Ukraine. Pharmaceutical Market Dynamics in 2007-2011

The total value of Ukrainian pharmaceutical market, including retail and hospital segments in 2011 reached USD 3 bn exceeding the figure for the same period the previous year by 16%. Market has finally exceeded pre crisis value in USD terms. Total volume reached 990 m packages showing 1% growth in real terms.

For the first 9 months of 2011 imports of finished pharmaceutical products in Ukraine amounted to USD 2.8 bn for 376 m packages, exceeding the figure for the same period the previous year by 21% in cash and 14% in real terms.

In 2011 pharmaceutical market of Ukraine has fulfilled optimistic expectations of the operators as it grew by 15% in USD equivalent. In volume terms the market barely reached pre-crisis level.

Figure 1. Medicines consumption in Ukraine, bn packages





Figure 2. Medicines consumption in Ukraine, USD bn (Source: PharmXplorer)





Figure 3. Export of pharmaceutical products from Ukraine, USD mn (Source: State Statistic Service of Ukraine)





Figure 4. Export of pharmaceutical products by countries, % (Source: State Statistic Service of Ukraine)





In 2011 Ukrainian pharmaceutical manufacturers exported products on the amount of USD 0.2 bn, 90% of which were supplied to CIS (Uzbekistan USD 40 m, Russia USD 36 m, Kazakhstan USD 23 m, Belarus USD 21 m and other countries).

The industry produces some 1400 medicines of approximately 3000 sold in the country. In the 2011 the share of local production of drugs on the market of pharmaceutical sales reached 27.5% in monetary and 65.1% in real terms, for a segment of the foreign producers, the figure was 72.5 and 34.9% respectively. Prescription drugs are estimated to constitute 52% of sold medicines, while other 47% are OTC.

The value of biotech products in the pharmaceutical market of Ukraine is approximately USD 5.5 m, but Ukraine’s share is only about USD 1.6 m (20 to 30%). It should be noted, however, that these are rough estimates as the Ukrainian biotech market is poorly structured and official statistics do not exist. The largest segments of the pharmaceutical biotechnology market in Ukraine are probiotic drugs, vaccines and serums, closely followed by blood proteins, antibiotics, enzymes and genetically engineered drugs.

In the hospital segment marked by the processes of import substitution – is prevails products of Ukrainian origin, accumulating 87% of the volume of hospital purchases in bulk and 50% in cash terms. Hospital segment share decreased from 18% in 2008 to 14% in 2011 due to restricted state financing of the industry and slow pace of healthcare reforms.

Fragmented nature of the Ukrainian pharmaceutical market allows a relatively easy entry. There is a lot of room for consolidation. During the crisis cost of market entry has lowered considerably as land, construction and wage prices decreased. Desired prices for already existing manufacturers declined as well.

Spending on medicines per capita in Ukraine in comparison with other countries

Figure 5. Healthcare spending in Ukraine and comparable countries, USD per capita (Source: World Healthcare Organization, Economist Intelligence Unit)

Five-year forecast

It is expected that the government’s budget position will be more restricted as compared to pre-crisis period. This will limit growth in healthcare spending in Ukraine over the forecast period, despite the country’s significant healthcare challenges.

Total healthcare spending is expected to grow at an average rate of 13.9% per annum in value terms until 2015 (nearly doubling 2010 level). Despite such strong increase healthcare spending in Ukraine will still remain considerably lower than in other CEE countries. Spending per capita in Ukraine is forecast at USD 407 in 2015 (USD 1,055 in Russia and USD 1,366 in Poland).

This gap between amounts of healthcare spending in Ukraine and comparable countries will likely persist due to lower income per capita in Ukraine as well as slower pace of reforms in the healthcare industry. The Ukrainian pharmaceutical market is the least saturated in the region in per capita terms, but growth is expected to be strong over the next few years.

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