Issuu on Google+

Upharmacia U krainian P harmaceutical M arket M onthly

Macroeconomic Environment | Market & Companies News | Regulatory Updates | Healthcare News

Issue: 05 2016 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 in the CIS/CEE.

UPharma Consulting

Kiev / www.upharma-c.com / mailbox@upharma-c.com / +380 (44) 232-11-42


Page 2

MACROECONOMIC ENVIRONMENT Table: Key Macroeconomic

(Apr 2015-Apr 2016) 2015

Indicators in Ukraine

Apr

May

Jun

Jul

Aug

2016 Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

3.10

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

Export of Goods (US$ bn)

Q2

Q3

Q4

20.795

25.552

25.588

-35%

3.07

3.09 -30%

growth, % y-o-y

-39%

-41%

Import of Goods (US$ bn)

2.86

2.63

growth, % y-o-y

Industrial Production Sales (US$ bn) growth, % y-o-y

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

Unemployment Rate (%) Average Salary (US$)

-38%

5.91 -33%

1.66

-26%

2.94

2.76

-46%

3.15

5.79

-38%

3.35

-34%

-22%

-22%

2.98

3.88

-34%

5.71

-35%

1.94

1.83

-17%

3.09

-37%

5.65

-33%

1.94 -41%

-2%

5.42 -23%

1.88

Q1

3.24 -30%

5.72 -20%

1.86

3.23

3.13

-23%

3.22 - 27%

6.29

-21%

3.07

-31%

2.04

3.08

2.99

-11%

-31%

3%

-13%

2.23

2.68

3.35

3.12

-27%

-32%

-26%

-6%

5.92

6.37

4.93

4.93

-21%

2.04

3.36

-19%

1.80

-17%

2.01

-18%

1.60 -19%

8%

1.50 4%

1%

3.05

5%

5.41 -2%

1.64 2%

7%

5.17 -12%

1.76

-40%

-35%

-38%

-32%

-38%

-33%

-29%

1.8

1.8

1.7

1.6

1.6

1.5

1.5

1.6

1.9

1.9

1.9

1.7

1.6

6%

176

193

202

202

194

199

207

193

223

180

174

187

191

OFFICIAL CURRENCY EXCHANGE RATE UAH / USD UAH / EUR

22.7

20.9

21.2

21.8

21.6

21.8

21.8

23.3

23.4

24.3

26.4

26.4

25.6

24.5

23.3

23.8

23.9

24.0

24.5

24.6

25.1

25.4

26.3

29.3

29.2

29.1

9.01

13.79

12.2

11.7

15.77

8.31

13.90

PHARMACEUTI CAL INDUSTRY INDICATORS Export of Pharma Products (mio USD)

13.46

13.00

15.36

13.85

growth, % y-o-y

-44%

-39%

-39%

-6%

-54%

Import of Pharma Products (mio USD)

103.7

84.2

115.0

106.5

93.3

growth, % y-o-y

-36%

-60%

-44%

-47%

Pharma Retail Sales, values (mio USD)

180.0

193.0

177.7

172.6

-47%

177.1

-47%

121.1

-37%

147.1

13.33

15.54

-52%

-28%

-30%

11%

16%

3%

141.3

142.1

103.7

145.0

125.1

130.0

-31%

-28%

-24%

-42%

15%

27%

21%

193.2

206.3

196.6

212.3

198.9

176.0

187.3

growth, % y-o-y

-40%

-28%

-29%

-32%

-24%

-28%

-26%

-20%

-18%

-17%

-1%

-5%

Pharma Retail Sales, volumes (mio units)

122.6

124.5

118.4

119.5

122.5

126.7

130.2

129.0

136.4

133.6

126.8

133.8

growth, % y-o-y

WACP (USD)

-20%

1.41

-11%

1.47

-9%

1.52

-10%

1.48

-8%

1.45

-11%

1.52

-5%

1.58

-4%

1.52

-5%

1.56

1%

1.49

-12%

1.39

-5%

1.40

25%

178.1 -1%

125.2 2%

1.42

growth, % y-o-y

-27%

-23%

-21%

-23%

-18%

-19%

-22%

-18%

-14%

-23%

-23%

13%

1%

CPI of Ukraine Pharmaceutical Products CPI Local Companies share, values (%) Local Companies share, volumes (%)

160.9 164.7 40.7 77.6

158.4 159.5 41.5 77.6

157.5 153.5 41.7 77.9

155.3 151.8 41.8 78.4

152.8 149.4 41.4 78.2

151.9 145.8 41.4 76.5

146.4 142.1 41.4 75.7

138.1 146.6 41.7 75.8

134.6 143.3 40.9 76.7

131.9 140.3 42.3 75.6

126.9 132.7 42.9 76.5

113.5 120.9 42.7 76.5

108.4 109.8 42.3 76.7

Description of the indicators: MACROECONOMIC INDICATORS

GDP (Gross Domestic Product) is an aggregate measure of production equal to the sum of the gross values added of all resident, institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs) calculated in current prices. Converted from UAH to USD in accordance with an average official NBU exchange rate in the corresponding period. Hereinafter: excluding the temporarily occupied territory of the Autonomous Republic of Crimea and City of Sevastopol, as well as the part of zone of the antiterrorist operation. Source: State Statistics Service of Ukraine. Export of Goods is a sale of goods by Ukrainian subjects of foreign economic activities to foreign subjects of foreign economic activities (including non-cash payment) with or without exportation of these goods through the customs border of Ukraine, including the re-export of goods. Initially calculated in USD. Source: State Statistics Service of Ukraine. Import of Goods is a purchase (including non-cash payment) of goods by Ukrainian subjects of foreign economic activities in foreign subjects of economic activities with or without the importation of these goods into the territory of Ukraine, including the purchase of goods for domestic consumption by establishments and organizations of Ukraine located abroad. Initially calculated in USD. Source: State Statistics Service of Ukraine. Industrial Production Sales is the value of industrial goods, which are actually shipped in the period, as indicated in documents decorated as the basis for calculating with the buyer (customer), regardless of income payments for them. Converted from UAH to USD in accordance with an average official NBU exchange rate in the corresponding period. Source: State Statistics Service of Ukraine. Retail Turnover of Enterprises is the value of consumer goods sold via retail trade and restaurants to the population by all operating enterprises. It also includes direct retail sales by industrial, transport and other non-trade enterprises. In addition, retail turnover includes retail sales of food products to departments, organizations and enterprises to provide meals to the people they serve (at sanatoria, children’s care institutions, hospitals, etc.). Reflected in current prices. Converted from UAH to USD in accordance with an average official NBU exchange rate in the corresponding period. Source: State Statistics Service of Ukraine. Unemployment Rate is a ratio (percent) of the unemployed registered at the State Employment Service to the average annual population of working age. Source: State Statistics Service of Ukraine.

Average Salary is an average value of remuneration in cash and in kind paid to employees for time worked or work done. Converted from UAH to USD in accordance with an average official NBU exchange rate in the corresponding period. Source: State Statistics Service of Ukraine. Official Currency Exchange Rate is the rate established by the National Bank of Ukraine under which Ukrainian national currency – UAH (Ukrainian hryvnia) will be exchanged for foreign currency (USD or EUR). Calculated as average value in the corresponding period. Source: National Bank of Ukraine. PHARMACEUTICAL INDUSTRY INDICATORS

Export of Pharma Products is an export of goods related to the group “Pharmaceutical products” under the Ukrainian Classification of Goods for Foreign Economic Activities. Initially calculated in USD. Source: State Statistics Service of Ukraine. Import of Pharma Products is an import of goods related to the group “Pharmaceutical products” under the Ukrainian Classification of Goods for Foreign Economic Activities. Initially calculated in USD. Source: State Statistics Service of Ukraine. Pharma Retail Sales are retail sales of different product categories of “pharmacy basket” (drugs, medical devices, cosmetics and food supplements) in values and volumes. Converted from UAH to USD in accordance with an average official NBU exchange rate in the corresponding period. Source: Morion. WACP (Weighted average cost of a pack) is a ratio of pharma retail sales in values to pharma retail sales in volumes. CPI (Consumer price index) is an indicator of changes at the time of prices and tariffs for commodities and services being purchased by the population for unproductive consumption calculated to corresponding month of previous year. Source: State Statistics Service of Ukraine. Pharma Products CPI is a Consumer price index of “Pharmaceutical products, medical products, appliances and equipment” group calculated to corresponding month of previous year. Source: State Statistics Service of Ukraine. Local Companies Share is the share (percent) of sales related to Ukrainian companies in overall pharma retail sales in values and volumes. Source: Morion

Ukrainian Pharmaceutical Market Monthly: May 2016


Page 3

220

193.0

200

180

177.7 180.0

172.6

177.1 130.2

160 122.6

126.7

124.5

120

176.0

130

126.8 125.2

119.5

2016

2015

100

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

120

100

Mar

12

Industrial production sales 5.91

6

5.65

5.80

5.71

5.43

5.41 4.93

5.17

2.5

4

1.83

1.66

1.94

2.04 1.88

1.86

2.01 1.80 1.60

Retail turnover of enterprises

3

1.64

1.76

1.5

1

Industrial Production Sales & Retail Turnover of Enterprises Surplus 2015

0

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jun

158.4

157.5

Feb

155.3

Aug

Sep

152.8

Oct

151.9

146.4

Nov

Dec

2016 Jan

Feb

30

Mar

0.0

Apr

0

Mar

Apr

160 146.6

CPI of Ukraine

143.3

140.3

140

132.7 120.9 109.8

26.9

25.5

25 22.7

20.9

24.9

21.2

26.1

21.8

25.9

21.6

15

26.1

29.3

UAH / € 24.6

21.8 21.8 UAH / $

25.1 23.3

25.4 23.4

29.2

29.1

26.3 24.3

26.4

26.4

25.6

Apr

May

Jun

Jul

Aug

Sep

Oct

80

20

2015

0

100

40

vs. Consumer Price Index

5

120

60

Official Currency Exchange Rates

10

0.5

2016 Jan

Jul

40

20

1.50 1.0

2

160.9

May

40 20

2015

0

80 60

8.3

35

2.0 1.94

15.5 13.9

Ukraine's International Trade in Pharma Production

45

4.93

13.3

15.8 11.7

4

3.0

5

12.2

13.9

13.0

Apr

5.92

5.72

13.5

100 13.8

15.4

9.0

Apr

6.37

6.29

84.3

140 120

103.7

8

50

7

130.0

Export

110

Pharma Retail Sales

125.1

93.3

16

133.8

145.0

141.3

122.2 106.6

103.7

140

Volumes (mio units)

122.5 118.4

140

133.6 129.0

115.0

20

178.1

136.4

142.1

Import

150 187.3

Values (mio USD)

160

147.1

24

198.9

196.6

193.2

160

212.3

206.3

Nov

Dec

2016 Jan

Feb

Mar

0

Apr

KEY ECONOMIC EVENTS »» »» »» »» »» »» »» »» »»

The EBRD projected 2% growth of Ukraine’s GDP for 2016 and 2017. “Ukraine’s economy is expected to return to growth in 2016, although investors’ confidence remains weak,” the EBRD outlook stated. The IMF latest forecast was 1.5% GDP growth in Ukraine in 2016. The IMF mission held consultations in Kyiv on May 10-18 and plans to announce possible decision on USD 1.7 bn loan tranche in July. However, implementation of structural and institutional reforms in Ukraine is the main demand for decision to be positive. According to statistics service, in 1Q2016, Ukraine’s GDP growth rose 0.1% y-o-y. In 1Q2016, investments in Ukraine’s fixed assets showed rise for the first time in three years by 0.7% y-o-y. The largest improvements were in agriculture (56.5% y-o-y), trade (49.0% y-o-y) and transport (11.6% y-o-y). At the same time, investments in communication decreased 74.7% y-o-y. In 1Q2016, capital inflow in Ukraine has grown almost 3x y-o-y to USD 1 bn. The biggest inflows were from the Netherlands (USD 124 mio), the UK (USD 104 mio) and Switzerland (USD 92 mio). Sectors with the most inflow were finances (USH 266 mio) and retail (USD 153 mio). In Apr Treasury residuals of Ukraine decreased by 23% PPG to UAH 16.3 bn. In Apr prices in Ukraine increased by 3.5% as compared to Mar. The main reason was 20.1% PPG rise of utility rates due to 48.8% PPG surge in natural gas prices. Ukraine’s monetary base increased by 2.6% PPG to UAH 335.9 bn in Apr, the National Bank of Ukraine reported. In Jan, the Bank downgraded its forecast for the growth of monetary base in 2016 from 17.2% to 8.3% y-o-y. In Apr, Ukraine’s current account balance reached a surplus of USD 327 mio compared to a USD 460 mio deficit in Mar. The main factors were a narrowed trade deficit on goods as well as an improved balance on incomes.

Ukrainian Pharmaceutical Market Monthly: May 2016


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


Page 5

MARKET & COMPANIES NEWS Biofarma received ISO certificate Ukrainian pharmaceutical company Biofarma received certificate ISO 22000:2005, approving implementation and use of international system of food products safety management at manufacturing. The certificate was issued by the world’s leading certification companies International Certification Network and DQS CFS GmbH (Germany). “Compliance with ISO 22000:2005 standards confirms the quality and safety of production, transparency of all manufacturing processes, indicates that the company meet the requirements defined by international standards, which opens further opportunities to sell Biofarma’s preparations abroad,” the company’s officials said. Biofarma is a leading producer of donor blood-made preparations in Ukraine. In 2015, the company’s export has risen 18.4% y-o-y and amounted USD 7 mio. The Kyiv Chamber of Commerce and Industry recognized Biofarma as the best exporter in the pharmaceutical industry among small and medium-sized enterprises in 2015. Interchem developed new facilities On May 17, Interchem pharmaceutical company has opened a new laboratory and production complex in Odessa. The total area of the complex amounts 15 ths m2. Moreover, the company invested EUR 42 mio to enhance its industrial capacities, which would allow increasing its production by 4 times. By 2020, the company plans to increase

the stuff from 700 to 960 employees. In 2015, Interchem was the 25th company on Ukrainian pharmaceutical market. In 2014, the company’s income amounted UAH 321 mio (15% y-o-y decline). Interchem’s portfolio includes 80 brands, which mainly oriented on affecting respiratory and nervous systems.

of rapid immunochromatographic tests for in-vitro diagnosis in Ukraine. The company was founded in 2002 and later on entered other CIS markets. With new complex opened, the company plans to master own production of rapid tests.

Indar co-developed a syringe pen

On May 24, delegation of 30 representatives of the Republic of China visited research and production complex of Ukrainian company Biopharma in Bila Tserkva (Kyiv region) within the investment session of Kyiv International Economic Forum “Ukraine-China: New Silk Road”. Among the visitors were the Heads of such industry associations and companies as Chinese Federation of Industrialists, Pharmaceutical Holding of Shaanxi Province, Chinese Association of Heavy Engineering, Office of Foreign Affairs of people’s government of Heilongjiang Province, Chinese National Corporation for import and export of complete equipment (Complant Corporation). The association of Silk Road will include 21 countries and Ukraine plans to join it. Currently, 50 Chinese funds expressed a desire to invest in the association’s programs about USD 46 bn, the Vice Head of Chinese Federation of Industrialists said. Research and production complex of Biopharma was opened in 2015. The plant complies all GMP standards as well as quality and environmental management standards. Biopharma is a leading Ukrainian manufacturer of high-technological preparations made of donor blood. The company exports its production

Ukraine’s leading insulin producer Indar in cooperation with Swiss company YPSOMED has developed a new syringe pen “id Pen” for intensive and usual insulin therapy of type I and II diabetes. id Pen is used with insulin cartridges produced by Indar and allows to inject insulin at a dosage of 1 to 60 international units per injection. The pan also has audible and tactile indication as well as indicator-controller of residual dose. In 2015, Indar decreased its net income 8.9x y-o-y to UAH 8.47 mio. On 19 May, the Antimonopoly Committee of Ukraine allowed the Cypriot company Luraq Investments Limited (part of Georgian Industrial Group) to acquire above 25% shares of the company. Pharmasco put new complex into operation On May 4, Ukrainian company Pharmasco opened its own complex, which includes offices, warehouse with appropriate temperature conditions and premises for own production. The complex is situated in Vyshhorod (Kyiv region) and covers an area of 2750 m2. Pharmasco is a leading supplier

Chinese partners visited Biopharma’s industrial complex

Ukrainian Pharmaceutical Market Monthly: May 2016


Page 6

to Kazakhstan, Belarus, Georgia, Armenia, Azerbaijan, Uzbekistan, Mongolia and other countries in Central Asia.

REGULATORY UPDATES Provided by Parliament adopted the Law on simplified registration of medicinal products being registered in the countries with the strict regulatory policy On May 31, 2016, Verkhovna Rada of Ukraine adopted as it is the Draft Law of Ukraine “On Amendments to the Article 9 of the Law of Ukraine “On Medicinal Products” regarding the Simplification of Medicinal Products Registration” (Reg. # 4484). The Law 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 memberstates. 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. See all news on regulatory updates on the Legal Alliance website. The MoH intends to introduce reference pricing On May 31, the MoH promulgated the Draft Resolution “On reference pricing for drugs”, which aims to bringing the definition and application of state regulated drug prices to the common uniform rules in accordance with the Law of Ukraine “On prices and pricing”. The documents also aims to provide economic feasibility of changes in drug prices as well as orientation of domestic prices to world market prices.

The Draft Resolution proposes since Aug 1 to implement the mechanism of reference pricing for drugs, which included in the list of local and foreign drugs allowed for procurement by healthcare institution for funds of state and local budgets as well as drugs the cost of which is reimbursed at the expense of budget funds. The document also proposes to approve the procedure for the change of wholesale drug prices. The MoH expects the Draft Resolution to allow implementing European, predictable and transparent principles of Rx drug pricing and form the basis for the introduction of reimbursement mechanism for this group of drugs. This, in turn, is a prerequisite for an effective mandatory health insurance and the rational use of budgetary funds and the funds of the population.

HEALTHCARE NEWS MoH announced Draft Concept on healthcare system reformation On May 10, the MoH promulgated the Draft Concept of healthcare system reformation, which in particular foresees creation of National Agency for healthcare funding and implementation of state guaranteed package of

medical services. According to the document, the package of medical services applies to all citizens of the country and includes primary care, emergency medical care, main types of outpatient services and main types of planned inpatient care.

Moreover, the package will include drugs and essential medicines used in hospital treatment. Drug provision will be based on reimbursement mechanism and will be carried by suppliers of all forms of property through single national contractor.

Ukrainian Pharmaceutical Market Monthly: May 2016


Page 7

Specialized humanitarian cardiosurgery center started working in Ukraine On May 13, Heart Institute of the MoH has signed the cooperation agreement with Kalangos Fund and “Hearts for all” Fund. According to the agreement, the cardiosurgery center was created on the base of the Heart Institute for the treatment of children, which hopelessly waiting for cardio aid in their homeland. The center is expected to provide cardio aid to 8-12 children every month. “It is a great honor for us to cooperate with Kalangos Fund in the field of humanitarian cardiac surgery and create the center in our Institute, as 10 million children in the world are waiting for cardio aid, which they cannot receive in their homeland,” the Director of Heart Institute Borys Todurov said. “Our highly qualified specialists are ready to help these children and this is a powerful promotion of Ukrainian medicine in the world.” ProZorro system allowed saving 19% in medical procurements Procurements in medical sphere made through system of public electronic procurement ProZorro were 18.79% lower from planned amount (UAH 452 mio). By average, the system allowed to reach 6% savings for all procurements. ProZorro system was initiated

by public organizations and the Ministry for economic development and trade to make public procurements transparent and fair as well as lower the corruption. The system started operating since Apr 2016 for central executive authorities and limited types of procurers, while since Aug 2016 the system will be available for all procurers. On May 19, the ProZorro system was awarded at World Procurement Awards 2016. Road Map on decentralization in healthcare for 2016 approved At the meeting with the MoH, the Ministry of Regional Development outlined the precise terms for implementing the tasks on healthcare reformation within the decentralization. The first task to be resolved is delegating the authorities to provide primary medical care at the level of united territorial communities. The second task is reforming of funding system and management of secondary healthcare facilities. Within the second task resolving, the MoH presented the concept on creation of hospital districts. On the results of the discussion, the Road Map for 2016 was approved: »» to approve the method of forming hospital districts (till 15/05/2016); »» to approve the Resolution on the composition of hospital districts (till 15/05/2016);

»» to amend the Budget Code in »»

part of funding of programs of secondary health care (till 15/07/2016); to amend the Law “On Basis of Legislation of Ukraine on Health Care” in part of hospital districts’ management (till 15/07/2016).

The Head of State Administration on medical products and narcotic control was appointed On May 25, the Cabinet of Ministers appointed Iryna Suvorova at the position of the acting Head of the State Administration of Ukraine on medical products and narcotic control. Before the appointment, Mrs. Suvorova was the Deputy Head of the Commission for the reorganization of the Administration. In Aug 2015, the government decided to unite the State Administration of Ukraine on medical products and State Administration for narcotic control. Since then the process of reorganization have been proceeding. At the same time, the State Administration of Ukraine on medical products, the acting controller over quality and safety of drugs and medical devices in Ukraine, does not have its Head appointed since Nov 2015.

Ukrainian Pharmaceutical Market Monthly: May 2016


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 in the CIS/CEE.

Business

Consulting

Support of M&A Deals / Pre-investment Due Diligence Commercial Audit / Business Diagnostics FCPA Audit / Reputational Audit

HR-Consulting

Executive Search / Recuiting Organizational Consulting / Personnel Assessment Outplacement

Market Access

Launch Planning / Marketing Analysis & Planning Regulatory Environment Audit / Business Modelling Analysis of Prescribers and Consumers

Business Education

Business Training for Pharmaceutical Companies: Strategy / Change Management New Launches / Marketing

Subscribe to Upharmacia instantly!

UPharma Consulting 21st Marshal Tymoshenko str., building 7, office 5 Kiev, 04212 Ukraine

+380 (44) 232 1142 +380 (44) 232 1143 www.upharma-c.com mailbox@upharma-c.com


Upharmacia - May 2016