With the breakup of the erstwhile Soviet Union, Ukraine became an independent republic with Kiev as its capital city. Even during the days of USSR, Ukraine and Kiev in particular maintained its status as an important region both politically and strategically.
Ukraine has a population of approximately 50 million. The current population density is 82 per square kilometer. Urban population constitutes 70 per cent, while rural population forms 28 per cent of the total population. Ethnic Ukrainians make up 77.8 per cent of the population, while ethnic Russians cover 17.3 per cent.
The male-female ratio for the country is estimated at 0.86:1 whereas the male female birth ratio is 1.05:1. Subsequently, for the age group of 65 and above, the male female ratio is reported at 0.51:1.
Form of Government
Ukraine is a democracy under a semi-presidential system with separate legislative, executive and judicial branches. The president of Ukraine (elected by popular vote) nominates the prime minister, who must be confirmed by the 450-seat parliament, the Verkhovna Rada. The president (on advice and consent of the prime minister) appoints the cabinet ministers, as well as heads of all central agencies and regional and district administrations. The official language of Ukraine is Ukrainian. The official currency is Hreivna (Also pronounced as Greivna).
The total (Nominal) gross domestic product (GDP) of Ukraine is USD 82.7 billion. Whereas based on purchasing power parity (PPP) it is USD 339.7 billion. Likewise, nominal GDP per capita is USD 1748.00, while based on PPP it is USD 7182.00.
Ukraine - Fact file
● Total Population: Approximately 50 mn (2007)
● Population Density: 82 per square kilometre
● Population Growth Rate: (-) 0.63% (2005 est.)
● Average Life Expectancy: 66.85 years
● Total GDP (Nominal): USD 82.7 Billion
● Negligible R&D Expenditure
● Healthcare Expenditure as % of GDP: 3.5%
● Annual per capita drug expenditure: USD 22.50 ( In 2004)
● Pharmaceutical Market Size - Approx. USD 1010 million at retail level and USD 810 million at wholesale price level
● Growth rate: Doubled at the rate of 14-15% over the last 3-4 years
Healthcare
Ukraine's healthcare expenditure is 3.5-4 per cent of GDP, which is higher than most of the other CIS republics. In-patient care accounts for 67.9 per cent of the total healthcare expenditure.
All the hospitals in the region are owned by the Ministry of Health (MOH). There are 3760 hospitals with 6,71,000 beds. The healthcare system also includes 18 institutes of higher learning, 48 institutes for scientific research and 6423 ambulatory facilities. Besides these, there are 144 non-MOH hospitals with 28400 beds and 501 ambulatory facilities. They are divided into a hierarchy of facilities at district level, central, regional, city and oblast level as well as various specialty centres. Although allopathic system of therapy is followed to some extent, the homeopathic system is also in practice (although negligible, compared to allopathic system). The total number of doctors in Ukraine in 2001 was 2,02,000. However this data reflects only those doctors who are employed in hospitals and does not take into account doctors working in research institutes, civil services, etc.
Morbidity from major diseases
Interpretation of data on morbidity in comparison to mortality is difficult in Ukraine, as in other former Soviet Union republics. Based on the number of outpatient consultations and admissions to hospitals, the estimated rates of morbidity reported in Ukraine is among the highest in the former Soviet Union.
● Incidence and prevalence of cases of respiratory disease account for the largest proportion of reported morbidity, 53.5 per cent and 33.9 percent, respectively
● Incidence of diseases of the nervous system and sense organs - 8.1 per cent
● Diseases of the skin and subcutaneous tissues 5.5 per cent
● Circulatory system diseases 16.3 per cent
As per a World Health Organisation (WHO) report, circulatory disease morbidity accounts for 21 per cent of all adult morbidity, the highest in the former Soviet Union. Respiratory morbidity in children accounts for 60 per cent of childhood diseases and 25 per cent of adult diseases. Since the accident at Chernobyl, the incidence of certain respiratory diseases, particularly pneumonia and asthma, has reportedly been increasing. Children suffer at the highest rate of congenital anomalies among the former Soviet republics. There is particular attention paid to the diagnosis, monitoring and treatment of increasing thyroid-related pathologies, cancers, related hematological diseases and genetic defects in newborns of parents at risk. Reports indicate that 60 per cent of children have some degree of thyroid modular hyperplasia, particularly in highly irradiated areas of the country.
Pharmaceutical market
The current market size of Ukraine is $1.25-$1.35 billion. In addition, the current hospital purchase is approximately USD 250 million. The external agencies carry tenders for chernobyl affected people and WHO and UNICEF aided tender. Regular tenders are also carried out for tuberculosis eradication, anti cancer and AIDS related programs. These figures are not included in the above mentioned market size. Such tenders may account for an additional USD 100-150 million.
Growth rate
The pharmaceutical market has been growing in double digits at a rate of 14-15 per cent during the last 3-4 years. This is despite negligible R&D expenditure. However, the growth has been on a very small base as the market potential is huge and there is a considerable gap in demand and supply. The local population as well as the state is unable to meet all the demands due to financial paucity. In the recent years, the local industry has geared up for manufacturing and is able to supply those products which are cheaper in cost which in fact has led to a surge in the market size but if we look specifically at the high end products, the growth would be in single digits as the buying power of the local population is still very low. Therefore the growth rate has to be seen with reference to a specific segment in order to understand the market dynamics of the last few years.
The total number of pharmaceutical companies (manufacturers) consists of 10 at National level, 150 at International level and 30 other Russian & CIS Republic companies. Various government funded and private health insurance (government funded / private) institutions have been introduced and its penetration level is bare minimum. Percentage of population under health insurance is 3-5%. Currently most of the health care expense is state aided and there are special categories of patients, who receive 100% subsidy. These include the World War Heroes and Chernobyl affected people. However, the state is rapidly reducing its subsidy level to most of the categories except for the above mentioned categories. However it does not provide the facility of reimbursement.
Distribution System
The Distribution System includes 250 distributors with approximately 4,000 Pharmacies.
Margins
In most of the cases it is difficult to differentiate between a distributor and a stockist in Ukraine.
Most of the distributors have integrated vertically by opening their own branches in various major towns of the country. Some own their chain of pharmacies.
The margin structure is as follows:
● Import duty + expenses: 10% + 3-5 % handling & other expenses
● Distributor's margin: 15%
● Stockist Margin: 12-15%
● Retailer's Margin: 20-25%
Pricing Policy
It is worthwhile to note that there is no Maximum Retail Price (MRP) structure in Ukraine and the same product may have different price in different pharmacies, depending upon the pricing policy of the pharmacy or the source of purchase. Seminars and symposia, promotion through advertising in specialized journals and exhibitions conducted for specialists are the most common method of promotion with visit to individual doctors is a new practice which is spreading fast.
Patents & Intellectual Property Rights (IPR)
The Ukrainian Government has recently issued a "progressive" patent legislation. It remains to be implemented. The poor population cannot afford to buy expensive patented medicines. This also helps indirectly the local industry in the present scenario.
Registration
The regulatory policy requires compulsory registration of all the finished formulations for import and sale into the country. Till recently, the active pharmaceutical ingredient (API) was not required to be registered.
The duty structure is split into: 10% Customs Duty with no Value Added Tax (VAT) but 10% VAT will be levied on both API's as well as finished dosage forms from December 2005. The Registration documentation is similar to the requirement in Russia. The companies are required to submit the Pharmacological and Toxicological data, Bioavailability Studies, Clinical Trial Data if the molecule is new, Raw Material Specifications, Finished Product Specifications, GMP Certificate, FSC, Manufacturing License, Samples & COA, Calibrated Working Standards. In cases where the molecule is relatively new, the companies are asked to carry out a clinical trial locally. However, it can vary depending upon the molecule.
Registration Cost
The official cost of registration is approximately USD 6,500.00 and the time required is 8-10 months. However, it can be expedited to 3-4 months by paying an additional amount of USD 6-7,000 excluding cost for clinical trials.
Challenges
The challenge that Ukraine as an emerging market faces is the need of an affordable yet regulated MRP pricing policy besides making medicines affordable and within the reach of all. The healthcare infrastructure has to be further improvised and developed all over especially in those areas or regions where the incidence of chronic diseases, risk of serious illnessness are very high and prominent. The negative growth rate of 2005 of (-) 0.63% is a matter of concern indicating the prevalence of high risk related diseases. Hence the initiatives and appropriate measures and timely implementation of appropriate regulatory policies of the government and local health authorities can boost the opportunities in the fast growing pharma and healthcare industry.
Opportunities
Ukraine, an emerging market having double digits growth rate as well as huge retail and wholesale market size, provides favourable opportunities to the existing as well as potential pharma and healthcare units. Indian companies stand to gain significantly in view of the opportunities offered by Ukrainian market. A detailed survey can identify the areas to be focused and products to be offered. A systematic approach vis-à-vis business partners, distributors, promotional activities and compliance with the regulatory affairs can lead to a surge of exports to Ukraine both for API's as well as Finished dosage forms. Indian companies together with local partners can make Ukraine a hub for supplies to the entire region (other than Russia) with Joint Ventures (JV's) or Wholly Owned Subsidiaries (WOS's).
- Courtesy Interlink Insight