Country Report: Ukraine - Pharmaceutical Executive

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Country Report: Ukraine

Pharmaceutical Executive


Others are more skeptical about the certainty of reimbursement. Alexander Golovnya, general manager of Lundbeck Ukraine, considers that even though some steps have been taken in the direction of reimbursement, there will be no real action in the near future. "I do not expect this to happen soon. This year parliamentary elections will take place, so we do not expect that the government will make any major changes before or shortly after these elections. However, I hope that a state reimbursement system together with a private insurance system (once established) will give patients broader access to modern ways of treatment," he says. As a company that focuses entirely on CNS disorders, for which there is no state funding, Lundbeck has been paving the way to de-stigmatize neurological conditions, such as depression and bipolar disease. "Another challenge is to change doctors' mentality of prescribing cheaper products to their patients since they worry about their patients' spending power instead of thinking about drugs' safety and efficacy," says Golovnya.

Within this debate, it is the Ukrainian companies that are most optimistic about the possibility of a reimbursement system and take the government's initiatives as credible efforts to move in the right direction. Tatyana Pechaeva, general director of Lekhim, is confident in saying that "we cannot wait any longer with the introduction of these reforms, and I am confident that they will finally be passed. We will have to see in what form and quality they will come, but at least the first brick has been laid. Reimbursement and medical insurance are connected to many other questions from which they cannot be seen separately. If we look at the reimbursement system for instance, it cannot go without production; production cannot go without science; and science cannot go without education. I hope the authorities fully understand this and tailor their reforms to the complexities of the healthcare system." With two manufacturing sites and as the 11th most important Ukrainian producer, Lekhim today is focusing on growing its local operations rather than on exports to CIS markets, which had been its main driver throughout the 1990s. Ever the enthusiast and a firm believer in her home market, Pechaeva asserts that "if we follow this development path, we will be among the top five in three years!"

Overall, as local companies experience increased pressure from their foreign counterparts, they have also been driving the wave of change within their own ranks, and have been lobbying authorities to move toward international standards of regulation. Sperco is currently reconstructing its manufacturing facilities to establish full GMP compliance for all of its operations. "So far we have been able to reconstruct about one third of our facilities under GMP standards and expect to complete another 25% by the end of 2012. We expect to complete the entire project by the end of 2013 or beginning of 2014. Aside from the GMP modernization project, we also have expansion plans that involve the construction of new warehouses and office buildings and this will be carried out over the next five years," says Lyudmyla Borysova, director of Sperco. This expansion plan is also indicative of investor confidence in the potential of Ukraine's pharmaceutical market, considering the Sperco was created under Spanish capital. In light of this, Borysova is aware of the need to "convince others to invest in Ukraine and to get over their fears of the challenges that this market holds, because ultimately the opportunities are much greater than the hurdles along the way." Furthermore, Borysova is proud to point out that "our modern manufacturing facilities were the beginning of the industrialization of the Vinnytsia region, as it later attracted other industrial projects once we had proved that it was possible to find qualified professionals in the region for these kind of activities."

Some investors have already heeded to the lure of Ukraine's latent potential by acquiring or setting up manufacturing facilities. Bulgarian flagship Sopharma acquired a plant in 2008 which they are currently modernizing to meet GMP standards. "The main reason to acquire a plant in Ukraine, in addition to the Sopharma plant in Russia, was to have an additional platform within the company to provide the entire CIS region. Another rationale for Sopharma to pick Ukraine for its production facility is the importance of this market. Ukraine was very important at the time of the acquisition in 2008, and the growth potential of the Ukrainian market remains impressive," concludes Igor Gerasymchuk, head of representative office of Sopharma Ukraine. In fact, Ukraine's promising future and efforts to improve the overall business environment of its pharmaceutical sector are also beginning to sway some of the world's leading companies. Jostein Davidsen, Nycomed's head of emerging markets, justifies the company's plans to set up manufacturing in Ukraine by explaining that it will "increase the access of our products for patients and provides us with greater flexibility in terms of logistics and distribution. It would never make sense for us to establish manufacturing simply because of government policy. We have to do it because we believe in it and believe in the future of this market." For the sake of Ukrainian patients and the country's development, it is nice to think that they are not the only ones who believe so.


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