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UPHARMACIA

Ukrainian Pharma Market Monthly

Macroeconomic Environment Market & Companies News Regulatory Updates Healthcare News

12'17 ISSUE

UPharma Consulting is a professional consulting company, operating in the Life Sciences sector. We deliver best global practices in market knowledge, people management, marketing and strategy for Pharma and Healthcare in the CIS/CEE.


Upharmacia December 2017

CONTENTS Page

3 5 5 6 7 8 9

Section

/ / / / / / /

Data period

Macroeconomic Indicators 11/2016-11/2017 Economy & Pharma Dashboard

11/2016-11/2017

Economic News 12/2017 Pharma Market News 12/2017 Regulatory Updates 12/2017 Healthcare News 12/2017 CIS Pharma News 12/2017

Disclaimer: These publications have been prepared by the research department of UPharma Consulting (“UPC”). It is provided to our clients and industry stakeholders for information purposes only, and UPC makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. UPC will not treat unauthorized recipients of this report as its clients. The information contained in this publication has been obtained from sources that UPC’s research group believes to be reliable, but UPC does not represent or warrant that it is accurate or complete. UPC is not responsible for, and makes no warranties whatsoever as to, the content of any thirdparty web site accessed via a hyperlink in this publication and such information is not incorporated by reference. All rights reserved. No part of this publication may be reproduced in any manner without the prior written permission of UPC. UPharma Consulting LLC is registered in Ukraine, Kyiv, 04212, 21st M. Tymoshenka str., building 7, office 5. Additional information regarding this publication will be furnished upon request.

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Upharmacia December 2017

MACROECONOMIC INDICATORS INDICATORS

2016 Nov

Dec

2017 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

MACROECONOMIC INDICATORS GDP ($ bn)

Q4

Q1

Q2

Q3

27.930

21.577

24.826

31.704

growth, y-o-y

9.16%

22.2%

17.9%

Q4

21.1%

Export ($ bn)

3.62

3.63

3.03

3.20

4.11

3.34

3.48

3.35

3.21

3.67

3.77

3.86

16%

8%

48%

20%

37%

8%

21%

14%

10%

15%

19%

19%

19%

Import ($ bn)

3.81

4.13

3.10

3.67

4.37

3.73

3.83

3.96

4.01

4.25

4.32

4.58

4.74

growth, y-o-y growth, y-o-y

4.30

Industrial Prod. Sales ($ bn)

24%

32%

32%

18%

35%

22%

27%

47%

30%

23%

25%

28%

24%

6.91

7.64

6.34

6.44

6.91

5.92

6.25

6.27

6.31

6.62

6.66

7.24

7.69

17%

20%

28%

30%

27%

14%

16%

16%

12%

19%

19%

13%

11%

Retail Turnover ($ bn)

2.04

2.09

1.40

1.37

1.62

1.66

1.93

1.78

1.96

2.09

1.93

1.98

1.99

14%

-3%

growth, y-o-y

Unemployment Rate (%) Average Salary ($)

growth, y-o-y

4%

-12%

-8%

-2%

-6%

21%

3%

4%

9%

10%

6%

1.3

1.5

1.6

1.7

1.5

1.4

1.3

1.3

1.2

1.2

1.2

1.1

1.2

210

247

221

230

250

248

259

272

283

278

257

277

276

CPI (Consumer Prices Index)

112.1

112.4

112.6

114.2

115.1

112.2

113.5

115.6

115.9

116.2

116.4

114.6

113.6

47.4

57.1

53.7

56.2

55.5

54.9

58.0

59.4

58.5

58.2

59.0

62.6

62.3

GfK Consumer Sentiment Index

OFFICIAL CURRENCY EXCHANGE RATE UAH / USD

25.7

26.2

27.2

27.0

27.0

26.9

26.4

26.1

26.0

25.6

26.1

26.7

26.7

UAH / EUR

27.8

27.6

28.8

28.8

28.8

28.8

29.2

29.3

29.8

30.2

31.1

31.4

31.3

20.1

PHARMACEUTICAL INDUSTRY INDICATORS Export of Pharma Products $M growth, y-o-y

Import of Pharma Products $M growth, y-o-y

Retail Sales, values $M growth, y-o-y

Retail Sales, volumes units M growth, y-o-y

14.75

23.95

8.10

13.31

22.01

12.22

14.21

19.75

14.15

13.06

16.7

14.5

26%

52%

-3%

0%

42%

-12%

0%

22%

6%

-4%

-11%

-21%

36%

142.6

169.1

102.4

123.4

150.6

116.8

145.7

156.8

150.5

149.8

146.6

146.3

176.4

1%

19%

-1%

-15%

20%

-10%

32%

19%

13%

9%

4%

7%

24%

224.7

268.0

233.2

225.4

187.0

210.5

217.5

206.5

211.4

212.7

236.5

249.7

266.2

14%

26%

17%

28%

0%

18%

22%

18%

21%

18%

24%

18%

18%

139.9

164.1

148.8

147.6

121.9

133.9

137.3

132.0

139.5

134.3

146.7

146.1

151.6

8%

20%

11%

16%

-9%

7%

11%

8%

14%

6%

8%

5%

8%

1.61

1.63

1.57

1.53

1.53

1.57

1.58

1.56

1.52

1.58

1.61

1.71

1.76

6%

5%

5%

10%

9%

10%

10%

10%

6%

10%

15%

12%

9%

107.4

106.4

105.4

104.2

103.2

102.8

103.0

103.2

103.9

104.1

103.9

104.5

105.1

Local Companies Share % values

42.3

41.7

41.9

42.7

43.0

42.7

42.9

43.0

43.7

42.7

43.1

42.8

43.0

Local Companies Share % volumes

74.9

73.9

74.5

75.2

75.7

75.6

76.0

76.2

77.0

76.8

75.4

74.4

74.5

Average Cost of a Pack $ growth, y-o-y

CPI, Pharma Products

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PHARMA TALENTS PIPELINE

WARNING WE ARE LOOKING FOR PHARMA: TALENTS / LEADERS / SEASONED PROFESSIONALS

FOR MIDDLE & SENIOR ROLES IN PHARMA COMPANIES IN UKRAINE & THE CIS

CHECK DETAILS HERE

• SALES & MARKETING • FINANCES • REGULATORY & MEDICAL AFFAIRS • PHARMACOECONOMICS • MARKET ACCESS


Upharmacia December 2017

ECONOMY & PHARMA DASHBOARD 148.8 147.6

206.5

211.4

212.7

187.0

139.9

146.7 133.9

160

137.3

139.5

150

151.6 146.1

130

134.3

132.0

Industrial Production Sales (USD, Bn)

217.5

210.5

Volumes (units, mio)

200

10 170

236.5

225.4

164.1

121.9 110

120

Nov

Dec

Jan

Mar

Apr

May

Jun

Jul

Aug

Sep

UKRAINE'S INTERNATIONAL TRADE IN PHARMA PRODUCTION 30

25

156.8

150.6

142.6

23.9

102.4

145.7

Export

150.5

149.8

146.6 146.3

Import

20.1

19.8

90

16.7 14.8 8.1

14.2

13.3

14.2

12.2

14.5

13.1

0

Dec

2017 Jan

Mar

Apr

May

Jun

Jul

Aug

7.24

30

20

Sep

Oct

Nov

3.0 2.5

4

2.09

2.04

3

1.62

1.40

2

2016

1.93

1.66

1.78

1.96

2.09

2.0

1.93

1.98

1.99

0.5

2017 Dec

Jan

112.4

112.6

—— Ukraine’s gross foreign debt grew 2.1% in 3Q2017 to USD 117.4 bn (111.4% of GDP).

1.5 1.0

1.37

0.0

Feb

114.2

Mar

Apr

May

Jun

Jul

115.1

112.2

113.5

28.8

29.2

Aug

115.6

115.9

Sep

UAH/USD

Oct

Nov

UAH/EUR

CPI

116.2

116.4

114.6

113.6

30.2

31.1

31.4

31.3

120

100

27.8

27.6

28.8

27.2

25.7

28.8

27.0

28.8

27.0

26.9

29.26

29.8

80

26.4

26.1

26.0

26.2

25.6

26.1

26.7

26.7

60

40 10

0

20

2016 Nov

Dec

2017 Jan

0

Feb

ECONOMIC NEWS —— Ukraine’s State Budget 2018 envisages the deficit at the level of UAH 81.8 bn (2.5% of GDP), inflation of 9%, the GDP growth forecast is 3.0% y-o-y. The exchange rate is expected to be USD/UAH 29.3 at the year’s end. The document also provided increase of the minimal salary from UAH 3,200 to UAH 3,723.

4.0 3.5

5

112.1

0

Feb

6.31

6.66

40

30

Nov

6.27

6.62

7.69

60

5

2016

6.25

5.92

6

50

150

120

6.44

6.34

6.91

OFFICIAL CURRENCY EXCHANGE RATES VS CPI

176.4

116.8 22.0

15

10

7

4.5

6.91

Nov

Nov

180

123.4

Export (USD, mio)

Oct

169.1

20

8

7.60

0

90

Feb

Exchange rates

80

5.0

9

1

2017

Import (USD, mio)

2016

Retail Turnover of Enterprises

Retail Turnover of Enterprises (USD, Bn)

266.2 249.7

233.2

240 224.7

Industrial Production Sales

INDUSTRIAL PRODUCTION & RETAILS SALES

Volumes, mio units

264.9

280

Values (USD, mio)

Values, mio USD

Consumer Price Index

PHARMACEUTICAL MARKET, RETAIL SALES

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

number of agreements on joint projects for the total amount of near USD 7 bn. —— Ukraine’s treasury residuals increased 11% m-o-m in Nov to UAH 54.1 bn. —— The acting Head of the National Bank of Ukraine stated the Bank expects the next IMF tranche in 2Q2018. Total investment from the IMF are anticipated at the level of USD 3-3.5 bn.

—— Ukrainian Parliament extended the moratorium on the sale of agricultural lands until 2019. —— Ukraine is undermining anti-corruption efforts by disrupting high-level corruption investigations of the National Anti-Corruption Bureau (NABU), the US State Department said. US government also anticipates the creation of the anticorruption court in the nearest time. —— Prime Ministers of Ukraine and China reached a

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Upharmacia December 2017

PHARMA MARKET NEWS Farmak Expects Increase of Retail Sales by 18% in 2018 Ukraine’s leading pharmaceutical company Farmak expects the sales of its drugs to rise by 18% y-o-y in UAH in 2018, the company’s Marketing Director Susanna Halilova stated. Herewith, the forecast on sales in volumes is unclear. Farmak anticipates the medical reform to have impact on pharmaceutical market with regard to the changes in the sales structure of certain groups of drugs. According to the forecast of Business Credit analytical company, the retail sales of Ukrainian drugs may increase 4% in volumes and 10% in values.

Yuria-Pharm may Supply TB Drugs to Brazil Ukrainian company Yuria-Pharm considers the possibility to supply its antitubercular drugs to Brazil, the company’s Director Dmytro Derkach said. Currently, the company is waiting for the results of the inspection conducted by the Brazilian regulatory body (ANVISA) in Nov. “Brazil is interested in Yuria-Pharm’s production, in particular, in its antitubercular drugs,” Mr. Derkach stated. In 2018, Yuria-Pharm plans to continue implementing production of new drugs and

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entering new external markets. Now, the company’s products are represented in 25 countries. In 9M2017, Yuria-Pharm was a #1 supplier on the Ukrainian hospital drug market with 10% market share. On the retail drug market, the company held 10th position.

Biofarma to Open a Blood Plasma Fractionation Plant in 2018 Ukrainian producer of blood preparations Biofarma plans to launch a blood plasma fractionation plant in Jul 2018. The plant’s construction will cost USD 35 mio. Its capacity is to amount 500 tons of blood plasma. “We have an ambition to become a TOP-7 producer of blood plasma in the world”, Biofarma’s President Konstantin Efimenko stated. Biofarma produces more than 20 immunobiological preparations from donor blood obtained according to technology of recombinant DNA and probiotics. In 2014, the company constructed its new plant in Bila Tserkva, investing about USD 42 mio.

Interchem Launched new API Production Complex Ukrainian company Interchem launched a new production complex for the production of Active Pharmaceutical Ingredients (API) at its plant in Odessa.

Completion of the complex construction has become the last phase within an investment project worth EUR 50 mio, which had been started in 2012. About EUR 9 mio were invested in the construction of the complex. Interchem also implemented a new drug labeling system used to automatically track the movement of drugs from the manufacturer to the end user or patient. The system uses two-dimensional codes of the GS1 ECC200 standard and was developed with recommendations of the European Federation of Pharmaceutical Industries and associations (EFPIA). “Counterfeit drugs are a serious problem in Ukraine”, the Director of Interchem Anatoliy Reder said. “As a single company in Ukraine, which implemented such system, Interchem participates in the pilot project of the State Service on Drug Control, aimed to addressing the problem through tracking the drugs turnover.” Interchem is a full-cycle enterprise, which produces above 100 forms of drugs. In 2016, Interchem was a 25th company on Ukrainian drug market by sales in values. In Dec, the company celebrated its 25th anniversary.

Indian Companies Plan to Increase Exports to Ukraine to USD 300 mio in 2018 Indian Pharmaceutical Manufacturers Association (IPMA) stated that in 2016 exports to

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Upharmacia December 2017

pharmaceuticals from India to Ukraine amounted USD 134 mio, making 28% of the total Indian exports to Ukraine. Members of the IPMA expects the exports to increase to USD 300 mio in 2018.

export products for more than USD 10 bn. The leading Indian companies such as Sun Pharma, Dr. Reddy's, Aurobindo, Stride and Hatro are presented on Ukrainian pharmaceutical market.

India is the third world’s producer of pharmaceuticals in volumes and 14th in values. Indian companies

REGULATORY UPDATES 7% VAT on Transactions with All Medical Products On Dec 7, Ukrainian Parliament adopted the Draft Law No. 6776D dated Nov 14, 2017, which provided amendments to the Tax Code of Ukraine. According to the new norms, since Jan 1, 2018, VAT rate of 7% will apply to supplies of goods in the customs territory of Ukraine and the importation into the customs territory of Ukraine of all medical products not included in the state register of medical equipment and medical devices, or those that meet the requirements of the relevant technical regulations, which is confirmed by the compliance document, and are allowed for placing on the market and / or putting into operation and use in Ukraine. It should be noted that today 7% VAT rate applies exclusively to the operations of supplying in the customs territory of Ukraine and the importation into the customs territory of Ukraine of medical products based on the list approved by the Cabinet of Ministers of Ukraine. 20% VAT is levied on supply in the customs territory of Ukraine and the import into the customs territory of Ukraine of medical products not included in www.upharma-c.com

this list. In addition, 7% VAT rate remains for supply operations in the customs territory of Ukraine and the import into the customs territory of Ukraine of medicines, medical products and / or medical equipment authorized for use for clinical trials, the permission for which is provided by the respective ministry.

Provided by Thereby, the specialized International organizations will conduct procurement of drugs and medical devices for Ukraine under 39 directions. Read more regulatory news on Legal

Alliance website

The List of Direction for Public Procurement of Drugs Expanded The Cabinet of Ministers promulgated the Resolution No. 975, which expanded the list of directions, under which International organizations conduct delegated procurement of drugs for Ukraine. The list included state programs for the procurement of drugs for the treatment of viral hepatitis B and C, the therapy of adult patients with cystic fibrosis, patients with tuberculosis, the procurement of tests and supplies for diagnosis of tuberculosis as well medical devices for patients with idiopathic family dystonia.

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Upharmacia December 2017

HEALTHCARE NEWS UAH 115 bn to be Allocated on Healthcare in 2018 In Dec, Ukrainian Parliament approved the State Budget for 2018. About UAH 115 bn will be provided on healthcare vs UAH 88.7 bn in 2017. Herewith, the regular healthcare expenses will amount UAH 86 bn. The MOH plans to spend additional UAH 14 bn on reformation of the primary medical care. UAH 1 bn will be allocated for the “Affordable drugs” reimbursement program. On Dec 27, the government included Losartan (cardiovascular diseases) and glibenclamide (type 2 diabetes) in the “Affordable drugs” reimbursement list. The MOH plans to further expand the program in future through adding more INNs and nosologies.

National Health Service to be Launched in Jun 2018 On Dec 27, the Cabinet of Ministers of Ukraine approved the Regulation on the National Health Service of Ukraine (NHSU). The NHSU is to become a national insurer, which will enter into contracts with health care institutions and will purchase health care services for citizens from them. Herewith, the Service will not own funds, which are allocated from the State Budget for payment of medical services for the population, as money are kept on Treasury accounts. The launch of the NHSU is scheduled for the end of Jun 2018. By that time medical institutions of primary care will have to reorganize themselves from the budget institutions into utility

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non-profit enterprises and then to reach contracts with the NHSU. The institutions, which do not pass all needed procedures, will be funded at the expense of a medical subvention as before. The contracts with the NHSU also could be reached in Oct and Dec 2018.

The MoH Defined the Priorities for 2018 Deputy Head of the MoH Pavlo Kovtonyuk listed the 5 key priorities of the Ministry for 2018: —— changing the system of financing services at the primary level of health care delivery; —— expansion of the drugs reimbursement program “Affordable drugs”; —— combating cardiovascular diseases by developing a network of cardiographic centers; —— development of the Law to regulate the licensing of medical activities; —— reformation of the Ministry of Health itself.

January 2018, the Deputy Head of the MoH Olexandr Linchevsky stated. The transplantation in Ukraine is not regulated as the corresponding Draft Law has not been adopted yet, but the Ministry strives to allow kidney transplantation from an unrelated donor even before the adoption of the new Law. The State Budget 2018 envisages the allocation of UAH 112 mio on such project. Its launch will demand the adoption of by-laws concerning the work of transplant coordinators and preparation of registries of donors and recipients. Moreover, in July 2018 the Ministry plans expand the “Affordable drugs” reimbursement program with drugs used in the pre- and postoperative period for organ and tissue transplantation. The list of reimbursable drugs to include azathioprine, mycophenolic acid and its salts, tacrolimus and cyclosporine.

The Prime Minister of Ukraine called the implementation of medical reform among the key priorities of the government in 2018. On 28 Dec, the President of Ukraine signed the Laws needed to start the medical reform in Ukraine.

Pilot Project on Cadaveric Transplantation to be Launched in 2018 The MoH is taking measures to launch the system of cadaveric transplantation in pilot regime in 5 regions of Ukraine and Kyiv since

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Upharmacia December 2017

CIS PHARMA NEWS Armenia

Russia

—— Tufenkji Group and Bio-Chem companies received national GMP certificates. Tufenkji Group plans to enter external markets in 2018. Currently, 5 of 19 producers in Armenia are GPM-certified.

—— Within the integration into the business of Sun Pharma, Biosintez company will construct the new production site for manufacturing of solid drug forms in 2Q2018. The capacity of the new site will be about 1.7bln tablets. —— In next 3 years, AstraZeneca plans to localize 10 drugs in Russia within the special investment contracts. 6 of them do not have analogues in Russia. —— According to IMS Health data, in 9M2017, Protek company leaded the rating of pharmaceutical distributors by direct sales of drugs with 18% market share. It was followed by Katren (16.9%) and Puls (13.6%). —— Russian Parliament postponed the introduction of compulsory labeling of drugs from 2019 to 2020. —— Pharmasyntez company will invest RUB 3.5bln in the production of 30 types of hormonal preparations at its facilities in Tyumen region. The company will become the only local manufacturer of such products in Russia.

Azerbaijan —— Belarus plans to build a pharmaceutical plant in Azerbaijan to produce antitumor drugs oriented on the third countries.

Belarus —— Deputy PM of Belarus stated that Belarus and Uzbekistan plan to create a joint enterprise on drugs manufacturing in Uzbekistan.

Kazakhstan —— Karaganda Pharmaceutical Complex, Hikma CIS and Eleas companies plan to establish production of 19 names of insulins to supply them within public tenders. —— Kazakh Parliament postponed introduction of compulsory medical insurance from 2018 to 2020. —— The government of Astana signed memorandums and contracts with companies worth KZT 100 bn. Each of them intends to establish own manufacturing of drugs and medical devises in the Astana pharmaceutical cluster.

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Upharmacia December 2017

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Upharmacia - December 2017  

Ukrainian Pharmaceutical Market Monthly. Details: https://goo.gl/qyW3AK

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Ukrainian Pharmaceutical Market Monthly. Details: https://goo.gl/qyW3AK

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