Ukraine. Pharma Industry Executive Summary

Pharmaceutical industry is traditionally one of the main industry sectors in the economy of Ukraine. It covers production of pharmaceuticals and medical purpose articles, wholesale and retail trade, specialized storage and distribution through developed sales network. It is one of the most dynamic and profitable industries.

During 2009-2011 Ukrainian pharmaceutical market showed strong growth reaching pre-crisis level in volume terms. Total Ukrainian market was estimated to be USD 3 bn in 2011 and is the second biggest market in the CIS. Today Ukraine, despite the fact that its retail market of medicines amounts to billions of dollars has low per capita consumption of medicines.

The pharmaceutical market has significant potential for further growth due to currently low total healthcare spending as compared to other countries in Central and Eastern Europe and expected increase of real income in the long run. Imported medicines account for c.70% of Ukrainian pharmaceutical market. However, local producers have been steadily increasing their share from 24% in 2008 to 29% in 2011. It was mainly due to higher demand for cheaper substitutes produced by local manufacturers.

Distribution sector is highly concentrated with TOP-5 players controlling 88% of the market (up from 79% in 2009). Hospital segment of drug distribution share decreased from 18% in 2008 to 14% in 2011 due to restricted state financing of the industry and slow pace of healthcare reforms. Retail segment includes 13 thsd pharmacies and 7 thsd smaller selling points. Retail segment is very fragmented with TOP-10 retail chains controlling 15% of the market. In addition, leading players are mainly locally owned.

Source: State Agency for Investment and National Projects of Ukraine; Deloitte