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UPHARMACIA

Ukrainian Pharma Market Monthly

Macroeconomic Environment Market & Companies News Regulatory Updates Healthcare News

11'17 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 November 2017

CONTENTS Page

3 5 5 6 7 8 9

Section

/ / / / / / /

Data period

Macroeconomic Indicators 10/2016-10/2017 Economy & Pharma Dashboard

10/2016-10/2017

Economic News 11/2017 Pharma Market News 11/2017 Regulatory Updates 11/2017 Healthcare News 11/2017 CIS Pharma News 11/2017

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 November 2017

MACROECONOMIC INDICATORS INDICATORS

2016 Oct

Nov

2017 Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

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

Q4

Q1

Q2

27.930

21.577

24.826

9.16%

22.2%

Q3

Q4

17.9%

Export ($ bn)

3.24

3.62

3.63

3.03

3.20

4.11

3.34

3.48

3.35

3.21

3.67

3.77

0%

16%

8%

48%

20%

37%

8%

21%

14%

10%

15%

19%

19%

Import ($ bn)

3.54

3.81

4.13

3.10

3.67

4.37

3.73

3.83

3.96

4.01

4.25

4.32

4.58

Industrial Prod. Sales ($ bn)

10%

24%

32%

32%

18%

35%

22%

27%

47%

30%

23%

25%

28%

6.39

6.91

7.64

6.57

6.41

6.91

5.89

6.15

6.19

6.28

6.54

6.78

7.40

2%

17%

20%

33%

30%

28%

14%

14%

14%

12%

17%

21%

16%

Retail Turnover ($ bn)

1.87

2.04

2.09

1.40

1.37

1.62

1.66

1.93

1.78

1.96

2.09

1.93

1.98

-8%

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

3.86

Unemployment Rate (%) Average Salary ($)

14%

4%

-12%

-8%

-2%

-6%

21%

3%

4%

9%

10%

6%

1.2

1.3

1.5

1.6

1.7

1.5

1.4

1.3

1.3

1.2

1.2

1.2

1.1

208

210

247

221

230

250

248

259

272

283

278

257

277

CPI (Consumer Prices Index)

112.4

112.1

112.4

112.6

114.2

115.1

112.2

113.5

115.6

115.9

116.2

116.4

114.6

51.6

47.4

57.1

53.7

56.2

55.5

54.9

58.0

59.4

58.5

58.2

59.0

62.6

GfK Consumer Sentiment Index

OFFICIAL CURRENCY EXCHANGE RATE UAH / USD

25.8

25.7

26.2

27.2

27.0

27.0

26.9

26.4

26.1

26.0

25.6

26.1

26.7

UAH / EUR

28.5

27.8

27.6

28.8

28.8

28.8

28.8

29.2

29.3

29.8

30.2

31.1

31.4

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

18.40

14.75

23.95

8.10

13.31

22.01

12.22

14.21

19.75

14.15

13.06

16.7

14.5

51%

26%

52%

-3%

0%

42%

-12%

0%

22%

6%

-4%

-11%

-21%

137.3

142.6

169.1

102.4

123.4

150.6

116.8

145.7

156.8

150.5

149.8

146.6

146.3

-7%

1%

19%

-1%

-15%

20%

-10%

32%

19%

13%

9%

4%

7%

212.2

224.7

268.0

233.2

225.4

187.0

210.5

217.5

206.5

211.4

212.7

236.5

249.7

3%

14%

26%

17%

28%

0%

18%

22%

18%

21%

18%

24%

18%

138.6

139.9

164.1

148.8

147.6

121.9

133.9

137.3

132.0

139.5

134.3

146.7

146.1

6%

8%

20%

11%

16%

-9%

7%

11%

8%

14%

6%

8%

5%

1.53

1.61

1.63

1.57

1.53

1.53

1.57

1.58

1.56

1.52

1.58

1.61

1.71

-3%

6%

5%

5%

10%

9%

10%

10%

10%

6%

10%

15%

12%

107.6

107.4

106.4

105.4

104.2

103.2

102.8

103.0

103.2

103.9

104.1

103.9

104.5

Local Companies Share % values

42.4

42.3

41.7

41.9

42.7

43.0

42.7

42.9

43.0

43.7

42.7

43.1

42.8

Local Companies Share % volumes

75.1

74.9

73.9

74.5

75.2

75.7

75.6

76.0

76.2

77.0

76.8

75.4

74.4

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

CPI, Pharma Products

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

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


Upharmacia November 2017

ECONOMY & PHARMA DASHBOARD 264.9

280

240

212.2

224.7

233.2

210.5

217.5

206.5

211.4

212.7

138.6

147.6

5

146.7 146.1

133.9

139.9

mio USD

23.9

20

15

Mar

Apr

150.6

142.6

137.4

123.4 22.0

102.4

May

145.7

Jun

156.8

Jul

Aug

Sep

180

150.5

149.8

146.6

146.3

13.3

10

12.2

14.2

90 20

14.5

8.1

0

Oct

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

3.0

2.5

1.93 1.62

1.66

1.96

2.09

1.78

2.0

1.93

1.98 1.5

1.37

1.0

0.5

2017 Nov

Dec

Jan

bn USD Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

0.0

Oct

160

112.4

112.1

28.5

27.8

25.8

25.7

112.4

27.6 26.2

112.6

114.2

115.1

112.2

113.5

115.6

115.9

116.2

116.4

114.6

28.8

28.8

28.8

28.8

29.2

29.26

29.8

30.2

31.1

31.4

27.2

27.0

27.0

26.9

26.4

26.1

26.0

25.6

26.1

Sep

Official Currency Exchange Rates vs. Consumer Price Index

30

mio USD

2017 Nov

2016

10

Im po r t

Ukraine's International Trade in Pharma Production 2016

6.19

6.78

120 100

26.7

80 60

60

Exp or t 5

40

30

13.1

6.15

6.54

50

120

16.7

5.89

6.28

140

150

19.8

14.2

7.40

6.91

Industrial Production Sales & Retail Turnover of Enterprises Surplus Oct

Oct

116.8

18.4 14.8

0

100

Feb

169.1

30

25

Jan

6.41

2.09

1.40

1

mio units

2017 Dec

2.04

1.87

2

120

Pharmaceutical Market Retail Sales Nov

6.57

134.3

132.0

Oct

7.64

3

121.9

2016

4

140

139.5

137.3

6.91

6.39

6

160

187.0 148.8

120

80

7

236.5

225.4

164.1

200

160

8

180

249.7

0

Oct

0

2016 Oct

UAH/USD UAH/EUR CPI

2017 Nov

Dec

Jan

40 20 0

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

ECONOMIC NEWS ——Ukraine’s GDP rose 2.1% y-o-y in 3Q2017 vs 2.5% growth in 1Q2017 and 2.3% in 2Q2017. Economic and Trade Ministry expects the GDP to grow 1.8% in 2017.

——In 9M2017, Ukraine’s foreign direct investments grew 7.1% y-o-y to USD 48.3 bn. Netherlands, Cyprus and Germany were main sources of investment to Ukraine.

——Ukrainian Parliament approved in the first reading the Draft State Budget-2017. It planes the revenues to amount UAH 877.4 bn, expenditures – UAH 878.5 bn. The Budget is based on the forecast of real GDP to grow 3%, inflation of 8.1%.

——Ukrainian Parliament adopted in the first reading the Draft Law to simplify privatization process by eliminating certain preparation procedures and other bureaucratic impediments. Ukraine’s PM expects new legislation to allow selling about 1,000 state enterprises.

——In Oct, Ukraine’s treasury residuals fell 19.1% m-o-m to UAH 48.6 bn. ——National Bank of Ukraine anticipates that in 2018 Ukraine will get USD 3.5 bn financing from the IMF, USD 1.5 bn from Eurobond placement and USD 0.5 bn from the World Bank. ——Ukraine fulfilled about 15% of the Ukraine-EU Association Agreement since it was signed in June 2014, the President of Ukraine said.

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Upharmacia November 2017

PHARMA MARKET NEWS Gedeon Richter See 22% Sales Increase in Ukraine in 9M2017 According to financial results published by Gedeon Richter, the company increased sales in Ukraine by 22.1% y-o-y to USD 24.9 mio. The total sales grew by 19.1% y-o-y to EUR 1.08 bn. Ukraine is among the company’s Top-10 external markets. Russia remains to be GR’s most profitable market. In 9M2017, the sales in Russia grew by 25.3% to EUR 237.6 bn. The US market sales showed 84.2% increase vs 9M2016. In May 2017, the Gedeon Richter in Ukraine changed its organization type from Public JSC to Private JSC. Moreover, the management board of the company was re-elected. In 9M2017, Gedeon Richter held 15th position on Ukrainian drug market by sales. The drug market saw 17.8% y-o-y increase in the period.

Sanofi-Aventis Ukraine Preparing Claim Against Ukraine Sanofi-Aventis Ukraine informed Ukrainian government that the company would appeal to the international investment arbitration against the state of Ukraine regarding the write-off of UAH 180 mio from the company’s accounts. In Jul 2017, in accordance with the court decision, the UAH 46 mio were written off from the company’s accounts. In Oct 2017, after the court dismissed the counterclaim of Sanofi-Aventis Ukraine, the State

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Service imposed an arrest on the company’s bank accounts for the amount of almost UAH 140 mio.

Ludmila Bezpalko to Head BCPP for 3 Years More

Sanofi-Aventis Ukraine’s officials say that the company has become a victim of fraud, namely from the side of its former contractor LLC Hosse-Plex Ukraine, which had provided fabricated documents to the court. The pharmaceutical company filed a counterclaim against the decision of the courts of the lower instance and appellate instance to the higher business court of Ukraine referring to incomplete clarification of the circumstances of the case and incorrect application of the rules of substantive and procedural laws.

The Board of Borshchahivskiy Chemical-Pharmaceutical Plant (BCPP) extended powers of Ludmila Bezpalko at the position of the company’s CEO for three years more. Mrs. Bezpalko has been being the company’s head since 1993.

“The current situation is treated very seriously,” the Director of Sanofi-Aventis Ukraine Guilhem Granier said. “Sanofi operates in more than 100 countries around the world, including developing countries, but none of them has faced similar events. Seeking to protect its rights and ensure unhindered work in the Ukrainian market Sanofi-Aventis Ukraine has sent a message to the Ukrainian government on international investment arbitration against the state of Ukraine.” Mr. Granier noted that the fraudsters may continue to put pressure on the company, including - through state bodies. Currently, Sanofi-Aventis Ukraine has not stopped any of its projects and hopes for proper protection from the state authorities.

In 9M2017, BCPP held 20th position on Ukrainian retail drug marker by sales in values losing 3 positions vs 9M2016. In 2016, the company’s profit increased x2 y-o-y vs 2015 to UAH 118.7 mio. About 30% of BCPP shares belong to Darnitsa company, which has been looking for ways to takeover the company.

Brazilian Regulatory Body Inspected Production Sites of Yuria-Pharm The National Agency for Surveillance in the Healthcare of Brazil (ANVISA) inspected production sites of Ukrainian pharmaceutical company Yuria-Pharm. The body inspected the site for production of parenteral solutions of small volumes of filling that are amenable to thermal sterilization, sterile preparations of large volumes of filling, as well as non-sterile solutions. Receiving the Brazilian GMP certificate will allow Yuria-Pharm to import and sale its products on the Brazilian market. The results of the inspection will be issued within the month.

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Upharmacia November 2017

Yuria-Pharm is a Ukrainian leading producer of infusion solutions. In 9M2017, the company was a #1 supplier on the Ukrainian hospital drug market with 10% market share. On the retail drug market, the company held 10th position.

Antimonopoly Body fined Sanofi-Aventis Ukraine and two distributors

Antimonopoly Committee of Ukraine fined Sanofi-Aventis Ukraine and Ukrainian distributors BaDM and Optima-Pharm for about UAH 139 mio. The authority fined that during 2010-2011 the companies introduced special conditions for sales and discounts, stimulating the distribution of Sanofi’s drug, which had lost patent protection and had many substitutes. Thus, according to Antimonopoly Committee, three companies were restricting

competition from the side of cheaper generic drugs. Sanofi-Aventis Ukraine declared the intention to appeal against the decision in court. “The decision of the Committee creates a precedent that extends the prohibition of antimonopoly legislation to market behavior, which until now was considered legitimate,” the company’s statement said.

REGULATORY UPDATES Changes to the National List Will Be Made This Year On Nov 17, the Draft Resolution of the Cabinet of Ministers of Ukraine was published for public discussion on the website of the Ministry of Health of Ukraine. The resolution proposes to supplement the National List of Essential Medicines approved by Resolution of the Government No. 333 on March 25th, 2009, with new positions. The project was developed in accordance with the recently adopted amendments to the Regulations on the National List of Essential Medicines and the Regulations on the Expert Committee on the Selection and Use of Essential Medicines. Thus, the Expert Committee on the Selection and Use of Essential Medicines conducted an analysis of clinical efficacy and safety of medicinal products confirmed by evidence-based medicine (without pharmacoeconomic analysis) recommended for inclusion in the National List of Essential Medicines www.upharma-c.com

in the "fast-track" procedure. After the approval of the draft resolution of the Cabinet of Ministers of Ukraine, the National List in the revised edition will form basis for public procurement in 2018. Subsequently, the National List will be supplemented with new positions based on applications of individuals and legal entities, in particular, holders of registration certificates, on the results of their consideration by the Expert Committee. Applications are accepted throughout the calendar year.

The Plan of Measures for Realization of the Reform Concept for Financing Healthcare Decree of the Cabinet of Ministers of Ukraine No. 821-p as of Nov 15, 2017 approved the Plan of Measures for the Implementation of the Reform Concept for Financing

Provided by Healthcare up to 2020. The Concept itself was approved at the end of 2016 in order to create and implement a new financing model that provides clear and transparent guarantees regarding the amount of free medical care, better financial protection of citizens in case of illness, effective and equitable distribution of public funds and reduction of informal payments, creation of incentives for improving the quality of medical care provision to the population by state and municipal healthcare institutions. Among other things, it is anticipated that in early 2018 an electronic system for the international classification of requests for primary medical care ICPC-2 will be implemented, electronic prescriptions for drugs will be issued, the cost of which will be reimbursed by the state. In addition, in the near future, the introduction of an electronic tool (on the basis of information technologies), which provides for the implementation of

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Upharmacia November 2017

open tenders for price proposals in the form of electronic reduction, provides for the calculation of the maximum amount of compensation for costs and the determination of the price of drugs, the cost of which is reimbursed by state. The plan of measures also provides for the introduction of training programs for the improvement of professional qualifications of

healthcare workers in the period from 2017 to 2019 in terms of financial and managerial autonomy (within the framework of technical assistance projects). Training programs for healthcare workers providing primary health care will be introduced. Read more regulatory news on Legal

Alliance website

HEALTHCARE NEWS Clinical Trials Register Launched in Test Mode The State Expert Center of the MOH launched the Clinical Trials Register, which contains information about clinical trials, which approved by the orders of the MOH of Ukraine and allowed to be held in Ukraine. The aim of the Register is to create the unified database of clinical trials in Ukraine and to provide reliable information about the state of clinical trials to patients, physicians, applicants, etc. The Register has been developed in accordance with the Helsinki Declaration of the World Medical Association and the WHO International Standards for Clinical Trials Register.

Legatum Prosperity Index: Ukraine held 135th Position in Healthcare In 2017 Legatum Prosperity Index prepared by the Legatum Institute, Ukraine was placed 135th country among 148 in healthcare ratings. The overall position of Ukraine was 112th. The “healthcare” category assesses

8

the country’s activities in three directions: physical and mental health, health infrastructure and preventive care. According to the Legatum Institute, the healthcare situation in Ukraine worsened in part because of lower vaccination rates. The reason for this is the spread of public distrust towards this type of prevention. Analysts cite that 1/3 of parents in Ukraine are against vaccinations.

3 More Diseases to be Included in Reimbursement Program in 2018 The MoH plans to include 3 more nosologies in the “Affordable drugs” reimbursement program for 2018. Apart from cardiovascular diseases, type II diabetes and bronchial asthma, the program would include drugs against chronic diseases of the gastrointestinal tract, depressive states and anemia in pregnancy. Since its start in Apr 2017, about 10 mio prescriptions worth UAH 390 mio were reimbursed by the state. The number of prescriptions is growth by about 150 ths over the months (1.8 mio in Oct). About 6.2 ths pharmacies in Ukraine

participate in the program. The inclusion of new nosologies will require allocation of UAH 300 mio. The government expects that about UAG 1 bn will be provided for funding of “Affordable drugs” program.

New Classification of Medical Professions Took Force On Nov 1, 2017, the new classification of professions took force in Ukraine. The changes were made in accordance with the international classification and standards of the European Union. The changes were made to medical professions too. The title “medical assistant in emergency medicine” was changed to “paramedic”, “doctor-therapist” to “doctor of internal medicine”, etc. Some titles were also canceled, however, the MOH stated that these changes would not lead to dismissal of health workers. Doctors and nurses with appropriate education and skills will automatically take positions with new professional titles followed by further training courses.

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Upharmacia November 2017

CIS PHARMA NEWS Azerbaijan

——Azerbaijani Ambassador urged entrepreneurs from Pakistan to establish pharmaceutical plants in free economic zone in Aljat settlement in Baku.

Georgia

——Georgian Parliament intends to make issuance of electronic prescriptions a mandatory procedure in 2018.

Kazakhstan

——In 9M2017, production of pharmaceuticals in Kazakhstan grew 36.1% y-o-y to KZT 54.1 bn. The production is concentrated in South Kazakhstan region (55.6%), Almaty region (23.3%) and Almaty (12.4%).

Russia

——Novartis, Geropharm and Orion Medic companies plan to launch manufacturing of their products in St. Petersburg by the end of 2017, the Head of Industrial Policy Committee of the city stated. ——The Russia’s biggest laboratory for control over the drugs quality will be launched in Yaroslavl in 1Q2018. It will also include the center for examination and analysis of drugs circulation in Russia.

procurements. The procurement documentation should contain the formulation, dosage form and expiry date of the drug. ——Pharm-Sintez.Lab company, first Russian producer of peptide precursors, agreed on the supply of its products in India and Turkey. ——Korean company Cosmo & Company with help Russian producer of medical exoskeletons ExoAtlet to enter the Japanese market. The partners also plan to enter the markets of China and South Korea. ——BIOCAD company launched onto Morocco market its oncology drugs produced at the facilities of Sothema Labs company. The company also plans to enter markets of Senegal, Gabon and Ivory Coast. ——Valenta Pharm was allowed to stare production at its new plant in Shchyolkovo city (Moscow region). The plant is able to produce 2 bn tablets and capsules as well as 30 mio ampules per year.

Uzbekistan

——Three companies from South Korea Dalim BioTech, Yuhan Corporation and Erae will invest USD 25 mio in production of their drugs in Uzbekistan. The production facilities will likely be established in some of 7 new free economic zones designed for development of pharmaceutical industry.

——Russian government set unified rules for description of drugs, which are the subject of public

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Upharmacia November 2017

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Upharmacia - November 2017  

Ukrainian Pharmaceutical Market Monthly. Details: https://goo.gl/aoHiQ6

Upharmacia - November 2017  

Ukrainian Pharmaceutical Market Monthly. Details: https://goo.gl/aoHiQ6

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