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Modern economic POTENTIAL OF UKRAINE |
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Pharmaceutical industryUkraine’s pharmaceutical industry is a very specific business which covers the production of pharmaceuticals and medical articles as well as wholesale and retail trade with specialized storage and distribution through a stable sales network of drugstores and pharmacies. The pharmaceutical industry in developed countries is one of the most dynamic and profitable ones, being at the same time a market segment regulated by government bodies and controlled by insurance firms. The industry has been recently integrating with medical servicing firms as well. The pharmaceutical industry has a notable place in the economy of Ukraine as it is an important segment of the national market, has an influence on the national and defense security of the country, and is a very knowledge-intensive sector with well-developed cooperation. The state policy of Ukraine in administering the pharmaceutical industry and drug supply is being formed with a focus on the requirements of the European Union. The main drug producers in Ukraine are Darnitsa pharmaceutical firm, JSC KievMedPreparat, Borschagovskiy Chemical and Pharmaceutical Plant, OJSC FARMAK, Zdorovye (Health) pharmaceutical firm, and JSC GalichPharm. Over 9,000 drugs have been registered in Ukraine at present, as opposed to less than 4,000 just a couple of years ago. To compare: the number of drugs registered in the Ukrainian Soviet Socialist Republic during the Soviet Times was around 2,000 medicines, in Russia and Kazakhstan – some 15,000, in Germany – 11,000, and in the USA – more than 20,000. Ukraine’s pharmacy (around 160 producer companies) makes up to 1,400 drugs. The leading pharmaceutical centers are still Kiev (with up to 20% in gross production volume), Kharkov (up to 15%), Lvov region (up to 10%), and Donetsk region (up to 9%). In general, the trade segment embraces over 1.5 ths. companies and some 15-20 ths. drugstores evenly spread all over Ukraine. Ukrainian producers of medicines widely use local raw stock, as well as imported substances. The general dynamics of the Ukrainian pharmaceutical market are presented by the diagram: Gross import, export, production, and market volumes over 2003-2005
Similar to years before, in the last year Ukraine’s pharmaceutical industry has been gradually boosting export volumes. Russia should be noted as the largest consumer of Ukrainian pharmaceuticals. Shares of countries – the largest recipients of ready pharmaceuticals of Ukrainian production in gross exports of ready pharmaceuticals, physical terms, over 2003-2005
The structure of local pharmaceutical market consists of drugstore purchases –72%, hospital procurement –16%, and state purchase –12%. The profit margin for pharmaceuticals in drugstores is around 34%. Throughout 2005, the leaders in medicine exports (in terms of export proceeds) were OJSC FARMAK, BioStimulator, Arterium, Darnitsa pharmaceutical firm, Zdorovye pharmaceutical firm. The pharmaceutical industry of Ukraine has good opportunities regarding entry into foreign markets. The companies developed many articles which may become very competitive, for example, Ukrainian enthero-sorbents. The Sillard drug developed by the Institute of Surface Chemistry under the National Science Academy of Ukraine, and patented and produced by the Institute’s plants, should be soon produced under license in China and some other Asian countries. By and large, experts say that at present Ukrainian enterprises are only beginning to compete with large foreign companies. To create and apply their own projects, the companies need investments for expanding their technical capacities. The entrance pass to the world market is a GMP certificate, which sets requirements for the qualification of personnel, equipment, premises, quality of components, and terms of product storage and transportation. The companies which have already undergone the procedure are StirolPharma, Borschagovskiy Chemical and Pharmaceutical Plant, and FARMAK. Specialists mention the high level of the pharmaceutical supervision system in Ukraine. This is also proved by the fact that Ukraine was recognized a full-fledge member of the International Program of Drug Control of the World Health Organization. 30% of pharmaceutical testing is done in the CIS, whereas only 3% of world drug output is synthesized here. One may claim today that for the first time Ukraine has built a vertical structure – from doctor to the Ministry of health, – which helps collect data on the side-effects of drugs. Today’s situation in the pharmacies of Ukraine can be a powerful stimulus to restructure the industry, facilitate competition, and shift to the technical standards of the European Union. A certain reduction in the number of pharmaceutical enterprises of Ukraine should be expected as a result. The companies which will be successfully restructured and survive the fierce local competition will also be able to compete in international markets. The formation of a national medical insurance system will also improve and bring the country’s pharmaceutical market to order. It will consolidate drug producers, as well as traders in the wholesale and retail segments in the medium run. The key macroeconomic goal of Ukrainian pharmaceutical companies for the next several years is growing cooperation between Ukrainian producers of medicines and similar producers in the European Community. Collaboration may be shaped as joint ventures, alliances, joint marketing and promotion of articles, as well as the transfer of non-prescription drug technologies to Ukraine. The main motivation for such a transfer is not a penetration into Ukrainian market, but exports to Western, Central, and Eastern Europe. The export motivation of transnational companies, if production is set up in Ukraine, will maintain the scientific base, which should be restructured according to new market tendencies. Preserving the scientific base, creating developed and specialized determinants regarding the country’s competitive advantage, as well as foreign investment into the development of the pharmaceutical business – all of these create the long-term cornerstone for competitive advantage and contribute to the re-orientation of Ukrainian export shipments from markets of transfer economy countries to Western, Central, and Eastern Europe. As well, these steps facilitate the competitiveness of the national pharmaceutical industry. Besides, the harmonization of main technical requirements with the standards of the European Union may simultaneously protect pharmaceutical producers of Ukraine from competing with low-quality medicine products. |
