upharmacia - january 2017 - special edition

Macroeconomic Environment

Market & Companies News

Regulatory Updates

Healthcare News

UPHARMACIAUkrainian Pharmaceutical Market Monthly

Issued by UPharma Consulting

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 for Pharma and Healthcare in the CIS/CEE.

01'17issue SPECIAL EDITION:

2016 FY RESULTS

Upharmacia January 2017

2 www.upharma-c.com

CONTENTS

3 /MacroeconoMic indicators, 2016 FY

4 /econoMY developMent suMMarY in 2016

5 /pharMaceutical Market suMMarY in 2016

6 /local pharMa coMpanies in 2016

7 /healthcare sector developMent in 2016

8 /keY regulatorY changes in 2016

9 /Forecasts For 2017

11 /econoMY & pharMa dashboard, 2016 FY

page

11 /countrY's econoMY in Jan 2017

12 /pharMa Market & coMpanies news in Jan 2017

13 /regulatorY updates in Jan 2017

15 /healthcare news in Jan 2017

17 /cis pharMa Markets & events

2016

FY

SU

MM

AR

YJA

N 2

017

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INDICATORS2016

FYJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MACROECONOMIC INDICATORS

Q1 Q2 Q3 Q4

GDP ($ bn) 17.655 21.053 26.185growth, % y-o-y 0.1% -0.02% 0.87%

Export ($ bn) 2.04 3.08 2.99 3.10 2.88 2.93 2.92 3.18 3.16 3.24 3.62 3.63 36.4growth, % y-o-y -31% 3% -13% 1% -2% -5% -7% 3% -6% 0% 16% 8% -3.9%

Import ($ bn) 2.23 2.68 3.35 3.05 2.69 2.87 3.09 3.45 3.48 3.54 3.81 4.13 38.9

growth, % y-o-y -26% -6% 5% 7% 2% 4% 4% -11% 8% 10% 24% 32% 5.8%

Industrial Prod. Sales ($ bn) 4.93 4.93 5.41 5.17 5.39 5.44 5.61 5.57 5.62 6.39 6.91 7.64 69.02

growth, % y-o-y -18% 8% -2% -12% -5% -6% -2% 3% -2% 2% 17% 20% 0.24%

Retail Turnover (US$ bn) 1.60 1.50 1.64 1.76 1.59 1.73 1.87 1.92 1.76 1.87 2.04 2.09 21.38

growth, % y-o-y -19% 4% 2% 6% -18% -6% -3% 2% -5% -8% 14% 4% -2.7

Unemployment Rate (%) 1.9 1.9 1.7 1.6 1.6 1.5 1.4 1.3 1.3 1.2 1.3 1.5 1.5

Average Salary ($) 180 174 187 191 198 214 217 208 204 208 210 247 203

CPI of Ukraine 140.3 132.7 120.9 109.8 107.5 106.9 107.9 108.4 107.6 112.4 112.1 112.4 114.9

GfK ConsumerSentiment Index

50.2 54.1 50.6 49.1 50.3 52.7 50.1 53.7 50.1 51.6 47.4 57.1 51.4

OFFICIAL CURRENCY EXCHANGE RATE

UAH / USD 24.3 26.4 26.4 25.6 25.2 25.0 24.8 25.1 26.3 25.8 25.7 26.2 25.6

UAH / EUR 26.3 29.3 29.2 29.1 28.5 28.1 27.5 28.1 29.5 28.5 27.8 27.6 28.3

PHARMACEUTICAL INDUSTRY INDICATORS

Export of Pharma Products ($ mio)

8.31 13.33 15.54 13.90 14.17 16.15 13.36 13.58 18.81 18.40 14.75 23.95 184.2

growth, % y-o-y -30% 11% 16% 3% 9% 5% -4% 51% 37% 51% 26% 52% 18.6%Import of Pharma Products ($ mio)

103.7 145.0 125.1 130.0 110.4 132.1 133.1 137.3 140.6 137.3 142.6 169.1 1606.5

growth, % y-o-y 15% 27% 21% 25% 31% 15% 25% 47% 15% -7% 1% 19% 17.8%

Retail Sales, values ($, mio) 198.9 176.0 187.3 178.1 177.6 174.8 175.4 180.9 190.4 212.2 224.7 268.0 2344.3

growth, % y-o-y -17% -1% -5% -1% -8% -2% 2% 2% -1% 3% 14% 26% 0.9%Retail Sales, volumes(mio units)

133.6 126.8 133.8 125.2 123.6 122.6 122.7 126.2 135.5 138.6 139.9 164.1 1592.6

growth, % y-o-y 1% -12% -5% 2% -1% 4% 3% 3% 7% 6% 8% 20% 2.9%

Average Cost of Pack (USD) 1.49 1.39 1.40 1.42 1.44 1.43 1.43 1.43 1.41 1.53 1.61 1.63 1.47

growth, % y-o-y -23% -23% 13% 1% -2% -6% -3% -1% -8% -3% 6% 5% -4.9%

CPI, Pharma Products 131.9 126.9 113.5 108.4 107.3 108.2 107.4 107.2 107.9 107.6 107.4 106.4 111.7

Local Companies share, values (%)

42.3 42.9 42.7 42.3 42.9 42.8 42.8 42.6 43.4 42.4 42.3 41.7 42.6

Local Companies share, volumes (%)

75.6 76.5 76.5 76.7 77.2 77.4 77.9 77.6 76.5 75.1 74.9 73.9 76.2

MACROECONOMIC INDICATORS / 2016 FY




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2016 YEAR SUMMARY ECONOMY DEVELOPMENT

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>> ECONOMY

Ukraine managed to tackle recession and demonstrate features of economic growth in 2016. Key factors of economic recovery were the domestic demand for investments and a household consumption.

Ukraine’s foreign trade continued a transformation in 2016: there was a shift from the traditional Russian market (and the CIS market in general) and an increase of EU countries in a foreign trade share.

Deteriorating Ukr-Rus relations hampered Ukraine’s trade with countries in the South Caucasus and Central Asia.

The GDP grew by +1.8% in the 2016 FY. And the Ministry of Finance expects it to grow further +3% in 2017.

International reserves of the NBU reached $15.5 bn at the year-end (increased 16.8% y-o-y).

Monthly CPIs decreased in Apr to 9.8 from 20.9 in Mar and was stable until Oct when it grew to 12.4. The same amount was in Dec.

In 2016, industrial output grew 2.4% y-o-y compared to 13% y-o-y fall in 2015. Main industries have shown slight growth: metal production – 5.9% y-o-y, machinery production – 1.3% y-o-y, chemical – 0.4% y-o-y (pharmaceutical – 3.9%). Mining reduced by 0.3% y-o-y.

Official currency exchange rates for UAH/USD amounted 26.2 in Dec, compared to 23.4 in Dec 2015.

CONSUMER INFLATION12.4%

+1.8%

+5.8%

-3.9%

at the year-end, NBU

estimated by the MoF

68.863.3

53.9

37.8 36.4

84.7

77.0

54.4

36.8 38.9

0

10

20

30

40

50

60

70

80

90

2012 2013 2014 2015 2016

Export & Import of UkraineUSD bnExport Import

4.1% 5.5%

0.2% 0.0%

-6.8%-9.9%

1.8%

2010 2011 2012 2013 2014 2015 2016

Ukraine's GDP growth

8.0 8.0

11.9

21.8

25.6

10.3 10.6

15.7

24.2

28.3

99.8 100.5

124.9

143.3

112.4

0

40

80

120

160

0

10

20

30

2012 2013 2014 2015 2016

Currency Exchange Rates vs.Consumer Price Index

UAH/USD UAH/EUR CPI

$ 38.9 bn, NBU

GDP

IMPORT

$ 36.4 bn, NBU

EXPORT



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Market share of foreign companies in drug segment continued decreasing in values, while in volumes, they increased their share by 3.1%.

The share of medical devices reduced 0.5% y-o-y in values and 1.2% y-o-y in volumes. Food supplements and cosmetics slightly increased their shares as compared to 2015.

64.5% 63.1% 59.2% 57.7%

35.5% 36.9% 40.8% 42.3%

0%

50%

100%

2013 2014 2015 2016

Market shares of Foreign&Local pharma companies

retail segment,in values

Foreign Domestic

32.5% 28.2% 23.2% 26.3%

67.5% 71.8% 76.8% 73.7%

0%

50%

100%

2013 2014 2015 2016

Market shares of Foreign&Local pharmacompanies

retail segment,in volumesForeign Domestic

84.5%

7.9%

3.7%3.9%

Market structure by segments 2016, in values

Drugs

Medical devices

Cosmetics

Foodsupplements 65.8%

28.4%

3.1%2.7%

Market structure by segments 2016, in volumes

Drugs

Medical devices

Cosmetics

Foodsupplements

3 979 4 485 3 534 2 323 2 344

16.6%

12.7%

-21.2% -34.3%

0.9%

0

1 000

2 000

3 000

4 000

5 000

2012 2013 2014 2015 2016

Ukrainian Retail Pharmaceutical Market in valuesUSD mio

y-o-y growth, %

1 961 1 992 1 764 1 548 1 593

4.5%1.6%

-11.5%-12.3%

2.9%

0

500

1 000

1 500

2 000

2 500

2012 2013 2014 2015 2016

Ukrainian Retail Pharmaceutical Marketin volumesmio packs

y-o-y growth, %

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2016 YEAR SUMMARY PHARMACEUTICAL MARKET>> MARKET TRENDSIn 2016, after two years of drastic fall, Ukrainian pharmaceutical market slightly increased by 0.9% y-o-y in values to USD 2.34 bn and by 2.9% y-o-y in volumes to 1.59 mio packs. The period of 18-month straight decrease stopped in Jul when the market grew 2% PPG in values. In the year-end, the growth dynamics vastly accelerated – in Nov and Dec, the market rose 14% and 26% PPG in values, respectively.




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>> PHARMACEUTICAL MARKET: LOCAL PLAYERS GROWTH

Market participants are striving to further development.

— HALYCHPHARM (a part of the Arterium Corporation) has launched an infusion solutions line.

— On May 17, INTERCHEM has opened a new laboratory and production complex in Odessa. The company invested EUR 42 mio in enhancing its industrial capacities, which would allow increasing its production by 4 times.

— At the beginning of the year, DARNITSA was endorsed to acquire a little bit more than 50% shares of the Bor-shchahivskiy Chemical Pharmaceutical Plant (BCPP). The Board of BCPP accused Darnitsa of hostile takeover attempts. The acquisition process was halted.

— Ukrainian company KUSUM PHARM plans to start enlargement of its plant in Sumy by the end of 2016 to double production capacity at least 2 times by 2018.

— In May, Ukrainian company PHARMASCO opened its own complex, which includes offices, warehouse with appropriate temperature conditions and premises for own production.

— In Dec, EBRD announced the provision of USD 3.8 mio loan to Ukrainian company ECOPHARM for the construction of GMP plant. The Bank will also provide USD 3 mio loan to PHARMA-START (part of Swiss ACINO GROUP) for equipment procurement and additional capitalization.

RETAIL DRUG SALES: +0.4% HOSPITAL DRUG SALES: -6.4%

$ 1.98 bn $ 308.9 mioSource: Morion Source: Morion

2016 YEAR SUMMARY PHARMACEUTICAL MARKET

>> PHARMACEUTICAL MARKET: FOREIGN EXPANSION

Ukrainian pharmaceutical companies were actively exploring new markets:

— In Jan, FARMAK acquired polish distributor KWW Kotkowski Wierzbicki Wegrzyn sp.j.

— In Sep, ARTERIUM acquired Slovenian company Marifarm.

— In Oct, FARMAK announced plans to enter the Malasian market in 2018.

— In Oct, BIOFARMA signed a long-term agreement on export of its products to the Republic of Yemen.

— ZDOROVYE GROUP plans to access the U.S. market within the cooperation with the American company Unicity.

— LEKHIM’S company Technolog announced the intention to triple exports of its antituberculosis drugs in next few years.

— In Dec, FARMAK joined Drug, Chemical & Associated Technologies Association (DCAT) in order to have the opportunity to access the U.S. market.



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1

2

3

4

5

Introduction of the National model of medical insurance

Introduction of a guaranteed health care package

Creation of a single national public procurments organization

Introduction of reimbursement and reference pricing systems to increase the affordability of drugs

Autonomous status of health care institutions

Establishment of hospital districts

Shift to the principle: “Money follows a patient”

+

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>> HEALTH CARE: BUDGET

Old medical infrastructure, despite the extensive network of health care institutions (Ukraine keeps the 4th place in the world in the number of hospital beds – 879 beds per 100 ths population), does not ensure provision of quality and timely health care for the population or high wages of health care workers, and the low level of financing leads to the need for comprehensive health care reform aimed at reaching European level by Ukrainian medicine.

In Nov 2016, the Ukrainian government began a health care reform by the adoption of the Concept of health care reform financing.

Key provisions of the Healthcare reforming concept:

ARTERIAL HYPERTENSION

REFERENCE PRICING & REIMBURESEMENT LISTTYPE II DIABETESASTHMA

3 INNs 2 INNs 16 INNs

2016 YEAR SUMMARY HEALTH CARE SECTOR

HEALTHCARE BUDGET 2016

$ 580 mioHEALTHCARE BUDGET 2017

$ 611 mio

EFFECTIVE DATE

Apr 1, 2017




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2016 YEAR SUMMARY KEY REGULATORY CHANGESChanges in ProCedure for PubliC ProCurements

2016 was the year of the first experience of centralized public procurement of drugs and medical devices through specialized international organizations, while decentralized procurements were transferred to Prozorro system. The partners of the MOH have become UNDR, UNICEF and Crown Agents.

national essential mediCines list

On Jan, 12 the Cabinet of Ministers Resolution #1134 came into force. The National List of Essential Medicinal Products and Medical Devices has been renamed into the National Essential Medicines List. Therefore, the medical devices shall not be included into this list anymore and shall not be subject to pricing regulation. The List should be formed with due consideration of world-wide practices of rational pharmacotherapy and phar-macotherapeutic approach to primary health care of patients with priority pathologic conditions taking into consideration disease burden and mortality rate, and health care sector standards. The List will consist of INNs and will updated once a year.

simPlified registration ProCedure for mediCines

On May 31, the Parliament approved the Law, which provided for the simplified registration of medicinal products being registered by the competent authorities of the USA, Switzerland, Japan, Australia, Canada, and the European Union in accordance with the centralized procedure.

Such products should be accepted for usage in the territories of the mentioned countries or the EU member states. The registration procedure for such medicinal products envisages the submission of the smaller package of documents, reduction of registration terms, and no need for the expertize of the registration materials.

Decision on registration is issued by the MOH within 17 business days: — 10 business days: Review of registration materials by the State expert center.

— 7 business days: Making the decision by the MOH on registration.

state regulation of PriCes

On Nov 9 the Government has adopted the Resolution of the Cabinet of Ministers of Ukraine #862 “On state regulation of prices for medicines” and #863 “On the introduction of reimbursement of the cost of medicines”.

The new price regulation system will act through: — Maximum prices by implementation of price referencing on medicines by the MOH

— Maximum mark-ups only for reimbursable medicines purchased through decentralized procurements: wholesale – 5%, retail – 15%.

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2017 YEAR FORECASTS

GDPgrowth, %

Inflation, %

SigmaBlaizer 3.0 10.0

EBRD 2.0 -

IMF 2.5 11.0

World Bank 2.0 8.5

ECONOMY FORECASTS FOR 2017 eConomy

According to a majority of forecasts, it is expected that Ukraine’s economy will recover and its GDP will continue growing. However, such expectations are rather modest given the fact that Ukraine’s economy has already survived deep recession at 1.5-3%.

Recovery of domestic demand is among key factors contributing to economic growth. Private consumption will moderately recover in the medium term as a result of pent-up demand and rising incomes.

It is also expected that business investments will rise. However, a substantial increase in investment activity in the near future will stimulate a respective increase in investment imports, including machinery and equipment, which will largely increase in a negative contribution of net export to GDP. A revival of credit activity amid expected reducing interest rates will be an additional factor contributing to growing domestic demand.

A net export will slow down the GDP growth. Slow global economic growth, including a slowdown in China’s growth, will curb an increase in Ukraine’s export.

PharmaCeutiCal seCtor

Pharmaceutical market of Ukraine is expected to continue a slight recovery in 2017. As the purchasing power of the population continues growing with the growth of the salary levels, the retail market will increase in both values and volumes.

The negative factor is the instability of the national currency, devaluation of which is projected at 10% for 2017. The successful launch of reference pricing and reimbursement for certain categories of drugs in Apr is supposed to benefit both producers and customers, but regulatory provisions still raise many questions within the industry.

According to ProximaResearch projection, the market will increase by 14-18% in hryvnias and by 2.9% in volumes.

healthCare seCtor

The plans of the Ministry of Health for 2017 are highly ambitious. The main emphasis will be on the reformation of medical institutions through provision of wider autonomy to the management and creation of hospital districts.

Moreover, Ukraine is starting the gradual movement towards insurance medicine. First steps are changes in primary care funding and an introduction of family doctors.

The main factor, which could halt the reformation is the sabotage from the side of officials and lobbyists, which use the existing system for personal gain. Moreover, the position of Ulana Suprun is unstable as she is still the acting Minister of Healthcare, while a lot of MOH’s initiatives have been criticizing by publicity as well as senior officials. Thereby, the success of the reforms will mostly depend on the MOH’s management credibility level and the industry’s readiness to change.

3 534 2 323 2 344 2 539

-21.2% -34.3%

0.9% 8.3%

0

1 000

2 000

3 000

4 000

2014 2015 2016 2017

Ukrainian Retail Pharmaceutical Market Forecast

in valuesUSD mioy-o-y growth, %

1 764 1 548 1 593 1 639

-11.5% -12.3%

2.9% 2.9%

0

500

1 000

1 500

2 000

2 500

2014 2015 2016 2017

Ukrainian Retail Pharmaceutical Market Forecastin volumes

mio packsy-o-y growth, %

Source: ProximaResearch

Source: ProximaResearch



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ECONOMY & PHARMA DASHBOARD / 2016 FY

ECONOMY IN BRIEF JANUARY 2017

— General budget deficit amounted UAH 54.7 bn in 2016, which is 2.4% of GDP. The projected indication was 3.7% of GDP.

— Average annual devaluation of the hryvnia that was 15% in 2016 would slow to 10% in 2017, Dragon Capital investment company projected.

— The Ukrainian Trade Ministry expects the foreign direct investments (FDI) in Ukraine to grow from USD 3.8 bn in 2016 to USD 4.5 bn in 2017.

— According to the NBU, in 2016, Ukrainians purchased USD 747.1 mio from banks, which is 9.2% more than in 2015. Sale of foreign currency increased 44.6% y-o-y to USD 3.22 bn.

— In 2016, industrial prices in Ukraine, rose 35.7%

198.9

176.0187.3

178.1 177.6 174.8 175.4 180.9190.4

212.2224.7

268.0

133.6126.8

133.8

125.2 123.6 122.6 122.7126.2

135.5138.6 139.9

164.1

100

120

140

160

180

80

120

160

200

240

280

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Pharmaceutical Market Retail Salesmio USD

mio units2016

8.3

13.315.5

13.9 14.216.1

13.4 13.6

18.8 18.4

14.8

23.9103.7

145.0

125.1 130.0

110.4

132.1 133.1 137.3 140.6 137.4 142.6

169.1

0

30

60

90

120

150

180

0

5

10

15

20

25

30


Ukraine's International Trade in Pharma Production

Export

Import

2016mio USD

4.93 4.935.41 5.17 5.39 5.44 5.61 5.57 5.62

6.396.91

7.64

1.601.50

1.64 1.761.59

1.731.87 1.92

1.761.87

2.04 2.09

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

1

2

3

4

5

6

7

8


Industrial Production Sales & Retail Turnover of Enterprises Surplus

2016bn USD

23.4 24.326.4 26.4 25.6 25.2 25.0 24.8 25.1 26.3 25.8 25.7 26.2

25.4 26.329.3 29.2 29.1 28.5 28.1 27.5 28.1 29.5 28.5 27.8 27.6

143.3 140.3132.7

120.9109.8 107.5 106.9 107.9 108.4 107.9 112.4 112.1 112.4

0

20

40

60

80

100

120

140

160

0

5

10

15

20

25

30

35

40

45

50

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

UAH/USD

UAH/EUR

CPI

2016 Official Currency Exchange Rates vs. Consumer Price Index

y-o-y, the State Statistics Service reported.

— Inflation in Ukraine in 2016 slowed down to 12.4% from 43.3% in 2015 and 24.9% in 2014. According to the Statics Service, in Dec 2016, inflation stood at 0.9% against 1.8% in Nov and 2.8% in Oct.

— VAT refunds in Ukraine in 2016 totaled UAH 94.3 bn, which is 37.9% more than in 2015 (UAH 68.4 bn) and 87.8% more than in 2014 (UAH 50.2 bn).

— In 2016, Ukraine reduced natural gas consumption by 4.1% y-o-y to 32 bn cubic meters. In 2015, the consumption of gas fall 20.9% y-o-y.




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MARKET & COMPANIES JANUARY 2017in 2017, biofarma to invest uah 40 mio in its ProduCtion

Ukrainian producer of blood preparations plans to invest UAH 40 mio in its production and to launch 15 new products in 2017, the Chairman of the Supervisory Board Konstantin Efimenko of the company said. The company also expects increase of its retail sales by 30% y-o-y and growth of its exports by 50% y-o-y. To expand its export opportunities, Biofarma seeks to finish formation of 25 pharmaceutical dossiers in the European format. This year, Biofarma is also to launch a new plasma fractionation plant. According to Mr. Efimenko, in 2016, Biofarma increased pharmacy sales by 36.6% y-o-y to UAH 372.7 mio, while its export enhanced 60% y-o-y.

uniPharm Will Present interests of bosnalijek in ukraine

U.S. company Unipharm, Inc. reached the agreement with largest pharmaceutical company in Bosnia and Herzegovina Bosnalijek d.d. on presentation of the company’s interests in Ukraine. Unipharm will manage Bosnalijek’s product portfolio including the

distribution, registration, re-registration and promotion in Ukraine. The deal is expected to be completed by Apr 2017. The Director of Unipharm representative office in Ukraine Alexander Shalunov will lead the RO of Bosnalijek to provide effective integration of two businesses.

“We are sure, that the decision made will strengthen positions of both companies and ensure the development within the difficult conditions of the Ukrainian pharmaceutical market,” the Unipharm press-release said.

farmak reCeived gmP CertifiCate for ProduCtion of aPis in shostka

Production facilities of the Ukrainian company Farmak in Shostka (Sumy Region) has passed inspection on their compliance with national and European GMP requirements. In Dec 2015, Farmak created a separate manufacturing of substances in Shostka. The manufacturing was established as part of expansion of production of finished drugs and active pharmaceutical ingredients (API). The complex includes manufacturing sites, quality control laboratories and logistic center. The staff currently

includes 86 employees. Farmak retained a leading position on the Ukrainian pharmaceutical market in 2016.

ukraine to reaCh voluntary settlement With gilead on sofosbuvir

Ukrainian government will sign voluntary settlement with Gilead Sciences Inc. regarding patent protection of Sovaldi (sofosbuvir). Earlier, the U.S. company sought to cancel state registration of sofosbuvir generic Grateziano (Pharmco), which had been registered before Sovaldi. In Oct 2016, Kyiv Administrative Court refused to cancel state registration of Grateziano.“During negotiations, we have managed to find a compromise for Gilead to renounce it’s claims to Ukraine,” the Justice Minister of Ukraine said. “We will take measures to eliminate violations of the legitimate patent rights, while Gilead is to provide the Ukrainian market a discount on the drug”.After reaching the agreement, Gilead would not raise any financial claims, the company’s officials said. Within the Global Access Program, where Ukraine is included, the price of Sovaldi for public procurements should be USD 250 per package.



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REGULATORY UPDATES JANUARY 2017simPlified drug registration Came into forCe

On Jan 3, 2017, the Ministry of Justice of Ukraine has registered the order of the MOH on launch of the mechanism on simplified registration of medicines registered in countries with strong regulatory authorities.

The new mechanism provides for the simplified registration of medicinal products being registered by the competent authorities of the USA, Switzerland, Japan, Australia, Canada, and the European Union in accordance with the centralized procedure.

Such products should be accepted for usage in the territories of the mentioned countries or the EU member-states.

The registration procedure for such medicinal products envisages the submission of the smaller package of documents, reduction of registration terms (17 business days), and no need for the expertize of the registration materials.

neW ProCedure for CalCulating maximum gross Wholesale PriCes for mediCinal ProduCts on the basis of referenCe PriCes

On Dec 29, 2016, in pursuance of Resolution of the Cabinet of Ministers of Ukraine "On State Regulation of Prices for Medicinal Products" No. 862, the Ministry of Health of Ukraine adopted Order No. 1423, thereby approving the Procedure for Calculating Maximum Gross Wholesale Prices for Medicinal Products on the basis of Reference Prices (hereinafter - the Procedure).

The Procedure was officially published and came into force on Jan 6th, 2017. The Procedure applies to medicinal products used in treatment of cardiovascular diseases, diabetes of type II and bronchial asthma, the cost of which is refundable in accordance with Resolution of the Cabinet of Ministers of Ukraine No. 863 as of Nov 9, 2016 (21 INNs in total).

As its name implies, the Procedure establishes a mechanism for calculating maximum gross wholesale prices for medicinal products on the basis of reference prices.

The latter are determined in UAH (reference prices in foreign currencies are denominated in UAH at the official NBU rate as of the date of determination of prices), taking into account the data on registered prices for medicinal products (of

each dosage form) obtained from official sources of the authorized public authorities of the following reference countries: the Republic of Poland, the Slovak Republic, the Czech Republic, the Republic of Latvia and Hungary.

Maximum gross wholesale price of a single dosage form of a medicinal product from among 21 INPN is calculated as the smallest reference price of a unit of each dosage sample values of the respective reference prices in the countries using the following algorithm:

MGWP = MIN (RP1 ... RPN),

Where MGWP – maximum gross wholesale price;RP1 RPN - reference prices in the reference countries.

neW ProCedure for PharmaCo-vigilanCe

A new Procedure for Phar-macovigilance approved by Order of the Ministry of Health of Ukraine No. 898 as of Dec 27, 2016 (hereinafter - the Procedure) entered into effect on Jan 6, 2017.

In addition to significant additions and changes to the terminology, the new Procedure also specifies new requirements to the applicant's

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pharmacovigilance system, without which circulation of medicinal products, vaccines and tuberculin is not permitted in Ukraine.

Thus, the applicant must establish and manage at least one pharmacovigilance system, which consists of elements allowing for the monitoring of safety of medicinal products, vaccines and tuberculin and determining any changes in benefit / risk ratio, namely:

i. that the applicant (permanently and continuously) has at least one qualified authorized person responsible for pharmacovigilance. Depending on whether the applicant is in Ukraine or not, the authorized person must be either an employee of the applicant (for applicants who are residents), or a contact person should be designated on the territory of Ukraine and be subordinated to the applicant’s authorized person (for non-resident applicants). These persons must have higher medical or pharmaceutical education (pharmacist, clinical pharmacist);

ii. a structured system of organization of pharmacovigi-lance, its update and support;

iii. documentation of all procedure processes;

iv. creation and maintenance of databases used by the applicant for pharmacovigilance;

v. involvement (if needed) of other legal and / or natural persons and enterprises, institutions and organizations

into pharmacovigilance by entering into contractual relationships;

vi. providing training of personnel of the applicant to carry out activities related to pharmacovigilance;

vii. creation of pharmacovigi-lance quality system;

viii. pharmacovigilance documentation processing, including its storage and archiving;

ix. creation and support of the risk management system.

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HEALTHCARE NEWS JANUARY 2017the government PostPoned referenCe PriCing to aPr 1

On Feb 1, the Cabinet of Ministers approved the decision to postpone the introduction of reference pricing for some categories of drugs from Feb 1 to Apr 1.

Such decision was made after the acting Head of the MOH Ulana Suprun stated that the implementation of the mechanism would require a longer transitional period associated with the gradual sale of drug residues.

“We cooperate with represen-tatives of the pharmaceutical market, and already have information that some producers reduced prices by 15-30%, others are continuing the cooperation,” Mrs. Suprun stated. “Therefore, we want to give them a longer transitional period to ensure the provision of affordable medicines the population”.

Earlier, the MOH has already postponed the reference pricing from Jan 1 to Feb 1 in order to provide pharmacies the period during which they could sell the residues of drugs, which had been supplied under the wholesale prices that exceed the maximum level.

Despite this, the market

operators still expressed the concern about the possibility of the disappearance of some original products of foreign manufacturers due to their inability to decrease the prices.

government Plans to reduCe duration of hosPitalization and inCrease the number of Primary Care PhysiCians

Within the government’s Plan of priority actions for the period up to 2020, it is planned to decrease the average duration of hospitalization form 11.8 days to 9.2 days. Herewith, the number of primary care physicians is expected to grow from 7 ths to 20 ths.

It is noted that a lot of healthcare funds in Ukraine are used ineffectively. Ukraine is the fourth country in the world by the number of hospital beds per capita, while the healthcare indicators are among the worst in Europe.

Therefore, in 2017, the government plans to introduce new funding model for healthcare system with emphasis on primary care and to define the guaranteed package of services.

eba asks for Clear exPlanations on referenCe PriCing and reimbursement

European Business Association (EBA) appealed the Prime Minister of Ukraine expressing the concerns of the pharmaceutical industry regarding the unclear understanding of the norms on reference pricing and reimbursement of some categories of drugs.

The EBA stated that the lack of clear explanations could lead to the deficit of the drugs, which are subject to the new mechanism.

The Association noted that market participants need clarification regarding the possibility of free circulation of medicines in the pharmacy network, if the price of the drugs will exceed the calculated threshold level for Ukraine

The EBA also requested the Government to publish a clarification about the expected results of the implementation of the new regulation for the three nosologies, the period of their assessment and further actions in the case of confirmation of the lack of efficiency in the implementation of the mechanism.

“The patients do not know whether they would be able to continue individual therapy in future. Physicians are not aware whether they will be able to prescribe drugs according to





their professional knowledge and experience.

While, the pharmaceutical producers do not have a sufficient basis for the adoption of a positive or negative decision on the continuation of business activities in Ukraine”, the appeal of the EBA stated.

moh Promulgated all tenders for 2016 PubliC ProCurements

The MoH signed all contracts and promulgated all tenders on the public procurement of medicines for the funds of 2016 State Budget, the Head of the Ministry reported.

The funds for the procurement of medicines under the State Budget 2017 are expected to come in Mar. In fact, procurements for this year and the previous year are to be conducted in 2017.

The Ministry continues cooperation with International procurement organizations (UNDR, Crown Agents and UNICEF) within the delegated public procurements.

ukraine’s Pm is asked to aPPoint head of the moh

Parliamentary Committee on Public Health appealed Ukrainian Prime Minister Volodymyr Groysman asking to submit to the Parliament a candidate for the post of the Minister of Health with a view to entrusting this person with personal responsibility for the formation and implementation

of state policy in the sphere of public health or for the omission of his department.

Mr. Groysman said the government is to arrange the political consultation regarding the appointment of the Head of the MOH.In Jul 2016, Ulana Suprun was appointed to the position of the acting Minister of Health and currently holds the position.

On Jan 1, 2017, the Director of Heat Institute started publicly accusing Ulana Suprun and the MoH management in negligence and failure of public procurements of medicines and medical equipment for the treatment cardiovascular diseases.

The acting Minister rejected the accusations, while the Prime Minister supported the MOH management, calling it “an absolutely incorruptible team that has a chance to bring the health care system to a new level”.



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CIS REGION PHARMA NEWS & EVENTS / 2016 FYazerbaijan

• The construction of Azerbaijani-Iranian pharmaceutical plant Caspian Pharmed has been launched. USD 20 mio will be invested. The construction is to finish in 3Q2018.

• Azerbaijan is considering the establishment of joint plants with Turkey and Ukraine, the Economy Minister reported. European partners are also considered.

• In 2016, 80% of medicines was imported from European and other developed countries; the rest was related to Russia, Ukraine and Belarus, the Economy Minister noted.

belarus

• At least three new pharmaceutical plants will be opened in Belarus in the coming years with participation of India, Chairman of the Council of the Republic of the National Assembly said during the ground-breaking ceremony for the new plant in Skidel. Other two plants are under the construction and are located in Kolyadichi and Beshankovichy.

• Belarus plans to enhance export of medicines in Africa and South-East Asia, the Director of Pharmaceutical Development Department said.

• Innovative veterinary preparations for the treatment and prevention of diseases of agricultural and domestic animals have been developed in Belarussian State University.

georgia

• Georgia Healthcare Group has completed the merger of JSC ABC Pharmacia, the fourth largest pharmaceutical retailer and wholesaler in Georgia, to form a new pharmacy network JSC Georgian Pharmacy (GEFA).

kazakhstan

• The CEO of Kazakhstan’s Single Distributor SK-Pharmacia proposed to work out the possibility to conduct joint public procurements of pharma-ceuticals with member-states of the Eurasian Economic Union (EEU).

• In 2016, consumer prices of pharmaceuticals increased 17.7% y-o-y, medical services – 12.5%. The overall CPI amounted 8.5%, the Statistics Committee reported.

russia

• GM of Teva Russia and Eurasia reported that Teva plans to increase the production capacities in Russia to 2 bln tablets per year, but is not planning to





manufacture substances in the country yet.• In 11M2016, Russian market of drugs against tobacco dependence increased 15% PPG in values to

RUB 2471.7 m. Currently, there are three OTC brands and one Rx brand presented on the market.• Russian Prime Minister approved the new List of vital and essential drugs for 2017, which included

646 INNs. The Vice Prime Minister stated that, in 2017, the List of essential and vital drugs will be approved not once, but as new drugs are appearing.

• Rafarma company plans to launch its production onto the market of South Korea. The first supplies of ceftriaxone are expected to start in 2018.

uzbekistan

• The President of Uzbekistan issue the Order on development of four pharmaceutical industrial zones: Boysun-pharm (Surxondaryo Region), Buston-lik-pharm (Tashkent Region), Zaamin-pharm (Jizzakh Region), Syrdarya-pharm (Sirdaryo Region). The investors will be exempt from land tax, income tax, property tax of legal entities, etc. for 3-10 years.



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