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Ukraine Pharmaceuticals and Healthcare Report Q1 2008Published by: Business Monitor International Published: Feb. 21, 2008 - 59 Pages Table of Contents
AbstractUkraine’s pharmaceutical market continued to grow at one of the fastest rates in Central and EasternEurope (CEE) in 2007, with BMI estimating the total market grew 22% year-on-year (y-o-y) to reach avalue of US$2.40bn, following a 24% increase in 2006. BMI’s updated forecast for the period 2007 to2012 sees average annual growth of 8.3%. This forecast is based on the assumption that Ukraine’seconomy will muddle through continued political instability and such pressures as rising energy pricesand maintain a respectable 5.5% annual average GDP growth rate. As underlined by BMI’s BusinessEnvironment Rankings, however, the general level of risk remains among the highest in the CEE region.In terms of country and market risk, Ukraine ranks last among 15 countries in Emerging Europe, despiterobust growth.This growth has been almost wholly driven by the retail market and out-of-pocket spending byconsumers. The upside to this is a lack of price controls, with the clear downside being the absence ofeffective regulation and reimbursement. From a market value perspective, this limits the purchase ofhigher value, patented medicines to all but the wealthiest segment of the population. A major audit ofstate medicines tenders undertaken in 2007 showed a litany of irregularities, highlighting the mix of poorgovernance and corruption pervading the state healthcare system. Indeed, the healthcare system remains in a state of drift. Out-of-term parliamentary elections at the end ofSeptember had yet to yield a new government as of mid-December as President Viktor Yushchenko’snominee, Yulia Tymoshenko, had yet to be approved by the narrowly divided Rada (parliament).Tymoshenko is backed by the reconstructed Orange Coalition and represents the nominal liberal wing inUkraine’s fractured political landscape. Assuming she is able to form a government, there is some hopethat her party’s election pledge to introduce a medicines reimbursement system and mandatory insurancebasedsystem could gain traction in 2008. Such moves are badly needed. But it will be many monthsbefore any serious reforms could see the light of day and this optimistically assumes a level of cooperationbetween parties and the cooperation of regional leaders. A lack of regulatory controls and a poorly-functioning judiciary also leave many otherwise well-run localcompanies at risk of rival business groups using lawsuits and other mechanisms to try and wrest assets orcontrol over whole companies. Leading producers Darnytsa and Borshchagovsky claimed to havefended off such attacks from local groups during 2007, prompting an extraordinary show of frustrationand solidarity by major producers, who halted production briefly in protest in October. More positively,Bulgaria’s Sopharma inked a deal to acquire producer Vitaminy for US$5.3mn. Turkish genericsproducer Deva opened a representative office in Kyiv in Q407. Still, for regional and multinationalplayers, the market remained a source of robust growth in 2007, but the perilous risk environment hasmeant another year has passed without any major investments in local production facilities - signallingcontinued worries about the market’s long-term prospects. Get Full Details About This Report >> |
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