Every Ukrainian citizen annually spends an average of US $26-27 in retail prices for medications. For comparison, citizens of EU member countries neighboring with Ukraine spend around US $100-140 on purchasing medicines. UkraineвЂ™s pharmaceuticals market continues to develop gradually and confidently: its last yearвЂ™s volume amounted to US $1.25-1.3 bn. This year, its growth in money equivalent has been registered at 27-28%.
Viktoria Presnyakova, head of the representative office of RMBC Consulting, explains that the leap of the domestic pharmaceuticals industry by the presence of a powerful research and development base, strengthening of the positions of Ukrainian manufacturers and regulation of the system of state purchases of expensive medications for the treatment of HIV/AIDS, tuberculosis, pancreatic diabetes and oncological diseases.
Ihor Khmilevskiy, Chief of the External Information Service of the Morion Consulting Company, assured that by 2010, the volume of the pharmaceuticals market could triple to US $3.8-3.9 bn with an average growth of 25% annually.
However, in the opinion of Oleh Feldman, General Director of Comcon-Pharma Consulting, there are a number of factors that could affect the development of the industry such as the low consumption level of medications per capita of the population, disproportion between volumes of consumption of medications among residents of large regional centers and remote villages, the absence of systematic investments, excessive involvement of the state in the process of market regulation, a possible increase in the prices for raw materials and the material technical base of enterprises and the lack of trust of the population to advertising of medicines.
In the land of вЂњpharmaceuticalвЂќ giants
There are some 700 pharmaceutical companies operating in Ukraine, including 6 powerful Ukrainian companies producing over 70% of the pharmaceutical products manufactured in the country. In particular:
вЂў Darnytsya (Kyiv) manufactures over 215 types of medicines, 500 mn vials, 4 bn packages of pills, 30 mn flasks of sterile antibiotics and 8.5 mn tubes of ointments;
вЂў Borshchahivskiy Chemical-Pharmaceutical Plant (Kyiv) manufactures over 120 types of medicines in 10 pharmaceutical- therapeutic groups, the whole range of anti-tuberculosis medications, 200 mn packages of pills, 15 mn antibiotics in capsules and 14 mn sterile antibiotics in flasks;
вЂў StirolBioPharm (Horlivka, Donetsk oblast) was built by the Canadian company Western Industrial Group. It manufactures 950 mn pills and capsules per year. It was the first and only enterprise in the country, which is certified by the ISO 9002 standard and fully complies with GMP international standards;
вЂў Farmak (Kyiv) manufactures some 150 types of medicines and exports 11-15% of its products to Russia, CIS and Baltic countries, Bulgaria and Poland. The marketing strategy of the companies lies in active promotion of medications for endocrinology, cardiology, rheumatology, oncology and ophthalmology;
вЂў Zdorovya (Kharkiv) produces over 150 types of medications of all pharmaceutical-therapeutic groups of ATC- classification, including original medicines produced on the basis of amino acids, herbs and generic medicines. Recently, the company received the prestigious European Quality Award from OxfordвЂ™s Europe Business Assembly.
вЂў the new corporation Arterium, which was formed in the summer of 2006 as a result of the merger of two large plants вЂ“ KyivMedPreparat and LvivвЂ™s HalychPharm. This alliance turned out to be rather successful, as the growth in the companyвЂ™s sales on the Ukrainian market totals 40% and it is fourth in the rating of pharmaceutical companies offering medicines in 11 out of 14 existing pharmaco-therapeutic groups.
According to the companyвЂ™s CEO Denys Hartsylov, the merger of the two companies is an optimal combination of resources and possibilities for competing with foreign and transnational pharmaceutical companies, as well as with its largest domestic competitors Darnytsya and the Borshchahivskiy Plant.
Formulas of success
In order to receive the possibility of accessing leading pharmaceutical markets of the world and developing a national project for the prosperity of Ukrainian manufacturers in conditions of co-existence with foreign companies, Farmak General Director Fila Zhebrovska has proposed solution of the following tasks as quickly as possible:
вЂў form a viable Association of Pharmaceuticals Producers of Ukraine;
вЂў introduce a scientifically substantiated and transparent system of formulas;
вЂў create a mechanism of state compensation of expenses for purchasing medicines;
вЂў harmonize the Law of Ukraine on Medications with Directive 2001/83 of the European Parliament and EU Council from November 6, 2001 On the Code of Laws related to Medicinal Products for Human Consumption, supplemented by a new Directive 2004/27;
вЂў starting from 2009, register only those medicinal products, the production of which is done according to international GMP standards вЂ“ i.e. modernization of production lines, improvement of technical control, automation of processes and training of personnel;
вЂў shorten the procedure for registration of reproduced medicinal products;
вЂў bring price formation and the excise duty for medicinal alcohol in line with the current standards of the European Union;
вЂў develop proposals on introduction of a differentiated VAT rate for medications.
While the reform of the pharmaceutical industry is under way, some domestic enterprises will be acquired by foreign ones. At least three generic companies вЂ“ Polfarma (Poland), Pliva (Croatia) and Octapharma AG (Switzerland) вЂ“ have been showing great interest in this.
Mykola Demydov, Director of the Center for Marketing Studies at Pharmexpert, advises Ukrainian companies to get rid of the information vacuum in order to attract foreign investors, because the vacuum prevents the latter from determining the market value of these companies. The problem is that the shares of local pharmaceutical companies are not quoted on stock exchanges and appraisals of different expert organizations could differ substantially. In addition to that, foreigners are interested in not only buying businesses as such (trademarks and shares on the market), but also production capacities.
Distribution of shares on the pharmaceuticals market of Ukraine among companies leading by sales volumes of medicines:
Sanofi-Aventis (France) вЂ“ 4.7%
Darnytsya (Ukraine) вЂ“ 4.1%
Menarini Group (Italy) вЂ“ 4%
Arterium (Ukraine) вЂ“ 3.8%
Plant (Ukraine) вЂ“ 2.9%
Farmak (Ukraine) вЂ“ 2.6%
KRKA (Slovenia) вЂ“ 2.6%
(Great Britain) вЂ“ 2.6%
Zdorovya (Ukraine) вЂ“ 2.5%
(Hungary) вЂ“ 2.3%
Other companies вЂ“ 67.9%
Viktor Shafranskiy, Head of the Representative Office of the French pharmaceutical company Beaufour Ipsen in Ukraine:
вЂњThe huge prospects of the pharmaceuticals market are directly connected to UkraineвЂ™s integration into the WTO, which would mean liberalization of protectionist policy, regulation of trade aspects of intellectual property rights for patents, appearance of high quality, inexpensive medications, unlimited access to the world markets of Ukrainian produced medicines of the GMP standard, a decrease of customs duties and tariffs on imported products, stiffening of competition and improvement in the quality of medicines through the presence of foreign pharmaceutical companies, distributors and retail companies.вЂќ
Vitaliy Kyryk, Head of the Representative Office of the German pharmaceutical
company Ratiopharm in Ukraine:
вЂњI believe that the following is required to have or do for full-fledged formation of the Ukrainian pharmaceutical industry in conditions of a competitive market: own a balanced portfolio of prescription and non-prescription drugs, diversify assortment of products, conduct an effective promotion, start a process of consolidation and vertical integration in the sphere of distribution and the drug store business, establish tough barriers to prevent imitations, increase budget allocations for healthcare, approve basic therapeutic standards and, what is most important, develop the commercial sector of medicine.вЂќ
Volodymyr Ihnatov, Head of the Representative Office of the English-Swedish
pharmaceutical company AstraZeneca in Ukraine:
вЂњThe situation on the domestic pharmaceuticals market can develop by two scenarios. The first, pessimistic scenario, envisages preserving complicated problems that scare away foreign investment and innovation companies. Such problems include the non-operable system of medical insurance, patients spending a lot of money on low quality medicines, the government financing only several priority programs and legal regulation that remains unchanged.
The second, optimistic scenario will happen under condition of introduction of medical insurance, observance of intellectual property rights and improvement in the investment attractiveness of pharmacological business.вЂќ
By Volodymyr Tyravskiy