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UPHARMACIA

Ukrainian Pharma Market Monthly

Macroeconomic Environment Market & Companies News Regulatory Updates Healthcare News

09'17 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 September 2017

CONTENTS Page

3 5 5 6 7 8 9

Section

/ / / / / / /

Data period

Macroeconomic Indicators 08/2016-08/2017 Economy & Pharma Dashboard

08/2016-08/2017

Economic News 09/2017 Pharma Market News 09/2017 Regulatory Updates 09/2017 Healthcare News 09/2017 CIS Pharma News 09/2017

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 September 2017

MACROECONOMIC INDICATORS INDICATORS

2016 Aug

Sep

2017

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

MACROECONOMIC INDICATORS GDP ($ bn)

Q3

Q4

Q1

Q2

26.185

27.930

21.577

24.826

growth, y-o-y

0.87%

9.16%

22.2%

Q3

17.9%

Export ($ bn)

3.18

3.16

3.24

3.62

3.63

3.03

3.20

4.11

3.34

3.48

3.35

3.21

3%

-6%

0%

16%

8%

48%

20%

37%

8%

21%

14%

10%

15%

Import ($ bn)

3.45

3.48

3.54

3.81

4.13

3.10

3.67

4.37

3.73

3.83

3.96

4.01

4.25

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

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

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

3.67

-11%

8%

10%

24%

32%

32%

18%

35%

22%

27%

47%

30%

23%

5.57

5.62

6.39

6.91

7.64

6.34

6.44

6.91

5.92

6.25

6.27

6.31

6.62

3%

-2%

2%

17%

20%

29%

31%

28%

15%

16%

15%

13%

19%

1.92

1.76

1.87

2.04

2.09

1.40

1.37

1.62

1.66

1.93

1.78

1.96

2.09

Unemployment Rate (%) Average Salary ($)

2%

-5%

-8%

14%

4%

-12%

-8%

-2%

-6%

21%

3%

4%

9%

1.3

1.3

1.2

1.3

1.5

1.6

1.7

1.5

1.4

1.3

1.3

1.2

1.2

208

204

208

210

247

221

230

250

248

259

272

283

278

CPI (Consumer Prices Index)

108.4

107.6

112.4

112.1

112.4

112.6

114.2

115.1

112.2

113.5

115.6

115.9

116.2

53.7

50.1

51.6

47.4

57.1

53.7

56.2

55.5

54.9

58.0

59.4

58.5

58.2

GfK Consumer Sentiment Index

OFFICIAL CURRENCY EXCHANGE RATE UAH / USD

25.1

26.3

25.8

25.7

26.2

27.2

27.0

27.0

26.9

26.4

26.1

26.0

25.6

UAH / EUR

28.1

29.5

28.5

27.8

27.6

28.8

28.8

28.8

28.8

29.2

29.3

29.8

30.2

13.06

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

13.58

18.81

18.40

14.75

23.95

8.10

13.31

22.01

12.22

14.21

19.75

14.15

51%

37%

51%

26%

52%

-3%

0%

42%

-12%

0%

22%

6%

-4%

137.3

140.6

137.3

142.6

169.1

102.4

123.4

150.6

116.8

145.7

156.8

150.5

149.8

47%

15%

-7%

1%

19%

-1%

-15%

20%

-10%

32%

19%

13%

9%

180.9

190.4

212.2

224.7

268.0

233.2

225.4

187.0

210.5

217.5

206.5

211.4

212.7

2%

-1%

3%

14%

26%

17%

28%

0%

18%

22%

18%

21%

18%

126.2

135.5

138.6

139.9

164.1

148.8

147.6

121.9

133.9

137.3

132.0

139.5

134.3

3%

7%

6%

8%

20%

11%

16%

-9%

7%

11%

8%

14%

6%

1.43

1.41

1.53

1.61

1.63

1.57

1.53

1.53

1.57

1.58

1.56

1.52

1.58

-1%

-8%

-3%

6%

5%

5%

10%

9%

10%

10%

10%

6%

10%

107.2

107.9

107.6

107.4

106.4

105.4

104.2

103.2

102.8

103.0

103.2

103.9

104.1

Local Companies Share % values

42.6

43.4

42.4

42.3

41.7

41.9

42.7

43.0

42.7

42.9

43.0

43.7

42.7

Local Companies Share % volumes

77.6

76.5

75.1

74.9

73.9

74.5

75.2

75.7

75.6

76.0

76.2

77.0

76.8

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

CPI, Pharma Products

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- Management & HR - Sales & Marketing - Regulatory Affairs - Quality Assurance - Finances & Operations

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Upharmacia September 2017

ECONOMY & PHARMA DASHBOARD 264.9

280

180

8

6.39

7

240

212.2 200

180.9

160

233.2

224.7

225.4

164.1

190.4 148.8 135.5

138.6

210.5

217.5

206.5

133.9

139.5

137.3

Dec

Feb

Mar

Apr

May

Jun

Jul

137.3

140.6

137.4

123.4

23.9

102.4 18.8

15

145.7

150.5

13.3

19.8

12.2

13.1

8.1

Im port

Ukraine's International Trade in Pharma Production 2016

0

Aug

Sep

Oct

Nov

Dec

Jan

30

mio USD

2017 Feb

Mar

Apr

May

Jun

Jul

2.04

2.09

6.25

6.31

3.0

6.62

2.5

1.93 1.62

6.27

1.66

1.78

1.96

2.0

2.09

1.5

1.37

1.0

Sep

Oct

0.5

2017 Nov

Dec

Jan

bn USD Feb

Mar

Apr

May

Jun

Jul

0.0

Aug

160 140

40

30

28.1

20

25.1

107.9

29.5

26.3

112.4

28.5

25.8

112.1

112.4

27.8

27.6

25.7

26.2

112.6

114.2

115.1

112.2

113.5

115.6

115.9

116.2

28.8

28.8

28.8

28.8

29.2

29.26

29.8

30.2

27.2

27.0

27.0

26.9

26.4

26.1

26.0

25.6

120 100 80 60

60

Export 5

5.92

50

120

14.2

1.87

2016

0

Aug

150

14.2

6.91

Industrial Production Sales & Retail Turnover of Enterprises Surplus

90

14.8

6.44

149.8

116.8 22.0

1.76

1.40

108.4

18.4

13.6

156.8

1.92

2

Aug

180

150.6

142.6

20

10

100

169.1

30

25

Jan

4

1

mio units

2017 Nov

120

mio USD

Pharmaceutical Market Retail Sales Oct

5.57

6.34

3

134.3

132.0

121.9

Sep

6

7.64

5.62

5

140

126.2

Aug

160

187.0

139.9

2016

212.7

147.6

120

80

211.4

6.91

0

Aug

Official Currency Exchange Rates vs. Consumer Price Index

10

2016

0

Aug

Sep

Oct

UAH/USD UAH/EUR CPI

2017 Nov

Dec

Jan

40 20 0

Feb

Mar

Apr

May

Jun

Jul

Aug

ECONOMIC NEWS —— On Sep 1, the EU-Ukraine Association Agreement took full effect. Ukraine signed it in 2014, but the EU council ratified it only on Jul 11, 2017. In 1HY 2017, Ukraine’s exports of goods and services to the EU grew 22.8% y-o-y, reaching US $ 9.4 bln.

—— The Marshall Plan for Ukraine that is being developed by Ukrainian and Lithuanian politicians envisages the investment of US $ 5 Bn in Ukrainian infrastructure and energy efficiency in next ten years on an annual basis. The EU bodies will study the Plan.

corruption are critical requirements of the IMF to complete the fourth review of its USD 16.8 bn loan program for Ukraine.

—— Kyiv authorities are completing negotiations with international companies on raising about USD 500 mio of investments in building an entertainment park in Kyiv, the capital’s Mayor said.

—— In Aug, Ukraine’s treasury residuals increased by 38.8% vs Jul to their all-time record of UAH 61.2 Bn. —— In Aug, Ukraine’s budget revenues increased 31.4% y-o-y, slowing from 43.4% y-o-y growth in Jul. —— In Aug, Ukraine’s industrial production increased by 1.2% y-o-y. An output of chemicals increased by 33% y-o-y, machinery – 10.4% y-o-y. —— Pension reform, privatization and fight against www.upharma-c.com

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Upharmacia September 2017

PHARMA MARKET NEWS Biofarma’s Plant Caught on Fire On Sep 25, the Biofarma's facilities in Bila Tserkva had caught on fire. Luckily, no one was injured, and the fire was localized. The fire damaged warehouses only. The causes of the fire are still unknown. The fire destroyed only packages and raw materials. The production on the plant was resumed on Sep 28. Biofarma had built the plant in Bila Tserkva in 2014 investing about US $ 42 mio. The company plans to complete the construction of the new workshop of the plant in 2Q 2018 through investing about US $ 40 mio. Biofarma is the only producer of blood preparations in the CIS. It produces more than 20 immunobiological preparations from donor blood, preparations obtained in the technology of recombinant DNA and probiotics.

Takeda Ukraine Obtained OTC Drugs from Unipharm Ukraine’s RO of Unipharm finished the deal with Takeda Ukraine, according to which the subsidiary of the Japanese company obtained the Unipharm’s line of OTC drugs and food supplements. Unipharm will continue managing its current portfolio in 2018. During the period of integration of Unipharm’s products into Takeda’s portfolio, Unipharm will keep its operations and will begin active development in other pharmaceutical segments,

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the company’s officials said. In 1HY 2017, Takeda was 9th company on the retail drug market of Ukraine by sales in values.

Farmak Abandons Plans to Start Production of Vaccines Ukrainian pharmaceutical market leader Farmak would not open production of vaccines in the near future the CEO of the company Augustin Dubnicka stated. Thus, the company abandons the plans, which were announced earlier. “From our side, as a national producer, it would be more rational to create medicines in those areas where we are competent, for example, endocrinology,” Mr Dubnicka said. Farmak considers projects on contract production of APIs at its facilities in Shostka. The company plans to invest UAH 230 mio in the development of its projects in 2017. At the end of the year, the company retained the 15th position on retail drug market by sales.

Arterium Launched Three New Brands In Aug, Arteruim Corporation launched onto Ukrainian market three new drugs. Hepametion (ademetionine) for the treatment of liver diseases; it is used in the treatment of diseases accompanied by intrahepatic cholestasis.

infection of the nails. Cholelesan (comb drug) is a vegetal choleretic drug, which is intended for the treatment of gallbladder diseases, as chronic cholecystitis and biliary dyskinesia. Arterium has about 140 brands in its portfolio; antibacterial products are its primary focus. It held the second position on the local retail pharmaceutical market in 1HY 2017.

Sanofi Aventis Ukraine Seeks to File Claim to International Court to Protect Investment in Ukraine "The new refusal of business courts to conduct an examination of original documents, using which fraudsters are trying to seize almost UAH 50 million belonged to Sanofi Aventis Ukraine, was the reason for filing the claim" the company said in a press release. The case is heard in Ukrainian courts with numerous violations, disregarding for the arguments and evidence of Sanofi Aventis Ukraine, including examinations proving the forgery of documents. "These fraudulent actions occur when the Ukrainian authorities are inactive along with the active assistance of representatives of the State Enforcement Service," the press service said.

Amodern Neo (amorolfine) a varnish for the treatment of fungal

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Upharmacia September 2017

REGULATORY UPDATES The Regulation on the Application of the National List of Essential Medicines Approved Order of the Ministry of Health of Ukraine No. 801 as of Jul 17, 2017 approved the Regulation on the Application of the National List of Essential Medicines when organizing the process of providing the population with medicines in healthcare institutions and facilities that are fully or partially financed from the state and local budgets (hereinafter - the Regulation). The need to approve the Regulation was determined by the Resolution of the Cabinet of Ministers No. 180 "On Amending and Invalidating Certain Resolutions of the Cabinet of Ministers of Ukraine" as of Mar 16, 2017. The Regulation determines the specifics of the use of medicines included in the National List of Essential Medicines, which are marked with the "√", "*" and "**". For example, "√Do not prescribe to children under 3 months", "*For medical use in case of eclampsia and severe pre-eclampsia. Not applicable for other types of seizures". The document also provides an explanation of the dosage forms of medicines included in the National List. It should be noted that healthcare institutions and facilities that are fully or partially funded from the state and local budgets should follow this document when forming the nomenclature for the procurement of medicines from the National List. That is, Resolution www.upharma-c.com

of the Cabinet of Ministers "Some Issues of State Regulation of Prices for Medicines and Medical Products" No. 333 as of March 25th, 2009 is applied together with the Regulations.

Procurement Based on the National List are Deferred by the Next Year On Sep 30, 2017, the Resolution No. 718 "Some Issues of Procurement of Medicines" entered into force. This Resolution prolonged the transition period for the procurement of medicines in the regions based on the National List of Essential Medicines. A similar provision has been made regarding supplying patients with drugs based on free and preferential prescriptions from the pharmacy. Thus, before Jan 1, 2018, healthcare institutions and facilities that are fully or partially funded from state and local budgets can procure any medicines registered in Ukraine included in the State Register of Medicines of Ukraine. From Jan 1, 2018, public procurement of medicines will be carried out based on the National List. The exception is procurement through international specialized organizations and the state program of insulin reimbursement.

Provided by

Procurement Service issued an explanation notice to its territorial bodies regarding the classification of information posted outside pharmacies in terms of advertising legislation. In particular, the object of analysis was the possibility of using in the pharmacy signboard such phrases as "Pharmacy of Low Prices", "Pharmacy of the Best Prices" and "Economy Pharmacy". As before, the state agency notes that a signboard or a board containing information about the registered name of the entity, the logo, the type of its commercial activities (if it is not clear from the registered name of the entity) and the working hours, which is placed on the internal surface of the leased or own premises, on the external surface of a building or construction not higher than the ground floor, or on the floor where the leased or own premises are located, or at the entrance to such premises, is not considered advertisement. However, the agency underlines the fact that the way of presenting the above information on the pharmacy signboard cannot contain information on prices that can affect the consumer's intentions to purchase goods in the pharmacy, and information that may mislead the consumer about the intention of the pharmacy to serve certain social groups of the population.

State Procurement Service Explained the Conditions Under Which the Information in the Read more on Legal Alliance website Pharmacy Signboard is not an Advertisement On Sep 1, 2017 the State

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Upharmacia September 2017

HEALTHCARE NEWS The MoH Plans to Start a Pilot Project on Kidney Transplantation

In 2018, the MOH plans to implement a pilot project for kidney transplantation from an unrelated cadaver donor, the Ministry’s Head Ulana Suprun stated. The state funding of the program envisages UAH 100 mio of annual allocations in 2019-2020. “Six thousand Ukrainians with renal insufficiency continue to be dependent on hemodialysis”, Mrs. Suprun reported. “Next year, within the project, we will be able to carry out kidney transplantation in Kyiv, Zaporizhia, Dnipro, Kharkiv and Lviv”. The Draft Law on transplantation was approved in the first reading in Apr 2016, but the document is still under consideration by the Parliament. It is expected to be finalized by the working group in Oct.

The Draft Law on Rural Medicine was Registered in Parliament Presidential Draft Law “On the improving the accessibility and quality of medical care in rural areas” was registered in Ukrainian Parliament for consideration. Earlier Ukrainian President initiated the reforming of the health care system in rural areas, which includes increasing salaries for physicians, building modern outpatient clinics, and developing telemedicine. The Draft Budget 2018 envisages provision of UAH 1 bn for implementation of these measures. The reform proposes the creation

8

of a network of outpatient districts, which will include district clinics or Primary Health Care Centers, paramedical and obstetric points in villages with a population of about 600-800 people.

Healthcare Will Receive UAH 86 bn in 2018 Ukrainian government approved the Draft Budget 2018. It envisages the increase of healthcare budget to UAH 86 bn (9.1% of the overall budget and 2.6% of the GDP). The budget 2018 will be aimed at implementation of reforms. The expenses on primary care will increase by 36.9% y-o-y UAH 13.28 bn to provide the new principle of payment to physicians. The funding of Affordable Drugs reimbursement program will be increased by 42.9% to UAH 1 bn, as the reimbursement list is expected to be expanded. Financing of secondary, tertiary and emergency medical care will increase by 10.8% y-o-y to UAH 53.9 bn. The funds for public procurements of medicines and vaccines through international organizations will amount to UAH 5.95 bn.

No.6327 and No.6604 are adopted, the doctors will be charged in accordance with the number of patients who signed declarations with them from August 1, 2018. “The eHealth system would ensure support to the introduction of the money follows the patient principle in primary care,” the Head of the MOH Ulana Suprun said. “This would allow financing medicine more effectively, establishing fair relations between doctors and patients when doctors will receive fair payment for their work and the latter – high-quality healthcare services”. eHealth project in Ukraine is implemented with the support of the governments of Canada, the United States, Germany and the Global Fund.

eHealth

System is Available for the Registration of Doctors & Patients Electronic healthcare system eHealth was launched in test mode and became available for registration of doctors and patients. The operation of the system in the test mode, during which the registration of doctors will be carried out on a voluntary basis, will last until Apr 1, 2018. At the same time, if the Draft Laws www.upharma-c.com


Upharmacia September 2017

CIS PHARMA NEWS Azerbaijan

—— The Head of the MoH of Belarus stated that his government is interested in establishing of joint pharmaceutical enterprise in Azerbaijan. Azerbaijani government plans to involve Azerbaijan Investment Company in the project. —— Within the Memorandum signed between Ministry of Economy of Azerbaijan and LLC Hayat Pharm, the creation of the Association of pharmaceutical production manufacturers in Azerbaijan has been agreed. —— The government regulated prices of 10 ths drugs registered in Azerbaijan.

Belarus

—— Within the Belarusian-Indian Business Forum, the parties reached the number of cooperation agreements. The MOH of Belarus general agreement on strategic partnership with Hetero Labs Limited company. Trilateral agreement on the basic conditions between the MOH, Glorinkor Company (Belarus) and Biocon Limited (India). Same agreement between the MOH, Glorinkor Company and Cadila Healthcare Limited (India).

—— Veropharm company (part of Abbott Group) reached strategic partnership agreement with the Russian producer of pharmaceutical substances Bion. The companies will cooperate in development and production of drugs for cancer treatment, cardiovascular and central nervous system. —— The GM of BIOCAD company, stated that in 2-3 years Russian generic market would collapse – prices for this category of drugs to drop significantly, while the generic market to cease to be the driver of the development of the pharmaceutical industry.

Kazakhstan

—— Jordanian company Hikma Pharmaceuticals PLC signed investment contract with Kazakh government to build the pharmaceutical plant in Alatau industrial zone (Almaty city). The company also signed a 10-year contract with Single Distributor SK-Pharmacy on the supply of drugs on an exclusive basis. —— According to the MOH’s plan the regulation of Rx drugs prices will be implemented in 2018, OTC – in 2023.

—— Leading Belarussian producer of pharmaceuticals Belmedpreparaty will establish experimental production of oral antitumor drugs using isolating technologies. The project envisages implementation of international GMP standards.

Russia

—— Venture Biotech Fund Primer Capital invested in the development of the drug by Gemopharm company for the treatment of multiple myeloma. The drug has already shown high efficacy in vivo. —— BIOCAD company will build a production complex in Pushkin district in St. Petersburg. It will include the center for pre-clinical trials, as well as production of substances and finished drugs. The investments to amount RUB 3bn.

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Upharmacia September 2017

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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.

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Upharmacia - September 2017  

Ukrainian Pharmaceutical Market Monthly. Details: https://goo.gl/Wdt27t

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Ukrainian Pharmaceutical Market Monthly. Details: https://goo.gl/Wdt27t

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