U KRAINIAN P HARMACEUTICAL M ARKET M ONTHLY Upharmacia Macroeconomic Environment | Market & Companies News | Regulatory Updates | Healthcare News ISSUE: 07 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 / [email protected] / +380 (44) 232-11-42
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.
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 MacroeconomicIndicators in Ukraine
(June 2015-June 2016)
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Ukrainian PharmaceUtical market monthly: July 2016
KEY ECONOMIC EVENTS » On Jul 11, the governments of Ukraine and Canada signed a free trade agreement, which came into force
immediately. The agreement is expected to reduce 99% of the trade barriers between the two countries over a seven-year period.
» Fitch Ratings affirmed long-term local currency rating for Ukraine at CCC.
» In June, monetary base of Ukraine increased 4.5% m-o-m, the National Bank of Ukraine reported.
» Ukrainian Finance Ministry expects the favorable decision by the IMF on the next tranche in Aug. The delay with the decision will not affect the National currency’s exchange rate, the Minister said. The National Bank of Ukraine, in its turn, expects to receive two tranches for USD 2.7 bn from IMF by the year-end, the Head of NBU said.
» The EU and Ukraine are discussing the possibility of giving additional trade preferences for Ukrainian products on the European market, the PM of Ukraine said.
» Ukraine initiates the discussion on the establishment of a common economic space with the Eastern Partnership countries (Ukraine, Georgia, Moldova, Belarus, Armenia, and Azerbaijan) to be held this autumn, the Foreign Minister of Ukraine said.
» In June, industrial output in Ukraine declined 3.4% y-o-y, Statistics Service reported. In 1H2016, the industry grew 2.0% y-o-y.
» World Bank Managing Director Meets with Prime Minister of Ukraine on June 17, 2016. During the meeting with Prime Minister Groysman on June 16 in Washington, DC, World Bank Managing Director Sri Mulyani Indrawati confirmed the Bank’s commitment to support the country’s ambitious reform program, including the financial, fiscal, energy, social protection and other sectors.
177.7172.6
177.1
193.2
206.3
196.6
212.3
198.9
176.0
187.3
178.1 177.6174.8
118.4 119.5122.5
126.7
130.2 129.0
136.4133.6
126.8
133.8
125.2 123.6 122.6
100
110
120
130
140
150
160
100
120
140
160
180
200
220
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Pharma Retail Sales2015 2016
Volumes (mio units)
Values (mio USD)
15.4
13.9
9.0
13.812.2
11.7
15.8
8.3
13.3
15.5 13.9
14.2
16.1
115.0106.6
93.3
122.2
147.1 141.3 142.1
103.7
145.0
125.1 130.0
110.4
132.1
0
20
40
60
80
100
120
140
160
0
4
8
12
16
20
24
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Ukraine's International Trade in Pharma Production
2015 2016
Export
Import
5.80 5.715.43
5.72
6.295.92
6.37
4.93 4.93
5.415.17
5.39 5.44
1.831.94
1.88 1.86
2.04
1.80
2.01
1.601.50
1.641.76
1.591.73
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0
1
2
3
4
5
6
7
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Industrial Production Sales & Retail Turnover of Enterprises Surplus
2015 2016
Retail turnover of enterprises
Industrial production sales
21.2 21.8 21.6 21.8 21.823.3 23.4 24.3
26.4 26.4 25.6 25.2 25.0
24.926.1 25.9 26.1
24.6 25.1 25.4 26.3
29.3 29.2 29.1 28.5 28.1
157.5 155.3 152.8 151.9146.4 146.6 143.3
140.3132.7
120.9
109.8 107.5 108.2
0
20
40
60
80
100
120
140
160
0
5
10
15
20
25
30
35
40
45
50
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2015 2016vs. Consumer Price Index
Official Currency Exchange Rates
CPI of Ukraine
UAH / €
UAH / $
RECRUITING &EXECUTIVESEARCHWe recruit pharma people in theCIS region and focus on:
Ukrainian PharmaceUtical market monthly: July 2016
MARKET & COMPANIES NEWS
BCPP considers the issues of Darnitsa’ hostile actions
Shareholders of Borshchahivskiy Chemical-Pharmaceutical Plant (BCPP) at an extraordinary meeting on Jul 27 will examine the issues of hostile and unfriendly action of Darnitsa company. Moreover, the agenda foresees the consideration of supporting of Supervisory Board of BCPP and its Director in the protection of the interests of the company’s minority shareholders.
In Jun 2016, the Antimonopoly Committee of Ukraine allowed Darnitsa to buy above 50% of BCPP. On Jun 15, Darnitsa announced the intention to acquire 25% of shares of BCPP for UAH 80 ths per share. The Supervisory Board of BCPP considered the price as underestimated. Currently, Darnitsa owns 30% of shares of BCPP.
Arterium denied rumors on its probable bankruptcy
Arterium Corporation responded to the recent publications in mass media regarding the probable bankruptcy of the organization by calling such material tendentious.
“Any judicial decision, information from partners or financial institutions are treated in an apparently negative way,” the Corporation’s press- release says. “Comments from the companies exposed to such “analysis” are often not requested. This could be another confirmation of increasing competition on the pharmaceutical market.”
In Sep 2015, the National Bank of Ukraine approved the bankruptcy
of Finances and Credit financial group, which used to be the owner of Arterium and its credit partner. Subsequently, the Corporation retained unsecured credit lines as well as pledges, which ensured them.
“The issues of attraction and repayment of debt financing are actual for the vast majority of companies in all sectors of the economy. Organization at the moment is in the process of negotiations for the settlement of obligations. Agreements on refinance of some loans are already concluded with some financial institutions, the press release noted.”
Arterium Corporation includes Kievmedpreparat and Galychpharm companies. In 2015, the Corporation sold production for about UAH 2.5bn in Ukraine and 12 other countries. In 1Q2016, Arterium climbed two positions PPG and reached the second position on Ukrainian pharmaceutical market by sales in values.
Hungarian No-Spa banned in Ukraine
On 11 Jul, State Administration of Ukraine on Medicinal Products forbidden sale, retention, and use of 18 series of No-Spa (drotaverine) produced by Hungarian plant Chinoin (a part of Sanofi). The ban imposed after the information provided to the Administration by Sanofi-Aventis Ukraine.
In Feb 2016, the Administration had obliged entities to withdraw the drug from circulation through quarantining. This time, packages should be utilized or returned to suppliers.
Darnitsa expanded its cardio portfolio
Darnitsa announced an expansion of cardio portfolio with the launch of injection solution Pentotren (pentoxifylline) in a polypropylene bottle. The preparation is used for pharmacotherapy of violations of microcirculation and peripheral blood circulation. It improves the nutrition of tissues, blood circulation and optimizes the condition of blood vessels. The most efficient form of parenteral administration of pentoxifylline is an intravenous infusion.
Cardio portfolio provides Darnitsa about 30% of its sales. Darnitsa was the 3rd company on Ukrainian pharmaceutical market in 1H2016 with sales amounting USD 39.2 mio. At the same time, the company decreased its net profit by 48.9% y-o-y to USD 5.7 mio.
Bayer defended patent protection for moxifloxacin
Kyiv Economic Court obliged Ukrainian pharmaceutical company Yuria-Pharm to stop violating the patent rights of Bayer Pharma AG, the owner of the patent for moxifloxacin. The Court invalidated the state registration of Maxicin (moxifloxacin, Yuria-Pharm), which in quantitative and qualitative composition responds to Avelox, produced by Bayer.
Bayer appealed the Court about two years ago. The Authority delivered its judgment for the German company after Bayer presented compelling evidence of patentability of its invention. Moreover, the company possesses the corresponding patents for moxifloxacin in the
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Ukrainian PharmaceUtical market monthly: July 2016
REGULATORY UPDATES
On Jul 2, the Draft Resolution of the Cabinet of Ministers of Ukraine “On implementation of the mechanism of full/partial reimbursement of drugs” was presented on the MOH’s website. The document proposes to approve the procedure of full/partial reimbursement of drugs and the list of 93 INNs to be reimbursed since Oct 1, 2016.
According to the document, funding of full/partial reimbursement should be provided due to subsidies from the state budget/local budget. The reimbursement is carried at the level of the reference price of a drug approved by the MOH.
Business entities will receive a refund of the amount indicated in the register from the administrators of local budgets. For this, every month, companies should prepare the report on drugs released on referent prices, which indicates an INN of a drug, effect of action, release form, the number of dispensed packages, reference price of full or partial refund, name of healthcare institution and the amount to be reimbursed in the reporting period.
The document proposes to approve the list of drugs against 23 disease categories, in particular, hematological diseases (excluding oncohematologic diseases), diabetes insipidus,
type II diabetes, rheumatism, rheumatoid arthritis, systemic, chronic, severe skin diseases, syphilis, epilepsy, cardiovascular diseases, etc.
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Parliamentary Committee on Public Health supported the Draft Law #4074 “On amendments to the Law “On Drugs” (regarding the access to the materials of preclinical studies and clinical trials of drugs)”. The document aims to amend the regulation, according to which the state protects the disclosure and unfair commercial use of the information contained in registration materials by making an exemption for the result of preclinical and clinical trials. This approach corresponds to the demands of Module 5 of Directive 2001/83/EC of the European Parliament and the Council. The Draft Law’s approval is expected to promote transparency, fight against corruption and ensure the reliability of data on the efficacy and safety of drugs.
The experts of the European Business Association opposed the Draft Law and asked the Committee to reject it. The Apparatus of the Ukrainian Parliament remarked the terminological disagreement of the terms “commercial secret” and “commercial information.” However, according to the
Committee members, the recommendations could be taken into account during the revision of the document before the second reading.
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On 14 Jul, the Draft Law #4981 “On compulsory social medical insurance in Ukraine”, which aims to implement health insurance in Ukraine since 2018, was registered in the Parliament. For the implementation of the documents, there were also registered Draft Laws to amend the Tax Code (#4982) and the Budget Code (#4983). The document foresees the establishment of the special Fund, which guarantees medical insurance due to contributions from the collected insurance payments and makes payment in case of exhaustion of insurance reserves of the insurer. The insurer could be a registered financial institution established in the form of joint stock company, licensed to conduct compulsory social health insurance.
On 18 Jul, Oleg Musiy registered the alternative Draft Law #4981-1. According to alternative version, the special Fund would be the only insurer that serves as the accumulator of money of policyholders, which subsequently makes payments under contracts of compulsory social health insurance.
USA, Japan, Germany, Australia and other countries.
Moxifloxacin is an antimicrobial medication for systemic use, which is used for the treatment of patients with community-acquired pneumonia as well as complicated infectious diseases of the skin and subcutaneous tissue. The
primary sales market for Maxicin was hospital market. It provided Yuria-Pharm about UAH 10-12 mio annually.
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Ukrainian PharmaceUtical market monthly: July 2016
HEALTHCARE NEWS
The government summed up achievements in healthcare in 2Q2016
On Jul 6, the Prime Minister of Ukraine Volodymyr Groysman presented the Report of Ukrainian Government in 2Q2016. According to Mr. Groysman, during 2.5 months of the new Cabinet of Ministers, positive signs of progress in economic growth, national currency stabilization and overcoming crisis were achieved.
The government also pointed four achievements in healthcare:
» Draft Order of the Cabinet of Ministers of Ukraine on the concept of healthcare funding reformation was discussed by public and processed by international experts;
» Simplification of drug registration mechanism for drugs registered in the USA, the EU, Switzerland, Japan, Australia, and Canada;
» Creation of State Enterprise “Center of Public Health of the MOH”, which carry out functions of conduction of social and hygienic monitoring of diseases, epidemiological surveillance and biosafety and fight epidemics;
» Creation of specialized humanitarian cardiac centers for treatment of children under the agreement on cooperation between Heart Institute of the MOH, Kalangos Fund and “Hearts for all” Fund.
Deputy Head of MOH suspected in corruption
On 8/07/2016, Kyiv Prosecutor’s Office caught red-handed the Deputy Minister of Health Roman Vasilishin while taking a bribe. According to the authority, Mr. Vasilishin created a system of extortions received from medical practitioners for enabling them to conduct operations in Kyiv Alexander Hospital.
The Court had chosen preventive measure for Vasilishin in the form of detention for a period of 60 days. The same day, the bail of UAH 2.9 mio was made for Vasilishin, who had pleaded not guilty. The government removed Vasilishin from his post for the investigation period.
“This case should make doctors seriously to consider the consequences of extortions from patients. Such acts will be stopped,” the acting Minister of Health Viktor Shafranskiy said.
Draft Concept of new healthcare model presented
On 15/07/2016, the acting Minister of Health Viktor Shafranskiy introduced the Draft concept of new healthcare model development. The system, which envisages an integrated approach, will include the following components: funding, accessibility of drugs, medical services, public health system, personnel, management system, science and
communications.
The Concept expects to introduce insurance model of financing, reimbursement, and reference drug prices. The Ministry will define a guaranteed package of health care and establish a national insurance institution.
The expected results of the Concept’s implementation are:
» increase in life expectancy for 0.7–1 years;
» reduce the mortality of working-age population by 20%;
» reduce the infant mortality by 17%;
» reduce the maternal mortality by 12%;
» reduce pre-hospital mortality by 8%;
» reduce hospital mortality from acute myocardial infarction by 25%, from strokes – by 30%, from injuries – by 35%.
State Administration of Ukraine on Medicinal Products and Drug Control started operating
On Jul 18, State Administration of Ukraine on Medicinal Products and Drug Control has begun performing its functions and authorities in full volume. Therefore, the process of merge of State Administration of Ukraine on Medicinal Products and State Administration of Ukraine on Drug Control, which had started in Sept 2015, has completed.
The Draft Law #4982 proposes to establish a zero rate of income tax for the contracts of compulsory social health insurance. The Draft Law #4983 aims to amend the Budget Code for it to determine the amount
of the insurance payment under the contract of compulsory social medical insurance.
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Ukrainian PharmaceUtical market monthly: July 2016
The most important authorities of the Body are the licensing of economic activities of drug manufacturing, drug importing, wholesale and retail sale of drugs. The Administration is headed by Iryna Suvorova, who had been appointed on May 25, 2016.
Member of Parliament proposes to remove Crown Agents from public procurements
The Head of Parliamentary Committee on Public Health and its First Deputy proposed to exclude British procurement agency Crown Agents from the list of international organizations, which conduct public procurement of drugs and medical devices for Ukraine, due to unsatisfactory results of its activity. The corresponding Draft Law was registered in the Parliament on Jul 15.
According to the explanatory note, only 43% of drugs for adult oncology and 16% for child oncology and hematology from the planned amount were supplied, while reagents for the diagnosis of cancer were not procured at all. Moreover, the quality of drugs proposed by Crown Agents is questionable.
The MOH has been cooperating with Crown Agents since Oct 2015.
Ulana Suprun replaced Viktor Shafranskiy at the position of acting Head of MOH
On 22 Jul, the Cabinet of Ministers appointed Ulana Suprun at the position of the First Deputy Minister of Health of Ukraine. Few days later acting Minister Viktor Shafranskiy resigned at his own request. Consequently, since Aug 1, Mrs. Suprun has taken the authorities of the acting Head of the MOH.
Mrs. Suprun is an American-born doctor, volunteer and the Director of humanitarian initiatives of the
Ukrainian World Congress. She lives in Ukraine since autumn 2013. In 2014, Mrs. Suprun established organization Patriot Defence, which conducts classes on tactical medicine and provides Ukrainian troops with improved personal first-aid kits. On 11 Jul, President of Ukraine granted Ulana Suprun a Ukrainian citizenship.
Artificial heart was implanted for the first time in Ukraine
On Jul 12, the first in Ukraine operation on artificial heart transplantation was conducted in Heart Institute of the MOH.
“Implantation of artificial heart is the only decision for patients, which require heart transplantation, but cannot afford it due to legal issues,” the Director of the Institute Borys Todurov, who headed the operation, said. “The use of mechanical heart will allow a patient to wait for the opportunity to carry out transplantation of the real heart, when the corresponding Law is approved.”
Experts of the Institute received the right to carry the operation through passing appropriate certification in Germany. The artificial heart, which costed EUR 120 ths. was provided by German company under the guarantee of payment.
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