Upharmacia - May 2016

Ukrainian Pharmaceutical Market Monthly
Upharmacia
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

Ukrainian Pharmaceutical Market Monthly: May 2016
2015 2016
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
MACROECONOMIC INDICATORS
Q2 Q3 Q4 Q1
GDP (US$ bn) 20.795 25.552 25.588
growth, % y-o-y -35% -26% -17%
Export of Goods (US$ bn) 3.07 2.94 3.09 3.15 3.09 3.35 3.23 3.13 3.36 2.04 3.08 2.99 3.10
growth, % y-o-y -39% -41% -30% -34% -22% -22% -23% -21% -11% -31% 3% -13% 1%
Import of Goods (US$ bn) 2.86 2.63 2.76 2.98 3.88 3.24 3.22 3.07 3.12 2.23 2.68 3.35 3.05
growth, % y-o-y -38% -46% -37% -34% -2% -30% - 27% -27% -32% -26% -6% 5% 7%
Industrial Production Sales (US$ bn) 5.91 5.65 5.79 5.71 5.42 5.72 6.29 5.92 6.37 4.93 4.93 5.41 5.17
growth, % y-o-y -33% -38% -35% -33% -23% -20% -21% -19% -17% -18% 8% -2% -12%
Retail Turnover of Enterprises (US$ bn) 1.66 1.94 1.83 1.94 1.88 1.86 2.04 1.80 2.01 1.60 1.50 1.64 1.76
growth, % y-o-y -40% -35% -38% -41% -32% -38% -31% -33% -29% -19% 4% 2% 6%
Unemployment Rate (%) 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
Average Salary (US$) 176 193 202 202 194 199 207 193 223 180 174 187 191
OFFICIAL CURRENCY EXCHANGE RATE
UAH / USD 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
UAH / EUR 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
PHARMACEUTI CAL INDUSTRY INDICATORS
Export of Pharma Products (mio USD) 13.46 13.00 15.36 13.85 9.01 13.79 12.2 11.7 15.77 8.31 13.33 15.54 13.90
growth, % y-o-y -44% -39% -39% -6% -54% -47% -37% -52% -28% -30% 11% 16% 3%
Import of Pharma Products (mio USD) 103.7 84.2 115.0 106.5 93.3 121.1 147.1 141.3 142.1 103.7 145.0 125.1 130.0
growth, % y-o-y -36% -60% -44% -47% -47% -31% -28% -24% -42% 15% 27% 21% 25%
Pharma Retail Sales, values (mio USD) 180.0 193.0 177.7 172.6 177.1 193.2 206.3 196.6 212.3 198.9 176.0 187.3 178.1
growth, % y-o-y -40% -28% -29% -32% -24% -28% -26% -20% -18% -17% -1% -5% -1%
Pharma Retail Sales, volumes (mio units) 122.6 124.5 118.4 119.5 122.5 126.7 130.2 129.0 136.4 133.6 126.8 133.8 125.2
growth, % y-o-y -20% -11% -9% -10% -8% -11% -5% -4% -5% 1% -12% -5% 2%
WACP (USD) 1.41 1.47 1.52 1.48 1.45 1.52 1.58 1.52 1.56 1.49 1.39 1.40 1.42
growth, % y-o-y -27% -23% -21% -23% -18% -19% -22% -18% -14% -23% -23% 13% 1%
CPI of Ukraine 160.9 158.4 157.5 155.3 152.8 151.9 146.4 138.1 134.6 131.9 126.9 113.5 108.4
Pharmaceutical Products CPI 164.7 159.5 153.5 151.8 149.4 145.8 142.1 146.6 143.3 140.3 132.7 120.9 109.8
Local Companies share, values (%) 40.7 41.5 41.7 41.8 41.4 41.4 41.4 41.7 40.9 42.3 42.9 42.7 42.3
Local Companies share, volumes (%) 77.6 77.6 77.9 78.4 78.2 76.5 75.7 75.8 76.7 75.6 76.5 76.5 76.7
MACROECONOMIC ENVIRONMENT
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
Table: Key Macroeconomic
Indicators in Ukraine
(Apr 2015-Apr 2016)

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.
180.0
193.0
177.7
172.6
177.1
193.2
206.3
196.6
212.3
198.9
176.0
187.3
178.1
122.6
124.5
118.4 119.5
122.5
126.7
130.2
129.0
136.4
133.6
126.8
133.8
125.2
100
110
120
130
140
150
160
100
120
140
160
180
200
220
Pharma Retail Sales
2015 2016
Volumes (mio units)
Values (mio USD)
13.5 13.0
15.4
13.9
9.0
13.8
12.2 11.7
15.8
8.3
13.3 15.5
13.9
103.7
84.3
115.0
106.6
93.3
122.2
147.1
141.3
142.1
103.7
145.0
125.1
130.0
0
20
40
60
80
100
120
140
160
0
4
8
12
16
20
24
Ukraine's International Trade
in Pharma Production
2015 2016
Export
Import
5.91
5.65
5.80 5.71
5.43
5.72
6.29
5.92
6.37
4.93 4.93
5.41
5.17
1.66
1.94
1.83
1.94
1.88 1.86
2.04
1.80
2.01
1.60
1.50
1.64
1.76
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0
1
2
3
4
5
6
7
Industrial Production Sales &
Retail Turnover of Enterprises Surplus
2015 2016
Retail turnover of enterprises
Industrial production sales
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
26.9
25.5 24.9 26.1 25.9 26.1
24.6 25.1 25.4 26.3
29.3 29.2 29.1
160.9
158.4 157.5 155.3 152.8 151.9
146.4 146.6 143.3 140.3
132.7
120.9
109.8
0
20
40
60
80
100
120
140
160
0
5
10
15
20
25
30
35
40
45
50
2015 2016
vs. Consumer Price Index
Official Currency Exchange Rates
CPI of Ukraine
UAH / €
UAH / $

RECRUITING &
EXECUTIVE
SEARCH
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CIS region and focus on:
> Sales & Marketing
> Regulatory Affairs
> Quality Assurance
> Finances
> Operations
> Administration
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in People Management
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Partner, HR-Consulting
AMaximenko@upharma-c.com
+380 (44) 232-11-43
+380 (97) 953-68-14

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.
Indar co-developed a
syringe pen
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
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.
Chinese partners
visited Biopharma’s
industrial complex
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

to Kazakhstan, Belarus, Georgia,
Armenia, Azerbaijan, Uzbekistan,
Mongolia and other countries in
Central Asia.
REGULATORY UPDATES
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 member-
states.
The registration procedure
for such medicinal products
envisages the submission of the
smaller package of documents,
reduction of registration terms (17
business days), and no need for
the expertize of the registration
materials.
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.
Provided by
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.

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.

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Upharmacia - May 2016

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