Ukraine Pharmaceutical Country Report 9M 2019

Ukraine Pharmaceutical Country Report 9M 2019

Brief Summary

The current Report uncovers the 9M 2019 business trends of the pharmaceutical market of Ukraine, overviews its healthcare system, portrays its epidemiology and demographics. It also depicts pharma regulation features in Ukraine including a step-by-step process of the marketing authorization for pharmaceutical products. It provides insight into the country’s socio-political development since independence, describes recent economic trends, and provides the pharmaceutical market forecast for the next three years (2019-2021).

The Report is intended for industry executives, decision-makers, sales & marketing, and market access managers and other stakeholders. "Ukraine Pharmaceutical Country Report 9M 2019" will be useful for top-managers, business owners, consultants and other stakeholders of the Life Sciences industry, who are analyzing, planning to enter or invest in the Ukrainian pharma and/or healthcare market.

The Report covers the 2012-2018 full-year data and 9M 2019 data for the pharmaceutical market and provides a forecast for the period of 2019-2021.

TECHNICAL DETAILS & HOW TO BUY
Series: Pharmaceutical Market Country Reports
Country: Ukraine
Data years: 2013-2018; 9M 2019
Format: .pdf
Additional files: .xlsx, .pptx
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Political development of Ukraine in 2019

Ukraine came through some significant shifts in its political environment in 2019. At the presidential elections in April 2019, famous comedian and actor Volodymyr Zelensky won an unexpected victory against acting President Petro Poroshenko gaining unprecedented support of 73% of voters. Immediately after his inauguration, Mr. Zelensky dissolved the parliament and called for snap elections. On July 21, newly created by Zelensky’s team "Servant of the People" party won the parliamentary elections, yielding 60% of the seats in the parliament, and formed a government.

The new government, which took office in August 2019, has committed to an ambitious and wide-ranging reform agenda, which, among others, included:

  1. Liberalizing the economy to create favorable investment climate
  2. Eliminating the hellish bureaucracy
  3. Building a digital government in a SmartPhone
  4. Eliminating corporate raids, monopoly, and contraband
  5. Establishing the farmland market
  6. Creating energy independence
  7. Removal of immunity from members of Parliament
  8. Adoption of an impeachment legislation

Ukrainian Economy in 2019

The GDP of Ukraine grew by 2.5% in the 1Q 2019 compared to 3.3% in 1Q 2018. But, in 2Q 2019, it showed an entirely unexpected 4.6% growth, which was mostly due to advancement in private consumption, which swelled 11.8% y-o-y. Foreign portfolio inflows have increased significantly. Investors have been attracted by restored macroeconomic stability and sound central bank policies, along with favorable conditions on international financial markets.

Ukraine’s 3Q 2019 real GDP grew 4.2% y-o-y, slowing down from the previous quarter mainly due to the weak performance of the industry. The industrial production index was 100.0 in 9M 2019 as the main industries showed negative returns in the last months.

Dashboard. Ukraine's Real GDP and GDP growth rates + UAH/EUR/USD (avg) rates (Sources: IMF, National Bank of Ukraine)

The IMF expects Ukraine's GDP to grow at 3.0% in 2019. The growth rates are expected to be at the same level in 2020-2022. Ukraine’s government has been more optimistic, forecasting GDP growth of 3.7% in 2020. The forecast for GDP growth for 2021 and 2022 is set at 3.8% y-o-y and 4.1% y-o-y, respectively. Experts emphasize that to reach such growth rates, Ukraine will have to achieve notable progress in the most clamant reforms. Cooperation with international financial institutions will also become a vital factor as, in 2020-2021, UKR will have to pay large sums of money, covering the state debts, which drastically complicates economic development.

If reforms do not progress and adequate financing is not mobilized, growth could fall below 2% as investor confidence deteriorates, macroeconomic vulnerabilities intensify, and financing difficulties force compression in domestic demand.

Trends of the Ukrainian pharmaceutical market in 2019

Market structure

The Ukrainian pharma market consists of two sales segments:

  1. retail (sales through pharmacies and pharmacy chains), and
  2. hospital (hospitals purchases at the expense of the state budget and own funds of hospitals and regional healthcare budgets, purchases by private hospitals).

Dashboard. Shares of Retail and Hospital Segments in the Total Pharma Market (medicines only), VALUES and VOLUMES (Sources: UPharma Consulting, apteka.ua)

Almost 90% of sales come from the retail segment, whose share has grown from 86.2% in 2013 to 90.9% in 9M 2019. The retail segment is predominantly of local origin in volumes and foreign – in values.

Sales in the retail segment are generated through pharmacies and pharmacy units only. As on 01.01.2019, there were 16.5 ths pharmacies and 4.2 ths pharmacy units.


Local pharmaceutical manufacturers

There are 115 local companies which are engaged in (have licenses) the manufacturing of pharmaceutical products in the country.

  • The biggest local companies: Farmak, Arteriun Corporation, Darnitsa, Kyiv Vitamin Factory, etc.
  • The most competitive international companies on the market: Berlin-Chemie/Menarini, Sanofi, Teva, KRKA, etc.

A significant trend has formed in recent years of an insignificant, but stable increase in the share of UKR producers in values after 2014-2016. Consumers shifted to much cheaper products of local origin. During several years of such dynamics, local manufacturers managed to increase their capacities significantly and reorient their portfolios to more modern and expensive products.

In 9M 2019, 8 of 15 leading companies on the market by sales in values were of Ukrainian origin. The first three leading companies are Ukrainian companies. Farmak has been a leader of the Ukrainian pharmaceutical market over the last 8 years. In 9M 2019, the company grew its sales by 19.5% YoY. Another Ukrainian company Darnitsa managed to return the 3rd position after losing it in 2018, but that was predominately due to the slow growth of Teva.


Pharmaceutical sales regional distribution

Dashboard. Regional distribution of pharma sales in Ukraine, VALUES (retail segment) (Sources: UPharma Consulting, apteka.ua)

The regional structure of pharma consumption has notably reshuffled in the last six years. Due to the war conflict in Donetsk and Luhansk regions, the market shares of these regions notably decreased from 14.6% in 2013 to 3.9% in 2018. Before 2014, the share of the Autonomous Republic of Crimea in the total market was more than 6%, but due to the annexation of the peninsula Ukrainian entities stopped operating there and its share is set to zero since then.

At the same time, the shares of the Central and Western regions during the last 6 years notably increased. The market share of Kyiv city grew from 11% in 2013 to 14.5% in 2018 and 14.4% in 9M 2019. The aggregated share of Western regions increased from 18.1% in 2013 to 22.3% in 2018 and 22.2% in 9M 2019 - Lviv region showed the highest surplus in its market share (+1.5% 2018 vs 2013). Kharkiv and Odessa regions showed the highest growth rates after Kyiv city - their shares increased by 2.4% and 1.7%, respectively.


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