The current Report uncovers the 2019 business trends of the pharmaceutical market of Georgia, overviews its healthcare system, portrays its epidemiology and demographics. It also depicts pharma regulation features in Georgia 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 (2020-2022).
The Report is intended for industry executives, decision-makers, sales & marketing, and market access managers and other stakeholders. "Georgia Pharmaceutical Country Report 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 Georgian pharma and/or healthcare market.
The Report covers the 2013-2019 full-year data for the pharmaceutical market and provides a forecast for the period of 2020-2022.
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In June 2019, Georgia was disturbed by mass protests which took place after the Russian delegation of the Interparliamentary Assembly on Orthodoxy headed by a Communist Party member Sergei Gavrilov visited the Georgian Parliament. Gavrilov sat in a chair reserved by the protocol for the Head of Parliament and delivered a speech in Russian extolling the Orthodox brotherhood of Georgia and Russia. The opposition perceived this event as an insult and a betrayal of national interests by the Georgian authorities. Rallies in front of the Parliament culminated in an attempt to storm the state-building. On June 21, the Chairman of the Georgian Parliament resigned, which helped reduce tension in society. Amid protests, Russia cut off direct flights with Georgia.
In September 2019, Mamuka Bakhtadze resigned from the post of Prime Minister after a meeting of the parliamentary faction of Georgian Dream party its head Bidzina Ivanishvili announced his decision to change the government. Former Minister of Internal Affairs Giorgi Gakharia, who was in charge of a violent crackdown on protestors in June 2019, became a new head of the government.
In November, a new protest rally began in the Tbilisi, demanding the dissolution of parliament and the calling of early elections. The protests started after the Georgian parliament did not approve the electoral reform plan, according to which the 2020 parliamentary elections were to be held in full according to the proportional system.
The growth of the Georgian economy in 2019 exceeded estimates and amounted 5.2%. Exports for this period increased by 10% YoY, production rose by 19.8% YoY. The tourism sector remained strong despite the Russian ban on direct flights to and from Georgia.
However, positive economic growth did not affect the welfare of citizens. The constant devaluation of the national currency and rising prices were the main reasons for the impoverishment of the population. Compared to 2018, the annual inflation rate amounted to more than 7%, while the increase in food prices reached unprecedented levels over the past five years.
Dashboard. Georgia's Real GDP and GDP growth rates + Georgian lari exhange rates (avg) (Sources: IMF, National Bank of Georgia)
The economic outlook for 2020 is less optimistic. The IMF lowered its forecast for GDP growth from 4.8% to 4.3%. Galt & Taggart experts believe that economic growth this year may be even lower than 4%, mainly due to uncertainties related to the parliamentary elections and deterioration of relations with Russia.
Foreign companies maintain about 85-87% of the market in values. Products of local companies are conventionally cheaper, but their quality is poorer. Domestic pharmaceutical production has been growing over the last years, which was reflected in the growth of exports. In 9M 2019, the Georgian industry produced pharmaceutical products worth USD 66 mln.
Dashboard. Georgia's International Trade with pharmaceuticals, Export and Import Source: UPharma Consulting, National Bank of Georgia)
There are about 1,500 pharmacies in Georgia. Nearly half of them belong to GHG, Aversi, and PSP. GHG – 251 PoS, Aversi – 238, PSP – 193. Almost 700 pharmacies in Georgia are independent i.e., do not belong to any chains. They hold about a 15% share of the market. Independent pharmacies predominately are not able to compete with big chains, so their number is decreasing in consequence of bankruptcy and acquisitions.
There are about 70 pharma producers in Georgia. The major players on the market are three vertically integrated companies, which include both production, distribution, and retail departments. PSP, Aversi and Georgian Healthcare Group (GHG) companies obtain about considerable share of the distribution and retail markets and are able to regulate prices on them. Thus, the pharmaceutical market of Georgia is described as a weak oligopoly. The Georgian authorities had repeatedly stated their readiness to end cartel collusion on the country's pharmaceutical market. Still, the competition authority has not seen any violations from the side of three dominant companies.
The share of local companies among the total sales of pharmaceuticals is about 13% in values. However, Aversi-Rational and GM Pharmaceuticals (part of PSP) produce above 95% of pharmaceutical products in Georgia. These companies are only holders of the international GMP certificates in Georgia.
Dashboard. Weighted average cost of a pack (WACP) on the pharmaceutical market (retail segment) (Source: UPharma Consulting; IQVIA)
The weighted average cost of a pack on the retail market has been decreasing over the last years and amounted to USD 2.12 (-5.8% YoY).
High prices of medicines have been an issue in Georgia for a long time. The main reasons for this are the domination of foreign companies, the oligopoly of three local wholesalers, and the absence of price regulation. At the same time, medicines in Georgia are freed from VAT.
Since July 2017, the Ministry of Health of Georgia has launched a program that enabled the poor citizens to buy 23 medicines for the treatment of chronic diseases for a nominal price of GEL 1. From August 13, 2018, all citizens of Georgia can enjoy a 50% discount on medications for the treatment of the second type of diabetes. The government plans to expand the program further.