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UPHARMACIA Ukrainian Pharmaceutical Market Monthly

01'17 issue

Macroeconomic Environment Market & Companies News Regulatory Updates Healthcare News

SPECIAL EDITION:

2016 FY RESULTS 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 January 2017

CONTENTS

JAN 2017

2016 FY SUMMARY

page

2

/Macroeconomic Indicators, 2016 FY 4 /Economy Development Summary In 2016 5 /Pharmaceutical Market Summary In 2016 6 /Local Pharma Companies In 2016 7 /Healthcare Sector Development in 2016 8 /Key Regulatory Changes In 2016 9 /Forecasts For 2017 11 /Economy & Pharma Dashboard, 2016 FY 11 /Country's Economy In Jan 2017 12 /Pharma Market & Companies News In Jan 2017 13 /Regulatory Updates In Jan 2017 15 /Healthcare News In Jan 2017 17 /CIS Pharma Markets & Events 3

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Upharmacia January 2017

MACROECONOMIC INDICATORS / 2016 FY INDICATORS

2016 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

FY

MACROECONOMIC INDICATORS GDP ($ bn) growth, % y-o-y Export ($ bn)

Q1

Q2

Q3

17.655

21.053

26.185

0.1%

-0.02%

Q4

0.87%

2.04

3.08

2.99

3.10

2.88

2.93

2.92

3.18

3.16

3.24

3.62

3.63

-31%

3%

-13%

1%

-2%

-5%

-7%

3%

-6%

0%

16%

8%

-3.9%

($ bn)

2.23

2.68

3.35

3.05

2.69

2.87

3.09

3.45

3.48

3.54

3.81

4.13

38.9

growth, % y-o-y

-26%

-6%

5%

7%

2%

4%

4%

-11%

8%

10%

24%

32%

5.8%

4.93

4.93

5.41

5.17

5.39

5.44

5.61

5.57

5.62

6.39

6.91

7.64

69.02

-18%

8%

-2%

-12%

-5%

-6%

-2%

3%

-2%

2%

17%

20%

0.24%

1.60

1.50

1.64

1.76

1.59

1.73

1.87

1.92

1.76

1.87

2.04

2.09

21.38

-19%

4%

2%

6%

-18%

-6%

-3%

2%

-5%

-8%

14%

4%

-2.7

Unemployment Rate (%)

1.9

1.9

1.7

1.6

1.6

1.5

1.4

1.3

1.3

1.2

1.3

1.5

1.5

Average Salary ($)

180

174

187

191

198

214

217

208

204

208

210

247

203

CPI of Ukraine

140.3

132.7

120.9

109.8

107.5

106.9

107.9

108.4

107.6

112.4

112.1

112.4

114.9

GfK Consumer Sentiment Index

50.2

54.1

50.6

49.1

50.3

52.7

50.1

53.7

50.1

51.6

47.4

57.1

51.4

growth, % y-o-y

Import

Industrial Prod. Sales ($ bn) growth, % y-o-y

Retail Turnover (US$ bn) growth, % y-o-y

36.4

OFFICIAL CURRENCY EXCHANGE RATE UAH / USD

24.3

26.4

26.4

25.6

25.2

25.0

24.8

25.1

26.3

25.8

25.7

26.2

25.6

UAH / EUR

26.3

29.3

29.2

29.1

28.5

28.1

27.5

28.1

29.5

28.5

27.8

27.6

28.3

14.17

16.15

13.36

13.58

18.81

18.40

14.75

23.95

184.2

PHARMACEUTICAL INDUSTRY INDICATORS Export of Pharma Products ($ mio)

growth, % y-o-y

Import of Pharma Products ($ mio) growth, % y-o-y

Retail Sales, values ($, mio) growth, % y-o-y

Retail Sales, volumes (mio units) growth, % y-o-y

8.31

13.33

15.54

13.90

-30%

11%

16%

3%

9%

5%

-4%

51%

37%

51%

26%

52%

18.6%

103.7

145.0

125.1

130.0

110.4

132.1

133.1

137.3

140.6

137.3

142.6

169.1

1606.5

15%

27%

21%

25%

31%

15%

25%

47%

15%

-7%

1%

19%

17.8%

198.9

176.0

187.3

178.1

177.6

174.8

175.4

180.9

190.4

212.2

224.7

268.0

2344.3

-17%

-1%

-5%

-1%

-8%

-2%

2%

2%

-1%

3%

14%

26%

0.9%

133.6

126.8

133.8

125.2

123.6

122.6

122.7

126.2

135.5

138.6

139.9

164.1

1592.6

1%

-12%

-5%

2%

-1%

4%

3%

3%

7%

6%

8%

20%

2.9%

1.49

1.39

1.40

1.42

1.44

1.43

1.43

1.43

1.41

1.53

1.61

1.63

1.47

-23%

-23%

13%

1%

-2%

-6%

-3%

-1%

-8%

-3%

6%

5%

-4.9%

CPI, Pharma Products

131.9

126.9

113.5

108.4

107.3

108.2

107.4

107.2

107.9

107.6

107.4

106.4

111.7

Local Companies share, values

42.3

42.9

42.7

42.3

42.9

42.8

42.8

42.6

43.4

42.4

42.3

41.7

42.6

75.6

76.5

76.5

76.7

77.2

77.4

77.9

77.6

76.5

75.1

74.9

73.9

76.2

Average Cost of Pack (USD) growth, % y-o-y

(%)

Local Companies share, volumes (%)

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3


Upharmacia January 2017

2016 YEAR SUMMARY

ECONOMY DEVELOPMENT >> ECONOMY Ukraine managed to tackle recession and demonstrate features of economic growth in 2016. Key factors of economic recovery were the domestic demand for investments and a household consumption.

CONSUMER INFLATION

12.4%

Ukraine’s foreign trade continued a transformation in 2016: there was a shift from the traditional Russian market (and the CIS market in general) and an increase of EU countries in a foreign trade share.

at the year-end, NBU

+1.8% GDP

Deteriorating Ukr-Rus relations hampered Ukraine’s trade with countries in the South Caucasus and Central Asia.

estimated by the MoF

The GDP grew by +1.8% in the 2016 FY. And the Ministry of Finance expects it to grow further +3% in 2017. International reserves of the NBU reached $15.5 bn at the year-end (increased 16.8% y-o-y).

+5.8%IMPORT $ 38.9 bn, NBU

Monthly CPIs decreased in Apr to 9.8 from 20.9 in Mar and was stable until Oct when it grew to 12.4. The same amount was in Dec. In 2016, industrial output grew 2.4% y-o-y compared to 13% y-o-y fall in 2015. Main industries have shown slight growth: metal production – 5.9% y-o-y, machinery production – 1.3% y-o-y, chemical – 0.4% y-o-y (pharmaceutical – 3.9%). Mining reduced by 0.3% y-o-y.

-3.9% EXPORT $ 36.4 bn, NBU

Official currency exchange rates for UAH/USD amounted 26.2 in Dec, compared to 23.4 in Dec 2015. 5.5%

4.1%

Ukraine's GDP growth 0.2%

2010

2011

1.8%

0.0%

2012

2013

2014

2015

2016

-6.8% -9.9% 90 80

Export & Import of Ukraine

84.7 77.0

70 60

Export

Import

USD bn

30

Currency Exchange Rates vs. Consumer Price Index 124.9

68.8 63.3

50

53.9

20

54.4

99.8

28.3

143.3 24.2

100.5 15.7

25.6 21.8

37.8

36.8

36.4

80

38.9 10

10.3

10.6

8.0

8.0

2012

2013

11.9

20 10

2012

2013

2014

2015

2016

0

UAH/USD

4

40

0

0

120

112.4

40 30

160

2014

UAH/EUR

2015

2016

CPI

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Upharmacia January 2017

2016 YEAR SUMMARY PHARMACEUTICAL MARKET >> MARKET TRENDS In 2016, after two years of drastic fall, Ukrainian pharmaceutical market slightly increased by 0.9% y-o-y in values to USD 2.34 bn and by 2.9% y-o-y in volumes to 1.59 mio packs. The period of 18-month straight decrease stopped in Jul when the market grew 2% PPG in values. In the year-end, the growth dynamics vastly accelerated – in Nov and Dec, the market rose 14% and 26% PPG in values, respectively.

Ukrainian Retail Pharmaceutical Market 5 000

in values

USD mio y-o-y growth, %

4 000 16.6%

Ukrainian Retail Pharmaceutical Market

2 500

4.5%

12.7% 0.9%

3 000

in volumes

mio packs y-o-y growth, %

2 000 1.6%

1 500

2.9% 1 000

2 000 -21.2%

1 000 0

-11.5%

-34.3%

-12.3%

500

3 979

4 485

3 534

2 323

2 344

2012

2013

2014

2015

2016

0

1 961

1 992

1 764

1 548

1 593

2012

2013

2014

2015

2016

The share of medical devices reduced 0.5% y-o-y in values and 1.2% y-o-y in volumes. Food supplements and cosmetics slightly increased their shares as compared to 2015. Market structure by segments

Market structure by segments

2016, in values

2016, in volumes 28.4%

Drugs

Drugs

Medical devices

Medical devices

7.9%

3.1% 2.7%

Cosmetics

3.7% 3.9%

Cosmetics Food supplements

Food supplements

65.8%

84.5%

Market share of foreign companies in drug segment continued decreasing in values, while in volumes, they increased their share by 3.1%. Market shares of Foreign&Local pharma companies Foreign

Market shares of Foreign&Local pharma companies

retail segment, in values

Domestic

100%

Foreign

retail segment, in volumes

Domestic

100%

35.5%

36.9%

40.8%

42.3%

50%

67.5%

71.8%

76.8%

73.7%

32.5%

28.2%

23.2%

26.3%

2013

2014

2015

2016

50%

64.5%

63.1%

59.2%

57.7%

0%

2013

www.upharma-c.com

2014

2015

2016

0%

5


Upharmacia January 2017

2016 YEAR SUMMARY PHARMACEUTICAL MARKET RETAIL DRUG SALES: +0.4%

$ 1.98 bn Source: Morion

HOSPITAL DRUG SALES: -6.4%

$ 308.9 mio Source: Morion

>> PHARMACEUTICAL MARKET: LOCAL PLAYERS GROWTH Market participants are striving to further development. —— HALYCHPHARM (a part of the Arterium Corporation) has launched an infusion solutions line. —— On May 17, INTERCHEM has opened a new laboratory and production complex in Odessa. The company invested EUR 42 mio in enhancing its industrial capacities, which would allow increasing its production by 4 times. —— At the beginning of the year, DARNITSA was endorsed to acquire a little bit more than 50% shares of the Borshchahivskiy Chemical Pharmaceutical Plant (BCPP). The Board of BCPP accused Darnitsa of hostile takeover attempts. The acquisition process was halted. —— Ukrainian company KUSUM PHARM plans to start enlargement of its plant in Sumy by the end of 2016 to double production capacity at least 2 times by 2018. —— In May, Ukrainian company PHARMASCO opened its own complex, which includes offices, warehouse with appropriate temperature conditions and premises for own production. —— In Dec, EBRD announced the provision of USD 3.8 mio loan to Ukrainian company ECOPHARM for the construction of GMP plant. The Bank will also provide USD 3 mio loan to PHARMA-START (part of Swiss ACINO GROUP) for equipment procurement and additional capitalization.

>> PHARMACEUTICAL MARKET: FOREIGN EXPANSION Ukrainian pharmaceutical companies were actively exploring new markets: —— In Jan, FARMAK acquired polish distributor KWW Kotkowski Wierzbicki Wegrzyn sp.j. —— In Sep, ARTERIUM acquired Slovenian company Marifarm. —— In Oct, FARMAK announced plans to enter the Malasian market in 2018. —— In Oct, BIOFARMA signed a long-term agreement on export of its products to the Republic of Yemen. —— ZDOROVYE GROUP plans to access the U.S. market within the cooperation with the American company Unicity. —— LEKHIM’S company Technolog announced the intention to triple exports of its antituberculosis drugs in next few years. —— In Dec, FARMAK joined Drug, Chemical & Associated Technologies Association (DCAT) in order to have the opportunity to access the U.S. market.

6

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Upharmacia January 2017

2016 YEAR SUMMARY HEALTH CARE SECTOR >> HEALTH CARE: BUDGET HEALTHCARE BUDGET 2016

$ 580 mio HEALTHCARE BUDGET 2017

$ 611 mio

Old medical infrastructure, despite the extensive network of health care institutions (Ukraine keeps the 4th place in the world in the number of hospital beds – 879 beds per 100 ths population), does not ensure provision of quality and timely health care for the population or high wages of health care workers, and the low level of financing leads to the need for comprehensive health care reform aimed at reaching European level by Ukrainian medicine. In Nov 2016, the Ukrainian government began a health care reform by the adoption of the Concept of health care reform financing.

Key provisions of the Healthcare reforming concept:

1

Introduction of the National model of medical insurance Shift to the principle: “Money follows a patient”

2

Introduction of a guaranteed health care package

3

Creation of a single national public procurments organization

+

4

Autonomous status of health care institutions

5

Introduction of reimbursement and reference pricing systems to increase the affordability of drugs

Establishment of hospital districts

REFERENCE PRICING & REIMBURESEMENT LIST

EFFECTIVE DATE

Apr 1, 2017 www.upharma-c.com

ASTHMA

TYPE II DIABETES

3 INNs

2 INNs

ARTERIAL HYPERTENSION

16 INNs

7


Upharmacia January 2017

2016 YEAR SUMMARY

KEY REGULATORY CHANGES Changes in Procedure for Public Procurements 2016 was the year of the first experience of centralized public procurement of drugs and medical devices through specialized international organizations, while decentralized procurements were transferred to Prozorro system. The partners of the MOH have become UNDR, UNICEF and Crown Agents.

National Essential Medicines List On Jan, 12 the Cabinet of Ministers Resolution #1134 came into force. The National List of Essential Medicinal Products and Medical Devices has been renamed into the National Essential Medicines List. Therefore, the medical devices shall not be included into this list anymore and shall not be subject to pricing regulation. The List should be formed with due consideration of world-wide practices of rational pharmacotherapy and pharmacotherapeutic approach to primary health care of patients with priority pathologic conditions taking into consideration disease burden and mortality rate, and health care sector standards. The List will consist of INNs and will updated once a year.

Simplified R egistration Procedure for Medicines On May 31, the Parliament approved the Law, which provided for the simplified registration of medicinal products being registered by the competent authorities of the USA, Switzerland, Japan, Australia, Canada, and the European Union in accordance with the centralized procedure. Such products should be accepted for usage in the territories of the mentioned countries or the EU member states. The registration procedure for such medicinal products envisages the submission of the smaller package of documents, reduction of registration terms, and no need for the expertize of the registration materials. Decision on registration is issued by the MOH within 17 business days: —— 10 business days: Review of registration materials by the State expert center. —— 7 business days: Making the decision by the MOH on registration.

State R egulation of Prices On Nov 9 the Government has adopted the Resolution of the Cabinet of Ministers of Ukraine #862 “On state regulation of prices for medicines” and #863 “On the introduction of reimbursement of the cost of medicines”. The new price regulation system will act through: —— Maximum prices by implementation of price referencing on medicines by the MOH —— Maximum mark-ups only for reimbursable medicines purchased through decentralized procurements: wholesale – 5%, retail – 15%.

Provided by

8

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Upharmacia January 2017

2017 YEAR FORECASTS Economy According to a majority of forecasts, it is expected that Ukraine’s economy will recover and its GDP will continue growing. However, such expectations are rather modest given the fact that Ukraine’s economy has already survived deep recession at 1.5-3%. Recovery of domestic demand is among key factors contributing to economic growth. Private consumption will moderately recover in the medium term as a result of pent-up demand and rising incomes.

ECONOMY FORECASTS FOR 2017 GDP growth, %

Inflation, %

SigmaBlaizer

3.0

10.0

EBRD

2.0

-

IMF

2.5 2.0

11.0 8.5

World Bank It is also expected that business investments will rise. However, a substantial increase in investment activity in the near future will stimulate a respective increase in investment imports, including machinery and equipment, which will largely increase in a negative contribution of net export to GDP. A revival of credit activity amid expected reducing interest rates will be an additional factor contributing to growing domestic demand.

A net export will slow down the GDP growth. Slow global economic growth, including a slowdown in China’s growth, will curb an increase in Ukraine’s export.

Pharmaceutical Sector Pharmaceutical market of Ukraine is expected to continue a slight recovery in 2017. As the purchasing power of the population continues growing with the growth of the salary levels, the retail market will increase in both values and volumes. The negative factor is the instability of the national currency, devaluation of which is projected at 10% for 2017. The successful launch of reference pricing and reimbursement for certain categories of drugs in Apr is supposed to benefit both producers and customers, but regulatory provisions still raise many questions within the industry. According to ProximaResearch projection, the market will increase by 14-18% in hryvnias and by 2.9% in volumes.

in values

y-o-y growth, %

3 000 8.3%

0.9% 2 000

1 000

0

-21.2%

-34.3%

3 534

2 323

2 344

2014

2015

2016

2 539 2017

Source: ProximaResearch

Ukrainian Retail Pharmaceutical Market Forecast mio packs

2 500

in volumes

y-o-y growth, %

2 000 1 500

2.9% 1 000 -11.5% 500 0

Healthcare Sector

Ukrainian Retail Pharmaceutical Market Forecast USD mio

4 000

2.9%

-12.3%

1 764

1 548

1 593

2014

2015

2016

1 639 2017

Source: ProximaResearch

The plans of the Ministry of Health for 2017 are highly ambitious. The main emphasis will be on the reformation of medical institutions through provision of wider autonomy to the management and creation of hospital districts. Moreover, Ukraine is starting the gradual movement towards insurance medicine. First steps are changes in primary care funding and an introduction of family doctors. The main factor, which could halt the reformation is the sabotage from the side of officials and lobbyists, which use the existing system for personal gain. Moreover, the position of Ulana Suprun is unstable as she is still the acting Minister of Healthcare, while a lot of MOH’s initiatives have been criticizing by publicity as well as senior officials. Thereby, the success of the reforms will mostly depend on the MOH’s management credibility level and the industry’s readiness to change. www.upharma-c.com

9


RECRUITING & EXECUTIVE SEARCH We recruit pharma people in the CIS region and focus on: > Sales & Marketing > Regulatory Affairs > Quality Assurance > Finances > Operations > Administration

Anastasiya MAXIMENKO

Partner, HR-Consulting AMaximenko@upharma-c.com +380 (44) 232-11-43 +380 (97) 953-68-14

"We aim to be your trusted advisor in People Management"


Upharmacia January 2017

ECONOMY & PHARMA DASHBOARD / 2016 FY 268.0

280

240

212.2

198.9 200

176.0

187.3

178.1

177.6

174.8

175.4

180.9

120

135.5

133.8 126.8

2016

125.2

123.6

122.6

122.7

Mar

Apr

May

Jun

Jul

mio units

Sep

Oct

Nov

100

4.93

4.93

5.41

5.17

5.39

5.44

5.61

5.57

6.91

1.60

1.50

1.64

1.76

3.0

5.62

2.5

2016

50

143.3

15.5

13.9

Feb

Mar

Apr

1.59

1.73

1.87

1.92

1.76

1.87

2.04

2.09

1.5

142.6

150

23.9 18.4

16.1

14.2

13.4

May

Jun

120

90

14.8

13.6

60

30

Export

mio USD

Im port

Jul

Aug

Sep

Oct

Nov

0

Dec

132.7

140

120.9 109.8

107.5

29.3

29.2

29.1

28.5

25.4

26.3

23.4

24.3

26.4

26.4

25.6

25.2

112.4

112.1

112.4

107.9

108.4

107.9

28.1

27.5

28.1

29.5

28.5

27.8

27.6

25.0

24.8

25.1

26.3

25.8

25.7

26.2

106.9

120 100 80

25 20

1.0

137.4

180

160

140.3

35 30

140.6

Ukraine's International Trade in Pharma Production

40

2.0

2

60

15 40

Industrial Production Sales & Retail Turnover of Enterprises Surplus

2016

1 0

8.3

45

5

3

13.3

Jan

7.64 6.39

137.3

18.8

0

Dec

133.1

110.4

103.7

10

5

Aug

132.1

130.0

15

mio USD

7

4

20

139.9

8

6

125.1

120

Pharmaceutical Market Retail Sales Feb

164.1

126.2

80

Jan

145.0

160

190.4

138.6

169.1

30

25

224.7

140

160

133.6

180

bn USD Jan

0.5

5

0.0

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

10

Dec

2016

UAH/USD

Official Currency Exchange Rates vs. Consumer Price Index

UAH/EUR CPI

0

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

20 0

Dec

ECONOMY IN BRIEF JANUARY 2017 —— General budget deficit amounted UAH 54.7 bn in 2016, which is 2.4% of GDP. The projected indication was 3.7% of GDP. —— Average annual devaluation of the hryvnia that was 15% in 2016 would slow to 10% in 2017, Dragon Capital investment company projected. —— The Ukrainian Trade Ministry expects the foreign direct investments (FDI) in Ukraine to grow from USD 3.8 bn in 2016 to USD 4.5 bn in 2017. —— According to the NBU, in 2016, Ukrainians purchased USD 747.1 mio from banks, which is 9.2% more than in 2015. Sale of foreign currency increased 44.6% y-o-y to USD 3.22 bn. —— In 2016, industrial prices in Ukraine, rose 35.7% www.upharma-c.com

y-o-y, the State Statistics Service reported. —— Inflation in Ukraine in 2016 slowed down to 12.4% from 43.3% in 2015 and 24.9% in 2014. According to the Statics Service, in Dec 2016, inflation stood at 0.9% against 1.8% in Nov and 2.8% in Oct. —— VAT refunds in Ukraine in 2016 totaled UAH 94.3 bn, which is 37.9% more than in 2015 (UAH 68.4 bn) and 87.8% more than in 2014 (UAH 50.2 bn). —— In 2016, Ukraine reduced natural gas consumption by 4.1% y-o-y to 32 bn cubic meters. In 2015, the consumption of gas fall 20.9% y-o-y.

11


Upharmacia January 2017

MARKET & COMPANIES JANUARY 2017 In 2017, Biofarma to Invest UAH 40 mio in its Production Ukrainian producer of blood preparations plans to invest UAH 40 mio in its production and to launch 15 new products in 2017, the Chairman of the Supervisory Board Konstantin Efimenko of the company said. The company also expects increase of its retail sales by 30% y-o-y and growth of its exports by 50% y-o-y. To expand its export opportunities, Biofarma seeks to finish formation of 25 pharmaceutical dossiers in the European format. This year, Biofarma is also to launch a new plasma fractionation plant. According to Mr. Efimenko, in 2016, Biofarma increased pharmacy sales by 36.6% y-o-y to UAH 372.7 mio, while its export enhanced 60% y-o-y.

Unipharm Will Present Interests of Bosnalijek in Ukraine U.S. company Unipharm, Inc. reached the agreement with largest pharmaceutical company in Bosnia and Herzegovina Bosnalijek d.d. on presentation of the company’s interests in Ukraine. Unipharm will manage Bosnalijek’s product portfolio including the

12

distribution, registration, reregistration and promotion in Ukraine. The deal is expected to be completed by Apr 2017. The Director of Unipharm representative office in Ukraine Alexander Shalunov will lead the RO of Bosnalijek to provide effective integration of two businesses. “We are sure, that the decision made will strengthen positions of both companies and ensure the development within the difficult conditions of the Ukrainian pharmaceutical market,” the Unipharm press-release said.

Farmak R eceived GMP Certificate for Production of APIs in Shostka Production facilities of the Ukrainian company Farmak in Shostka (Sumy Region) has passed inspection on their compliance with national and European GMP requirements. In Dec 2015, Farmak created a separate manufacturing of substances in Shostka. The manufacturing was established as part of expansion of production of finished drugs and active pharmaceutical ingredients (API). The complex includes manufacturing sites, quality control laboratories and logistic center. The staff currently

includes 86 employees. Farmak retained a leading position on the Ukrainian pharmaceutical market in 2016.

Ukraine to R each Voluntary Settlement with Gilead on Sofosbuvir Ukrainian government will sign voluntary settlement with Gilead Sciences Inc. regarding patent protection of Sovaldi (sofosbuvir). Earlier, the U.S. company sought to cancel state registration of sofosbuvir generic Grateziano (Pharmco), which had been registered before Sovaldi. In Oct 2016, Kyiv Administrative Court refused to cancel state registration of Grateziano. “During negotiations, we have managed to find a compromise for Gilead to renounce it’s claims to Ukraine,” the Justice Minister of Ukraine said. “We will take measures to eliminate violations of the legitimate patent rights, while Gilead is to provide the Ukrainian market a discount on the drug”. After reaching the agreement, Gilead would not raise any financial claims, the company’s officials said. Within the Global Access Program, where Ukraine is included, the price of Sovaldi for public procurements should be USD 250 per package.

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Upharmacia January 2017

REGULATORY UPDATES JANUARY 2017 Provided by

Simplified Drug R egistration Came Into Force On Jan 3, 2017, the Ministry of Justice of Ukraine has registered the order of the MOH on launch of the mechanism on simplified registration of medicines registered in countries with strong regulatory authorities. The new mechanism provides for the simplified registration of medicinal products being registered by the competent authorities of the USA, Switzerland, Japan, Australia, Canada, and the European Union in accordance with the centralized procedure. Such products should be accepted for usage in the territories of the mentioned countries or the EU member-states. The registration procedure for such medicinal products envisages the submission of the smaller package of documents, reduction of registration terms (17 business days), and no need for the expertize of the registration materials.

New Procedure for Calculating Maximum Gross Wholesale Prices for Medicinal Products on the Basis of R eference Prices www.upharma-c.com

On Dec 29, 2016, in pursuance of Resolution of the Cabinet of Ministers of Ukraine "On State Regulation of Prices for Medicinal Products" No. 862, the Ministry of Health of Ukraine adopted Order No. 1423, thereby approving the Procedure for Calculating Maximum Gross Wholesale Prices for Medicinal Products on the basis of Reference Prices (hereinafter the Procedure). The Procedure was officially published and came into force on Jan 6th, 2017. The Procedure applies to medicinal products used in treatment of cardiovascular diseases, diabetes of type II and bronchial asthma, the cost of which is refundable in accordance with Resolution of the Cabinet of Ministers of Ukraine No. 863 as of Nov 9, 2016 (21 INNs in total). As its name implies, the Procedure establishes a mechanism for calculating maximum gross wholesale prices for medicinal products on the basis of reference prices. The latter are determined in UAH (reference prices in foreign currencies are denominated in UAH at the official NBU rate as of the date of determination of prices), taking into account the data on registered prices for medicinal products (of

each dosage form) obtained from official sources of the authorized public authorities of the following reference countries: the Republic of Poland, the Slovak Republic, the Czech Republic, the Republic of Latvia and Hungary. Maximum gross wholesale price of a single dosage form of a medicinal product from among 21 INPN is calculated as the smallest reference price of a unit of each dosage sample values of the respective reference prices in the countries using the following algorithm: MGWP = MIN (RP1 ... RPN), Where MGWP – maximum gross wholesale price; RP1 RPN - reference prices in the reference countries.

New Procedure for Pharmacovigilance

A new Procedure for Pharmacovigilance approved by Order of the Ministry of Health of Ukraine No. 898 as of Dec 27, 2016 (hereinafter - the Procedure) entered into effect on Jan 6, 2017. In addition to significant additions and changes to the terminology, the new Procedure also specifies new requirements to the applicant's

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pharmacovigilance system, without which circulation of medicinal products, vaccines and tuberculin is not permitted in Ukraine. Thus, the applicant must establish and manage at least one pharmacovigilance system, which consists of elements allowing for the monitoring of safety of medicinal products, vaccines and tuberculin and determining any changes in benefit / risk ratio, namely: i. that the applicant

(permanently and continuously) has at least one qualified authorized person responsible for pharmacovigilance. Depending on whether the applicant is in Ukraine or not, the authorized person must be either an employee of the applicant (for applicants who are residents), or a contact person should be designated on the territory of Ukraine and be subordinated to the applicant’s authorized person (for non-resident applicants). These persons must have higher medical or pharmaceutical education (pharmacist, clinical pharmacist);

into pharmacovigilance by entering into contractual relationships; vi. providing training of

personnel of the applicant to carry out activities related to pharmacovigilance; vii. creation of pharmacovigi-

lance quality system;

viii. pharmacovigilance

documentation processing, including its storage and archiving; ix. creation and support of the

risk management system.

ii. a structured system of

organization of pharmacovigilance, its update and support; iii. documentation of all

procedure processes;

iv. creation and maintenance of

databases used by the applicant for pharmacovigilance; v. involvement (if needed) of

other legal and / or natural persons and enterprises, institutions and organizations

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HEALTHCARE NEWS JANUARY 2017 The Government Postponed R eference Pricing to Apr 1 On Feb 1, the Cabinet of Ministers approved the decision to postpone the introduction of reference pricing for some categories of drugs from Feb 1 to Apr 1. Such decision was made after the acting Head of the MOH Ulana Suprun stated that the implementation of the mechanism would require a longer transitional period associated with the gradual sale of drug residues. “We cooperate with representatives of the pharmaceutical market, and already have information that some producers reduced prices by 15-30%, others are continuing the cooperation,” Mrs. Suprun stated. “Therefore, we want to give them a longer transitional period to ensure the provision of affordable medicines the population”. Earlier, the MOH has already postponed the reference pricing from Jan 1 to Feb 1 in order to provide pharmacies the period during which they could sell the residues of drugs, which had been supplied under the wholesale prices that exceed the maximum level. Despite this, the market

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operators still expressed the concern about the possibility of the disappearance of some original products of foreign manufacturers due to their inability to decrease the prices.

Government Plans to R educe Duration of Hospitalization and Increase the Number of Primary Care Physicians Within the government’s Plan of priority actions for the period up to 2020, it is planned to decrease the average duration of hospitalization form 11.8 days to 9.2 days. Herewith, the number of primary care physicians is expected to grow from 7 ths to 20 ths. It is noted that a lot of healthcare funds in Ukraine are used ineffectively. Ukraine is the fourth country in the world by the number of hospital beds per capita, while the healthcare indicators are among the worst in Europe. Therefore, in 2017, the government plans to introduce new funding model for healthcare system with emphasis on primary care and to define the guaranteed package of services.

EBA Asks for Clear Explanations on R eference Pricing and R eimbursement

European Business Association (EBA) appealed the Prime Minister of Ukraine expressing the concerns of the pharmaceutical industry regarding the unclear understanding of the norms on reference pricing and reimbursement of some categories of drugs. The EBA stated that the lack of clear explanations could lead to the deficit of the drugs, which are subject to the new mechanism. The Association noted that market participants need clarification regarding the possibility of free circulation of medicines in the pharmacy network, if the price of the drugs will exceed the calculated threshold level for Ukraine The EBA also requested the Government to publish a clarification about the expected results of the implementation of the new regulation for the three nosologies, the period of their assessment and further actions in the case of confirmation of the lack of efficiency in the implementation of the mechanism. “The patients do not know whether they would be able to continue individual therapy in future. Physicians are not aware whether they will be able to prescribe drugs according to

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their professional knowledge and experience. While, the pharmaceutical producers do not have a sufficient basis for the adoption of a positive or negative decision on the continuation of business activities in Ukraine”, the appeal of the EBA stated.

MoH Promulgated all Tenders for 2016 Public Procurements The MoH signed all contracts and promulgated all tenders on the public procurement of medicines for the funds of 2016 State Budget, the Head of the Ministry reported. The funds for the procurement of medicines under the State Budget 2017 are expected to come in Mar. In fact, procurements for this year and the previous year are to be conducted in 2017. The Ministry continues cooperation with International procurement organizations (UNDR, Crown Agents and UNICEF) within the delegated public procurements.

of state policy in the sphere of public health or for the omission of his department. Mr. Groysman said the government is to arrange the political consultation regarding the appointment of the Head of the MOH. In Jul 2016, Ulana Suprun was appointed to the position of the acting Minister of Health and currently holds the position. On Jan 1, 2017, the Director of Heat Institute started publicly accusing Ulana Suprun and the MoH management in negligence and failure of public procurements of medicines and medical equipment for the treatment cardiovascular diseases. The acting Minister rejected the accusations, while the Prime Minister supported the MOH management, calling it “an absolutely incorruptible team that has a chance to bring the health care system to a new level”.

Ukraine’s PM is asked to appoint Head of the MoH Parliamentary Committee on Public Health appealed Ukrainian Prime Minister Volodymyr Groysman asking to submit to the Parliament a candidate for the post of the Minister of Health with a view to entrusting this person with personal responsibility for the formation and implementation

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Upharmacia January 2017

CIS REGION PHARMA NEWS & EVENTS / 2016 FY Azerbaijan The construction of Azerbaijani-Iranian pharmaceutical plant Caspian Pharmed has been launched. USD 20 mio will be invested. The construction is to finish in 3Q2018. • Azerbaijan is considering the establishment of joint plants with Turkey and Ukraine, the Economy Minister reported. European partners are also considered. •

In 2016, 80% of medicines was imported from European and other developed countries; the rest was related to Russia, Ukraine and Belarus, the Economy Minister noted.

Belarus At least three new pharmaceutical plants will be opened in Belarus in the coming years with participation of India, Chairman of the Council of the Republic of the National Assembly said during the ground-breaking ceremony for the new plant in Skidel. Other two plants are under the construction and are located in Kolyadichi and Beshankovichy. • Belarus plans to enhance export of medicines in Africa and South-East Asia, the Director of Pharmaceutical Development Department said. •

Innovative veterinary preparations for the treatment and prevention of diseases of agricultural and domestic animals have been developed in Belarussian State University.

Georgia •

Georgia Healthcare Group has completed the acquisition of JSC ABC Pharmacia, the fourth largest pharmaceutical retailer and wholesaler in Georgia.

K azakhstan The CEO of Kazakhstan’s Single Distributor SK-Pharmacia proposed to work out the possibility to conduct joint public procurements of pharmaceuticals with member-states of the Eurasian Economic Union (EEU). • In 2016, consumer prices of pharmaceuticals increased 17.7% y-o-y, medical services – 12.5%. The overall CPI amounted 8.5%, the Statistics Committee reported. •

Russia •

GM of Teva Russia and Eurasia reported that Teva plans to increase the production capacities in Russia to 2 bln tablets per year, but is not planning to

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manufacture substances in the country yet. • In 11M2016, Russian market of drugs against tobacco dependence increased 15% PPG in values to RUB 2471.7 m. Currently, there are three OTC brands and one Rx brand presented on the market. Russian Prime Minister approved the new List of vital and essential drugs for 2017, which included 646 INNs. The Vice Prime Minister stated that, in 2017, the List of essential and vital drugs will be approved not once, but as new drugs are appearing. • Rafarma company plans to launch its production onto the market of South Korea. The first supplies of ceftriaxone are expected to start in 2018. •

Uzbekistan •

The President of Uzbekistan issue the Order on development of four pharmaceutical industrial zones: Boysun-pharm (Surxondaryo Region), Bustonlik-pharm (Tashkent Region), Zaamin-pharm (Jizzakh Region), Syrdarya-pharm (Sirdaryo Region). The investors will be exempt from land tax, income tax, property tax of legal entities, etc. for 3-10 years.

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Upharmacia - January 2017