The quiet year of 2013, which amounted to $3.3 bln, experts call it an exemplary year in terms of the size of the pharmaceutical market. It was a time when the pharmaceutical market of Ukraine was the largest among the CIS countries, and its growth rate was about 18%. And how the market feels in 2017 – read in the analysis of the Ukrainian pharmaceutical market from the branding agency KOLORO.
Analysis of the Ukrainian pharmaceutical market: status and leaders
2016 ended with sales of ₴50.5 billion ($1.98 billion) worth of pharmaceuticals. In the first six months in 2017, the retail pharmaceutical market reached ₴17 billion (about $602 million). It showed a 13% growth in monetary terms, but at the same time a 4% decrease in the number of packs. At the same time, there was a 2.3% increase in the production of products in standardized packages, such as tablets and ampoules. Predominantly these are prescription drugs and locally produced products. This indicates that consumers began to purchase products in large packages, which reduces the frequency of purchase of factory packs.
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The industry leaders are Ukrainian companies Pharmak PJSC, Arterium Corporation, and Darnitsa FF PJSC. Two foreign companies also made it to the top five: Sanofi (France) and Berlin-Chemie (Germany).
The drug ranking does not quite reflect the country’s morbidity pattern: more than 85% of deaths are due to non-communicable chronic respiratory and cardiovascular diseases, as well as diabetes mellitus.
Actovegin (biogenic stimulant) topped the top of the best-selling drugs. The top five best-selling drugs were anti-inflammatory drugs Nurofen and Nimesil, antispasmodic drug No-shpa and hepatoprotector Essenceale.
Prescription drugs accounted for 37% of all drugs sold in number of packs in the first half of 2017, and 60% in monetary terms.
The most popular products are for moms and babies. In monetary terms, the level of sales in 2017 increased by 40%, and in physical terms – by 32%. At the same time, the expensive category of goods performed well: 46% in monetary terms and 32% in physical terms.
Cardiovascular medications generate the most revenue for the pharmacy.
In KOLORO branding agency you can order a market analysis to develop a strategy for your company.
Read also: Analyzing the market for children’s goods
Accessible Liquids Program and other innovations
In April, the MOH program “Accessible medicines” was launched, which allowed residents of Ukraine to receive a list of prescribed medicines for free or with a small surcharge. The program was also aimed at increasing the availability of medicines and improving the level of diagnostics of diseases. In July, the ministry updated the list, increasing it by 42 positions – up to 199 drugs from 43 manufacturers from different countries:
- EU (21 manufacturers);
- Ukraine (17);
- India (4);
- Israel (1).
In monetary terms, patients received drugs worth more than ₴126 budget millions. From April to July, 3.6 million prescriptions were written. In July alone, their number reached 1.9 million. The largest number of pharmacies that joined the program, according to July data, is in Lviv, Dnipropetrovsk and Kharkiv regions.
As of October 2017, the number of pharmacies participating in the program reached 6,560.
At the end of the first 10 months of 2016, the sales volume of the mentioned drugs reached 29.7 million packs, which amounted to ₴1.6 billion. For 2017 (April – October), the sales amount has already reached ₴1.1 billion. In addition, an additional ₴500 million was allocated to abstract prices for medicines from the list.
The number of prescription drugs sold has increased dramatically:
(according to apteka.ua)
The program has a positive effect on the market: the consumer comes for the prescribed drug and makes an additional purchase because he or she has funds available.
Ukrainian pharmaceutical market: imports and exports
On June 19, 2016, the law came into force according to which the simplified procedure for registration of medicinal products applies to medicinal products (including generics, traditional, homeopathic and others) registered by the competent authorities of Australia, USA, Japan, Canada, Switzerland. If the drug is from the EU, the simplified procedure applies to those registered under the centralized procedure. Due to this, it is expected to reduce the cost of drugs. But in response to the government, Ukrainian pharma companies initiated the ACU’s (Anti-Corruption Committee of Ukraine) consideration of the impact on competition of these registration procedures.
According to Proxima Research, the percentage ratio in monetary terms of Ukrainian and foreign manufacturers was 37% and 63% in favor of foreign manufacturers. And the shares of sales by packaging looked as follows: 73% – Ukrainian-made, 27% – imported.
To date, imports of dosage and prepackaged medicines have decreased by 2.9 times in monetary terms and by two times in the number of tons compared to 2012.
The export picture is similar to imports. In 2012, 1.2 times more medicines were exported than in 2016, and 1.4 times in monetary terms.
Read also: Domestic market: a manual for a foreign investor
Overview of the Ukrainian pharmaceutical market: the largest players
In the first half of 2017 alone, Ukrainian pharmaceutical companies reduced their production by 17.7% compared to the same period of 2016. However, there was a 13.4% increase in production of hormone-containing drugs and drugs without antibiotics.
Domestic companies became the leaders of the Ukrainian market of pharmaceutical manufacturers.
Pharmac
“Pharmak” has 16.8% of the market among Ukrainian manufacturers and 6.5% among all manufacturers represented on the Ukrainian market. In 2016, Pharmak exported 24.6% of its products to such countries as Russia, Kazakhstan, Belarus, Uzbekistan, and Kyrgyzstan.
The company’s product portfolio includes more than 220 drugs (138 of them by INN) and increases by about 20 items annually.
Arterium
Arterium Corporation consists of Kyivmedpreparat PJSC and Halychpharm PJSC. The corporation supplies its products to the markets of Russia, Belarus, Kazakhstan, Uzbekistan and Azerbaijan. The corporation’s product portfolio includes about 150 drugs.
In 2016, Arterium Corporation invested ₴106 million in the development of new medicines, and plans to increase this amount by at least 50% by the end of 2017.
Darnica
Darnitsa PJSC produces more than 250 products. The purchase of BHVZ shares will increase the possibility of monopolization of some drugs, something AMK is currently concerned about.
“Darnitsa” is one of the oldest pharmaceutical companies in Ukraine, founded in 1938. In 2016, Darnitsa PJSC was recognized by Ukrainians as “The Best Pharmaceutical Company of the Year”. The company also set a record in Ukraine by producing and selling the largest number of drugs in tablets – 121,578,463 packs.
Drug market research: distributors
Distributors play a significant role in the Ukrainian pharmaceutical market.
Flagships of drug distribution in Ukraine provide 89.8% of the total volume of drugs supplied.
Read also: List of distributors of Ukraine or who to let sell your product to
Target audience, or how to fill the consumer basket of medicines
Ukrainian consumers are getting used to the idea that domestic manufacturers are not so bad. And financial opportunities allow Ukrainians to spend a little more on medicines, buying more expensive goods in the necessary volume.
The average price of a pharmacy basket today is 43.52 UAH, although it is possible to increase this indicator by 14%. However, compared to last year, the prices for medicines increased by the same 14%.
Pharmacy basket sales increased 23% in cash and 7% in packs compared to the same timeframe in 2016, totaling ₴51 billion and 1.2 billion packs, respectively. In 2017, all categories of pharmacy basket items show growth:
The data demonstrate positive growth dynamics of domestically produced drugs in the pharmacy basket compared to the same period last year.
(according to apteka.ua)
In the first 9 months of 2017, sales of medicines totaled ₴43 billion for 814 million packs.
(according to apteka.ua)
Read also: How to determine your brand’s audience
The most popular medications, or how to sell health care
The most popular drug brands in 2017:
This rating does not reflect the morbidity of the population. There are three options to explain this situation.
- Since the 1960s of the twentieth century, all civilized countries have adopted the principles of evidence-based medicine. It is based on protocols with evidence of a drug’s effect. Before a drug is launched on the market in Europe or the USA, it must pass all possible studies, proving its effectiveness.
- The consumer does not buy a medicine because it suits him. Most medicines in Ukraine are sold thanks to the advice of a cousin, matchmaker, brother and neighbor. Advice from a pharmacist is also acceptable.
- Effective advertising. The patient sees no point in going to the doctor, because the advertised drug promises instant action and improvement of the condition. At the same time, there are many cheaper analogs, but neither the pharmacy nor the doctor himself is interested in selling them.
Drug brand development from KOLORO agency includes packaging design, logo, naming.
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Drug advertising as a way to increase sales
From January to July of this year, $1.75 bln was spent on TV advertising. The world leader was AbbVie (which entered the Ukrainian market in 2013), which spent $158 mln on advertising of its drug Humira (anti-inflammatory), although last year advertising of the drug cost $10 mln more.
The second place went to Pfizer, which spent $98 million to advertise the drug Lyrica (anticonvulsant).
Eli Lilly rounds out the top three, having invested $194 million in advertising for Trulicity (a syringe pen for diabetics).
In the Ukrainian market, the figures are more modest. Pharmaceutical companies spent $226 mln on TV advertising in the first half of 2017. The companies invested $1.8m in radio advertising, and $854,000 in non-specialized print media. Domestic and foreign manufacturers of medicines spend the same amount on advertising.
Pharmak has been the leader for several years with $28.7 mln invested in TV advertising. Sanofi (France) invests significantly less in advertising – $19 mln and Sandoz (Switzerland) – $14 mln.
The manufacturers of the following drugs invested the most in advertising:
Read also: 10 largest budgets for advertising campaigns in Ukraine
Pharmacy retail
There are about 21,000 pharmacies in Ukraine. Their number is steadily growing: in 2016 alone, about 600 pharmacies were opened in Ukraine. Most of all pharmacies appeared in Lviv, Dnipropetrovsk, Vinnitsa and Odessa regions. The largest market players are Pharmacy of Low Prices, Bazhaemo Zdorov’ya, Dobrogo Dnya, which have more than fifty outlets each.
Read also: Development of corporate identity on the example of Ukrainian pharmacies
Market trends
The pharmacy market, like all other markets, suffers from crisis phenomena and a decrease in the purchasing power of the population. In recent years, due to the strong increase in the price of drugs, consumers are trying to do without drugs or buy the cheapest ones. And pharmaceutical companies are not lining their pockets. On the one hand, there is a tendency to switch to drugs of higher and medium price category. But on the other hand, it is mainly drugs of foreign manufacturers (or raw materials of foreign origin) and the desire of consumers to protect themselves from counterfeiting. Although, in order to stay afloat, market players with sufficient funds invest large sums in advertising and effective work with pharmacies. Thus, it is these sharks that become the “lords of the market”.
But pharmacies are also experiencing bad times. Since the purchasing power of the population wants better, and the prices for medicines in Ukraine are among the highest in the world (in some cases, prices are inflated 300 times). Therefore, the state decided to intervene by regulating product mark-ups within the limits of 5% and 15% and reference pricing. The latter means that the cost of medicines cannot be higher than similar prices in neighboring Poland, Latvia, Slovakia, Hungary and the Czech Republic. Since Ukrainians trust imported drugs more, pharmacies take advantage of this, for example, Norvask from Pfizer costs about ₴530 in our country, while in Poland this drug is sold for 14.5 PLN (about ₴90).
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Market Forecast
The problem of counterfeiting remains topical. It is difficult to assess the scale of the problem due to the closed information from the State Service for Medicines and Drug Control (Goslexluzhba). Although from time to time there is an order on full or partial prohibition of certain medicines. The effectiveness of the fight against falsified and counterfeit products has deteriorated and, despite an effective system of detection, the number of counterfeit products and the number of court cases do not match. In many respects, the effectiveness of work has deteriorated due to the moratorium on business inspections.
The sale of medicines over the Internet should also be controlled, as most companies selling medicines online are not licensed and do not have the necessary conditions to conduct this type of trade. Accordingly, the product may be not just a fake, but a life-threatening poison.
If you want to discover a new niche in the market, contact KOLORO. We will conduct market research, develop packaging and advise on the most effective brand positioning.
