005 Perfumery and cosmetics 8.9% Organic chemical Other compounds Kazakhstan 13.2% 4.5% 2.0% Germany Lithuania Paints and 2.0% 24.3% varnishes 8.5% Denmark 3.5% Pharmaceuticals Synthetic fibre France 31.9% 9.1% 3.8% United Kingdom Russian 3.9% Federation 19.9% Glass fibre Belarus 9.1% 4.4% Ukraine 5.5% Plastics Estonia 21.0% 17.5% Source: Central Statistical Bureau of Latvia, 2006 Source: Central Statistical Bureau of Latvia, 2006 Export of Plastics and Rubber Products by Country, 2005 Belarus Finland Other 4.4% 1.7% 13.2% United Kingdom 3.9% Lithuania 22.1% Netherlands 3.6% Denmark 4.3% Germany 5.4% Estonia 21.8% Sweden 8.4% Russian Federation 17.4% Source: Central Statistical Bureau of Latvia, 2006 3 LABOUR MARKET DEVELOPMENTS AND HUMAN RESOURCES The current labour market situation in the pharmaceutical, As regards human resource costs, the general salary level is biotechnology and chemistry sector is characterised by a among the lowest in the CEE countries despite a 12—15% stable number of qualified professionals and competitive national increase over the last year. The costs of pharma- human resource costs compared to other CEE countries. ceutical and biotechnology industry professionals in Latvia is Despite the transition–driven overall decline in the industry on average 1.5—4 times lower (dependant on occupation) more than a decade ago, the transformed and leaner than that paid by companies in western Europe, and the companies or newly established enterprises introduced state- industry–specific salary curve recorded just a slightly upward of-the-art technologies and processes to remain competitive trend measured against the overall economy. However, an and also provided additional professional development annual salary increase of 7—15% is expected during the opportunities for their employees. An influx of young coming 1—1.5 years. professionals to the sector is forecast in the coming 2—4 For companies interested in attracting a new workforce, the years as the currently increasing number of technology standard recruitment cycle (from project inception to signing students graduate from universities and enter the labour contracts with employees) is typically 3—4 weeks in the case market. of lower level professionals (skilled workers, operators) or 5— 6 weeks in the case of senior professionals (heads of research departments, chief technologists, engineers). Average Gross Salary Levels in CEE, March 2006 Latvia 4122 Lithuania 4678 Slovakia 4628 Estonia 5373 Poland 5392 Czech 7369 Hungary 7599 Slovenia 12082 0 2000 4000 6000 8000 10000 12000 14000 Source: CVO Group Indicative Average Salaries (gross monthly), EUR, March 2006 Gross monthly salary Latvia Estonia Lithuania Czech Republic Chemist–head 950—1150 1300—1600 1100—1300 1750 of Research Department Chemist–Analyst 775 850 650—800 950 Assistant Analyst 500 550 550 675 Assembly–line 450 550—650 475 650 and machine operators, chemical enterprises Pharmacologist– 950—1150 1300—1600 1100—1300 1750 Head of Research Department Pharmacist–analyst 775 650—850 650— 800 950 Assistant Analyst 500 450—600 525 675 Assembly–line 450 400—600 475 650 and machine operators, pharmaceutical enterprises Source: CVO Group CVO Group is the largest and most successful integrated recruitment solutions company in Central and Eastern Europe, covering Latvia, Lithuania, Estonia, Hungary, the Czech Republic, Poland, Slovak Republic, Romania and Russia. 4 R&D POTENTIAL Latvia possesses an extensive R&D base with good co–opera- materials science area (Institute of Solid State Physics and tion between industry and the scientific and academic sectors Institute of Polymer Mechanics, University of Latvia and covering a diverse range of research spheres: microbiological Institute of Inorganic Chemistry, Riga Technical University), synthesis, virology, the synthesis of physiologically–active sub- this R&D track has been designated a national long—term stances, bio–organic chemistry, molecular biology, genetics, priority. biotechnology, biomechanics, magneto–biology and others. Latvian pharmaceutical companies have proved themselves by Another traditional sub–sector within the industry now holding patents for 12 new drugs, despite lacking the sort of seeing a resurgence is R&D in areas such as the life sciences, R&D investment required for such projects by world standards, wood chemistry and the development of new materials for typically in excess of EUR500 million. The remainder of the aerospace, automotive and construction industries. As production revolves around