Page 1

Issued by UPharma Consulting

UPHARMACIA Ukrainian Pharmaceutical Market Monthly

07'17

issue

Macroeconomic Environment Market & Companies News Regulatory Updates Healthcare News

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 July 2017

CONTENTS Page

3 5 5 6 7 8 9

Section

/ / / / / / /

Data period

Macroeconomic Indicators 06/2016-07/2017 Economy & Pharma Dashboard

06/2016-07/2017

Economic News 07/2017 Pharma Market News 07/2017 Regulatory Updates 07/2017 Healthcare News 07/2017 CIS Pharma News 07/2017

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 July 2017

MACROECONOMIC INDICATORS INDICATORS

2016 Jun

Jul

Aug

Sep

2017 Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

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

Q3

Q4

Q1

26.185

27.930

21.577

9.16%

0.87%

Q2

22.2%

Export ($ bn)

2.93

2.92

3.18

3.16

3.24

3.62

3.63

3.03

3.20

4.11

3.34

3.48

-5%

-7%

3%

-6%

0%

16%

8%

48%

20%

37%

8%

21%

14%

Import ($ bn)

2.87

3.09

3.45

3.48

3.54

3.81

4.13

3.10

3.67

4.37

3.73

3.83

3.96

Industrial Prod. Sales ($ bn)

4%

4%

-11%

8%

10%

24%

32%

32%

18%

35%

22%

27%

47%

5.44

5.61

5.57

5.62

6.39

6.91

7.64

6.34

6.44

6.91

5.92

6.25

6.27

-6%

-2%

3%

-2%

2%

17%

20%

29%

31%

28%

15%

16%

15%

Retail Turnover ($ bn)

1.73

1.87

1.92

1.76

1.87

2.04

2.09

1.40

1.37

1.62

1.66

1.93

1.78

-6%

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

3.35

Unemployment Rate (%) Average Salary ($)

-3%

2%

-5%

-8%

14%

4%

-12%

-8%

-2%

-6%

21%

3%

1.5

1.4

1.3

1.3

1.2

1.3

1.5

1.6

1.7

1.5

1.4

1.3

1.3

214

217

208

204

208

210

247

221

230

250

248

259

272

CPI (Consumer Prices Index)

106.9

107.9

108.4

107.6

112.4

112.1

112.4

112.6

114.2

115.1

112.2

113.5

115.6

52.7

50.1

53.7

50.1

51.6

47.4

57.1

53.7

56.2

55.5

54.9

58.0

59.4

GfK Consumer Sentiment Index

OFFICIAL CURRENCY EXCHANGE RATE UAH / USD

25.0

24.8

25.1

26.3

25.8

25.7

26.2

27.2

27.0

27.0

26.9

26.4

26.1

UAH / EUR

28.1

27.5

28.1

29.5

28.5

27.8

27.6

28.8

28.8

28.8

28.8

29.2

29.3

19.75

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

16.15

13.36

13.58

18.81

18.40

14.75

23.95

8.10

13.31

22.01

12.22

14.21

5%

-4%

51%

37%

51%

26%

52%

-3%

0%

42%

-12%

0%

22%

132.1

133.1

137.3

140.6

137.3

142.6

169.1

102.4

123.4

150.6

116.8

145.7

156.8

15%

25%

47%

15%

-7%

1%

19%

-1%

-15%

20%

-10%

32%

19%

174.8

175.4

180.9

190.4

212.2

224.7

268.0

233.2

225.4

187.0

210.5

217.5

206.5

-2%

2%

2%

-1%

3%

14%

26%

17%

28%

0%

18%

22%

18%

122.6

122.7

126.2

135.5

138.6

139.9

164.1

148.8

147.6

121.9

133.9

137.3

132.0

4%

3%

3%

7%

6%

8%

20%

11%

16%

-9%

7%

11%

8%

1.43

1.43

1.43

1.41

1.53

1.61

1.63

1.57

1.53

1.53

1.57

1.58

1.56

-6%

-3%

-1%

-8%

-3%

6%

5%

5%

10%

9%

10%

10%

10%

108.2

107.4

107.2

107.9

107.6

107.4

106.4

105.4

104.2

103.2

102.8

103.0

103.2

Local Companies Share % values

42.8

42.8

42.6

43.4

42.4

42.3

41.7

41.9

42.7

43.0

42.7

42.9

43.4

Local Companies Share % volumes

77.4

77.9

77.6

76.5

75.1

74.9

73.9

74.5

75.2

75.7

75.6

76.0

76.5

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

CPI, Pharma Products

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Upharmacia July 2017

ECONOMY & PHARMA DASHBOARD 264.9

280

240

212.2 200

174.8

175.4

180.9

160

120

80

122.7

233.2 164.1 148.8

138.6

Jul

133.9

Oct

Nov

Dec

133.1

137.3

137.3

15

5

mio USD

100

Mar

Apr

May

137.4

142.6 23.9

18.8

123.4

13.4

0

Jul

Aug

150

116.8

120

19.8 90

14.8

13.6

13.3

Sep

Oct

12.2

14.2 60

Export

Ukraine's International Trade in Pharma Production mio USD 2016 Jun

Jun

22.0

102.4

156.8

145.7

18.4

16.1

10

132.0

mio units

Feb

140.6

20

120

2017 Jan

132.1

180

150.6

160

140

121.9

Sep

206.5

147.6

126.2

Aug

217.5

187.0

139.9

Pharmaceutical Market Retail Sales 2016 Jun

210.5

169.1

30

25

225.4

190.4

135.5 122.6

224.7

180

8.1

Im port

30

2017

Nov

Dec

Jan

0

Feb

Mar

Apr

May

Jun

50

160 140

40

106.9

107.9

30

28.1

27.5

20

25.0

24.8

108.4

28.1

25.1

107.9

29.5

26.3

112.4

112.1

112.4

112.6

114.2

115.1

112.2

113.5

115.6

28.5

27.8

27.6

28.8

28.8

28.8

28.8

29.2

29.26

26.2

27.2

27.0

27.0

26.4

26.1

25.8

25.7

26.9

UAH/USD UAH/EUR

Official Currency Exchange Rates vs. Consumer Price Index

10

CPI

Jun

Jul

Aug

Sep

Oct

2017 Nov

100 80 60 40 20

2016

0

120

Dec

Jan

0

Feb

Mar

Apr

May

Jun

ECONOMIC NEWS ——Ukraine’s Investment Attractiveness Index (prepared by the EBA) reached its highest ranking in six years (3.15). The leaders of 142 of the biggest international and Ukrainian companies indicated the improvement of deregulation, development of electronic services, simplification of receiving documentation, publicity of state data etc.

——The NBU downgraded the forecast of Ukraine’s GDP in 2017 from 1.9% to 1.6% y-o-y due to revised grain harvest estimates and low performance in services in 1H2017. The Bank forecasts the GDP growth to increase to 3.2% y-o-y in 2018. ——Ministry of Economic Development and Trade of Ukraine estimated the growth of GDP in 1H2017 at 2.5% (+/- 0.3%). ——The President of Ukraine declared the goal to increase trade turnover between Ukraine and Belarus to USD 5 bn; between Ukraine and Georgia to USD 1 bn. ——The IMF will not insist on launching a farmland market in Ukraine in order the country to www.upharma-c.com

obtain the next loan tranche. But the Fund’s spokesman note that land reform remains an important condition under the program. ——Ukraine’s PM stated that Ukraine initiates the talks on establishment of FTA with the UK after Brexit. ——In Jun, industrial output in Ukraine increased 3.8% y-o-y vs 1.2% y-o-y growth in May. Machinery industry showed 14.7% y-o-y growth. Among regions, the strongest growth was in Odessa region (43.9%) and Rivne region (28.4%). ——Ukraine's general budget revenue sped up to 46.6% yoy growth in June from 39.3% yoy in the prior month (State Treasury). ——Ukraine's state debt grew 0.4% m/m, or USD 330 mln, to USD 75.0 bln in June owing to further hryvnia strengthening (Finance Ministry). ——Ukraine's industrial output sped up to 3.8% yoy growth in June from 1.2% yoy in the prior month (State Statistics Service).

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Upharmacia July 2017

PHARMA MARKET NEWS Sanofi-Aventis Ukraine became a Victim of Fraudsters

This measure is aimed to ensure the quality of drugs on Ukrainian market.

Fraudsters have transferred UAH 46 mio from the accounts of Sanofi-Aventis Ukraine through forgery of documents of the Economic Court of Kyiv.

The range of companies (Servier Ukraine, Grindeks, Johnson&Johnson Ukraine, Teva Ukraine) submitted the letter to the MOH, expressing the obligation to make changes to the registration materials.

The company stated that the crime was conducted with the connivance of representatives of the judiciary system of Ukraine. “It damages not only the company but also the reputation of Ukraine as a state, which struggles to attract foreign investments and declares their protection,” the company’s official stated. “The lack of adequate protection of our rights can negatively affect the further plans on development of Sanofi Group’s business in Ukraine”. Sanofi-Aventis Ukraine declared the hopes for prompt reaction from the competent authorities to return the funds and bring perpetrators to justice. The company also considers the possibility of appealing to international mechanisms on protecting the rights of foreign investors. In 2016, Sanofi-Aventis Ukraine held 6th position on retail drug market of Ukraine.

The MOH Urges Companies to Re-register Drugs with Russian Certificates The MoH appealed pharmaceutical companies, which operate in Ukraine, urging them to re-register drugs with registration certificates obtained in Russia.

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In Apr 2017, acting Head of the MoH declared the intention to prohibit circulation of Russian drugs and medical devices in Ukraine due to their “doubtful quality”. Currently, the MOH do not approve registration or re-registration of drugs and medical devices produced in Russia.

MSD Failed to Find Sites for Localization in Ukraine The US-based pharmaceutical company MSD was trying to find production sites in Ukraine for localization of their products. The Head of Innovation Drugs Department of MSD Ukraine Margarita Ognivenko stated that the company failed to find production sites compliant with MSD standards. However, earlier the company has successful cooperation with Ukrainian company on delegated production of PegIntron® (peginterferon alfa-2b). This year MSD started suppling KEYTRUDA® (pembrolizumab) in Ukraine, first immuno-oncology drug on local marker. In 5M2017, MSD (under Merck & Co brand name) held 7th position on Ukrainian hospital market. Its best-selling drugs were Cancidas® and Noxafil®.

MSD plans to accelerate its hospital sales in Ukraine and to launch new antibiotics, oncology drugs and viral preparations. The company is also implementing project on rational use of antibiotics in Ukrainian clinics.

Bayer Won the Patent Dispute in the Court Economic Court of Kyiv satisfied the appeal of Bayer on violation of intellectual property rights of the company by Indian company Symed Labs Limited. In Jul, State Expert Center addressed to the MOH the registration application of Symed Labs for the drug Rivaroxaban. Bayer appealed the Court asking to prevent the registration of the Indian drug, as the corresponding INN had been registered by Bayer in 2013 under the brand name Xarelto®. Thus, the Court prohibited the MOH to register rivaroxaban generic of Symed Labs Limited. In Jun, Bayer submitted the similar appeal regarding illegal registration of another rivaroxaban generic by Dr.Reddy’s.

Farmak Has Changed the CEO Farmak has changed its top management on July 03rd, 2017. Filya Zhebrovskaya, the owner of the company, has left the post of the CEO and became Chairman of the Supervisory Board. Augustin Dubnicka was appointed Farmak's new CEO. Mr. Dubnicka

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Upharmacia July 2017

has signed a contract with Farmak for 2.5 years. His primary aims on his new role are to gain 15% of the total market share of the local market and to increase Farmak's export by +54%. Mr. Dubnicka has been working as the CEO of Star Pharma Ltd and divisional CEO/ Member of Board of Sanofi S.A.

broken cartridge holder may result in the device delivering a reduced dose of insulin which could potentially lead to high blood sugar. Novo Nordisk believes the risk of experiencing high blood sugar when using a device with an affected cartridge holder is low.

Novo Nordisk recalls

Bupivacaine-3N of Zdorovje Narodu is Banned to Use Due to a Lethal Case

cartridge holders in certain Insulin

Pens

Novo Nordisk is initiating a recall of insulin cartridge holders used in a small number of NovoPen Echo® and NovoPen 5® batches because they may crack or break if exposed to certain chemicals, like certain cleaning agents. NovoPen Echo® is used for insulin treatment by people with diabetes. Using a device with a cracked/

The recall is announced globally including Ukraine.

The State Services of Ukraine on Medicines and Drugs Control has banned a series of Bupivacaine-3N produced by Zdorovje Narodu due to an officially recorded lethal case after the usage of the product.

Zdorovje FF, Farmex Group, GNCLS Pilot Plant, is a part of the Zdorovje Group holding.

Arterium Recalls a Batch of Corvazan® The State Service of Ukraine on Medicines and Drugs Control published an official ban on circulation and usage of Corvazan® produced by Arterium due to the error on the package. The whole batch of the series No. 156226 has a discrepancy on packages. Corvazan® is used in hypertension, chronic angina, and as adjunctive therapy in chronic heart failure treatment.

Bupivacaine is used as a local anaesthetic. Zdorovje Narody, together with

REGULATORY UPDATES The Ministry of Health Will Register the First Drug Under a Simplified Procedure On July 20, 2017, the State Expert Center of the Ministry of Health of Ukraine presented a report on approval of registration materials for a medicinal product within the framework of a simplified procedure for registration of innovative medicines from countries with a severe regulatory system, which has been posted on the official website. Since the introduction of this procedure (Dec 30, 2016), three applications for registration have been submitted, but only the latter has passed the www.upharma-c.com

expertise of the State Expert Center. Let us remind you that within the shortened procedure, the innovative drugs that have already been registered by the competent authority of the United States, Switzerland, Japan, Australia, Canada, as well as medicines that are registered in a centralized procedure by the competent EU authority, can be registered for use on territories of these countries or EU member states within 17 days. Now, most of the problems that arise when assessing the registration materials of the State Expert Center, which are the basis for registration rejection, are

Provided by related to the following factors: • The lack of an opportunity to obtain clarification from the applicant for particular data from the registration materials and, as a consequence, the need for the SEC to reject applications in the event of any material mismatch; • The difficulty in verifying the medicinal product registration fact on the official websites of regulatory authorities due to the search difficulty on the sites of different countries; • Difficulty in confirming the

7


Upharmacia July 2017

applicant's changes to the registration dossier in the country of registration due to the lack of such information in public access in some countries; • Incorrect translation of instructions to the drug, which is given in an arbitrary form and does not require notarization.

The Ministry of Health Has Proposed to Expand the Orphan Diseases List On June 29, 2017, the Ministry of Health of Ukraine published the draft order of the Ministry of Health of Ukraine "On introducing changes to the list of rare (orphan) diseases leading to a reduction in the life expectancy of patients or their disability and for which there are recognized methods of treatment." on the website for public discussion. The draft proposed to complete the current list of orphan diseases with new nosologies, and to expand the list of orphan diseases indices according to the Orphanet portal system for individual nosologies. In particular, it was proposed to add to "Rare endocrine diseases, nutritional disorders and metabolic disorders" section the following items: • impaired ornithine metabolism. Argininemia. Ornithine transcarbamylase deficiency; • glycine imbalance; • other disorders of lipid accumulation. Wolman's disease; • hereditary erythropoietic porphyria; • porphyria cutaneous tarda; • other porphyria; • lipomatosis, not elsewhere classified. In addition, section IV "Rare diseases of the nervous system" is recommended to be completed with the following nosologies: • encephalitis, myelitis and encephalomyelitis. Encephalitis,

8

• • • • •

myelitis and encephalomyelitis in diseases classified elsewhere. Progressive encephalomyelitis with rigidity and myoclonus; secondary parkinsonism, caused by other external factors; other forms of secondary parkinsonism; blepharospasm; dystonia, unspecified; hereditary motor and sensory neuropathy.

Also, the Ministry of Health proposes to introduce a new section of orphan diseases, namely: Section XI "Rare diseases of sclera, cornea, iris and ciliary body", including Interstitial (stromal) and deep keratitis (Kogan syndrome).

The National List of Essential Medicines Enactment Has Been Postponed Until September 1, 2017 On July 4, 2017, the government adopted resolution "On Amendments to Cabinet of Ministers Decree No. 333 of March 25, 2009", the draft of which is posted on the official website of the Ministry of Health of Ukraine for public discussion. The document provides for postponing the date from which health institutions funded from state and local budgets should launch government purchases of medicines registered in Ukraine and included in the National List of Essential Medicines until September 1, 2017. In addition, the draft decree of Cabinet of Ministers of Ukraine provides for postponing the enactment of the provision on the obligation of customers to pre-satisfy in full the requirements for medicines registered in Ukraine and included in the National List of Essential Medicines until January 1, 2018.

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Upharmacia July 2017

HEALTHCARE NEWS Voting for Medical Reform Undermined

On Jul 8, Ukrainian Parliament preliminarily approved the Draft Law #6327 on state financial guaranties in provision of medical services and drugs. Afterwards, the document was proceeded by the Parliamentary Committee on Public Health.The MPs proposed 886 edits to the Draft Law; 396 of them were approved in the end. However, according to the acting Head of the MOH Ulana Suprun, the Head of the Parliamentary Committee Olga Bogomolets refused to sign the document for voting. Consequently, the document was signed by the Deputy Head of the Committee, but the Parliament didn’t have time to vote the Draft Law. Therefore, the approval of the medical reform actively pushed by the MOH, was sabotaged in the Parliament. According to the board member of the Anti Corruption Action Centre, the blocking of the medical reform is in the interests of the medical elite, which uncontrolledly manages the budgets of medical institutions. The voting for the reform was postponed till Sep, when the Parliament resumes its work. Ms. Suprun stated that the MOH would continue working on the reform implementation.

Among 199 drugs, 21 are produced in the EU, 17 – in Ukraine, 4 – in India, 1 – Israel. The reimbursement program “Affordable drugs” was launched in April 2017. Since then, the 3.6 mio prescriptions were issued and fully or partially payed by the state. As on middle Jul, about 6.2k pharmacies in Ukraine participate in the program.

The MOH Initiated Creation of Procurement Agency The MOH submitted to the government the Draft Resolution on creation of the National Procurement agency, which is to carry out procurement of drugs and medical devices. Accordion to the acting Minister, the agency is supposed to be launched in 2019.

At the same time, the MOH signed agreements with international organizations (UNDR, Crown Agents and UNICEF) on delegated procurement of drugs and medical devices for the state budget funds of 2017. The organizations have already supplied 98% of medical products procured for the funds of 2016.

New Reimbursement List Approved

The MOH approved the new register of drugs, which are subject to reimbursement. The list was expanded by 33 new position to 199 names. The value of 30 drugs will be reimbursed 100% by state, the other positions assume co-payment.

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Upharmacia July 2017

CIS REGION NEWS Azerbaijan

——Sun Pharma started the construction of its GMP plant for the production of solid drugs in Sumqayit. The company plans launch the production in the end of 2018. The production will be exported into CIS and other external markets. ——Bulgarian companies are interested in the Pirallahi Industrial Park and currently exploring the possibilities for future cooperation. Currently, 3 pharmaceutical plants are being constructed in the Pirallahi Industrial Park: a joint venture with a group of companies R-Pharm (Russian Federation), Vita-A LLC (Azerbaijan) and Azerbaijan Investment Company (AIC); The joint pharmaceutical plant between Iranian company Tamin Pharmaceutical Investment Company (TPIC) and Azerbaijan’s Azersun Holding and the Azerbaijani company Diamed Co.

Belarus

——International Scientific and Production Complex Nativita was opened in Beshankovichy. The plant is designed to produce innovative drugs for the treatment of oncology diseases. The company plans close cooperation with other companies in research and development.

finished in 2019. ——Russian Fund for Industrial Development approved the provision of the loan for establishing of the manufacturing of hepatitis A vaccine at the facilities of JSC Vector-BiAlgam in Novosibirsk. ——Russian Group of Companies R-Pharm obtained license from Otsuka Novel Products GmbH for the production and marketing of delamanid for the treatment of tuberculosis.

Kazakhstan

——SK-Pharmaceuticals resumes supplying insuline glargine and blood glucose test strips for all patients with diabetes and interferon beta-1b for all patients with the multiple sclerosis. All medicines will be provided for patients for the free of charge within the framework of the state-guaranteed free medical care. ——Compulsory vaccination is being discussed now in the country. Recently in Kazakhstan there are more and more frequent refusals of vaccination on religious beliefs. ——The MoH widened the list of medicines which will be 100% reimbursed for all patients with 59 items. The new list comes into force on Jan 1, 2018.

——A pharmaceutical holding company will be established in Belarus. The holding company will be open for enterprises of all forms of ownership and any departmental affiliation.

Russia

——Distribution company ROSTA sold its pharmacy chains Raduga, Pervaya Pomosh and Ladushka to Erkapharm Group of Companies. All these chains include 1191 pharamcies. ——Indian company Hetero labs intends to establish pharmaceutical production of essential drugs in Tula region. ——Mir-Pharm company signed investment contract on intention to build the plant in Kaluga pharmaceutical cluster. The project will demand investments of about RUB 450 mio. The construction is planed to be

10

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Upharmacia - July 2017  

Ukrainian Pharmaceutical Market Monthly. Read & download: https://goo.gl/e3XrBA

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Ukrainian Pharmaceutical Market Monthly. Read & download: https://goo.gl/e3XrBA

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