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Kazakhstan Pharmaceuticals and Healthcare Report Q4 2012
Business Monitor International, October 2012, Pages: 82
The Kazakhstan Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kazakhstan's pharmaceuticals and healthcare industry.
Kazakhstan remains the most open pharmaceutical market in Central Asia and is the one most integrated into the broader global pharmaceutical market. The government continues to push for World Trade Organization (WTO) accession in the near term (by the end of 2012), although the precise timeline remains uncertain. Kazakhstan’s membership of the Customs Union with Russia and Belarus provides another driver for market harmonisation, although this has proved somewhat slower than officials had previously pledged. Three of the country’s top five pharmaceutical producers – Chimpharm,
Nobel and Global Pharm – are now controlled by foreign investors, underlining the market’s potential.
Key downsides remain the market’s relatively small population size and logistical challenges – a population of 15mn spread over a territory the size of Western Europe – as well deep uncertainty regarding the country’s political stability when President Nursultan Nazarbayev leaves the scene. In addition, for the first time since the early 1990s, the country has seen outbreaks of social unrest and acts of terrorism, revealing underlying tensions.
Headline Expenditure Projections:
.. Pharmaceuticals: KZT195.8bn (US$1.34bn in 2011 to KZT1.34bn) in 2011 to KZT218.3bn
(US$1.47bn) in 2012; up 11.5% in local currency terms and 9.7% in US dollar terms. Forecast adjusted downward slightly due to updated macroeconomic forecasts.
.. Healthcare: KZT1,043.5bn (US$7.12bn) in 2011 to KZT1,167.1bn (US$7.83bn) in 2012; up 11.8% in local currency terms and 10.1% in US dollar terms. Forecast adjusted downward slightly due to updated macroeconomic forecasts.
.. Medical Devices: KZT86.51bn (US$590mn) in 2011 to KZT93.97bn (US$627mn) in 2012; up 7.9% in local currency terms and 6.2% in US dollar terms. Forecast adjusted downward slightly due to updated macroeconomic forecasts.
Risk Reward Rating:
Kazakhstan ranks 15th this quarter in BMI’s Risk Reward Ratings (RRR) for Eastern Europe, its score unchanged from Q311. The market’s key attractions for investors include the most liberal business environment in Central Asia, a commitment to long-term regulatory harmonisation and access to the broader Central Asian marketplace. WTO accession also appears likely in the near term following Russia’s accession. Downsides include its relatively small population, under-developed infrastructure and an undiversified economy exposed to the commodity cycle. A primary risk is political uncertainty due to the lack of a clear succession process for the president and widespread corruption.
.. Kazakh officials still appear committed to an ambitious deadline set by the president in 2009 to produce 50% of medicines, in volume terms, domestically. BMI has been consistently sceptical that the target will be met, although there has been some undeniable progress since the country adopted a ‘Roadmap’ for the industry as part of its Accelerated Industrial Development Programme in early 2010. In August, news agency Kazinform quoted the head of association FarmMedIndustriya as saying that 10 of 26 planned manufacturing facilities had been built or modernised. He also said that capacity was in place to produce 37% of medicines in volume terms.
.. In June 2012, outlet Bnews.kz quoted the Minister for Industry and New Technologies, who is responsible for the implementation of the Road Map, as saying 16 projects had been implemented at a cost of KZT20bn (US$134mn). BMI has previously calculated that total planned pharmaceutical investment projects in the pipeline amount to approximately KZT30bn
(US$200mn). We note reports of bottlenecks in implementing investments, but now conclude the industry may indeed meet its targets, on paper at least.
.. In terms of the long-term development of the industry, the creation of new capacity by the largest domestic producers is crucial. In August, Chimpharm, owned by Poland’s Polpharma,
reported a 23% fall in net profit for H112, but remains on track to open a new ampoule filling line in 2013 as part of two large projects approved under the Accelerated Industrial Development Programme adopted in 2010. At the end of May 2012, GSK inked a deal with the Kazakh government to develop production of vaccines and oncology drugs, while Sanofi and Pfizer reportedly signed a memorandum of cooperation with the authorities. The appearance of an increasing number of such deals could be a major breakthrough in developing sustainable longterm domestic production beyond targets set by the authorities.
.. In June 2012, Dariga Nazarabayeva, the daughter of the president and a member of the Majilis
(parliament) told outlet Tengrinews.kz that the country’s scientific potential had been thrown back 50 years by the post-Soviet transition. She called for “decisive steps”, including direct state financing and tax breaks, to create a new system of science management. BMI interprets her remarks as paving the way for new initiatives in research and development (R&D), also involving the pharmaceutical sphere. To date, the authorities have been focused on the development of generic drug production, a logical approach given the country’s lack of infrastructure for novel drug development. Nonetheless, Nazarabayeva’s remarks could represent a positive step forward in establishing increased funding for medical and pharmaceutical research, creating new opportunities for foreign investors.
BMI Economic View:
The government’s general budgetary position will remain robust over our forecast period, due in large part to the country’s National Oil Fund. Relatively high oil prices over the coming years will enable the government to run a state budget deficit (consisting of the central and local governments, but not including the National Oil Fund) in line with President Nursultan Nazarbayev’s long-term plan to improve Kazakhstan's social welfare via higher public spending.
BMI Political View:
We anticipate Kazakh authorities having a difficult time addressing ongoing discontent regarding the trials for the December Zhanaozen violence. However, we believe the country's vast natural resources potential and President Nursultan Nazarbayev’s firm grip on security forces will see to it that investor appetite remains anchored. That said, a proliferation or intensification of labour disputes across sectors could put this view at risk and dent the country’s political risk profile.
Executive Summary 5
SWOT Analysis 8
Kazakhstan Pharmaceuticals And Healthcare SWOT 8
Pharmaceutical Risk/Reward Ratings 9
Table: Emerging Europe Pharmaceutical Risk Reward Ratings, Q412 9
Kazakhstan – Market Summary 13
Regulatory Regime 15
Intellectual Property Environment 17
Counterfeit Drugs 18
Pricing And Reimbursement Regime 19
Pricing And Reimbursement Developments 21
Industry Developments 22
Healthcare Sector 23
Table: Top 10 Manufacturers By Value Of Hospital Purchases 26
Table: Top 10 INNs By Value Of Hospital Purchases 26
Healthcare Sector Financing 27
Table: Top 10 ATC Groups By Value Of Hospital Purchases 28
Table: Top 10 ATC Groups By Retail Pharmacy Sales 28
Domestic Pharmaceutical Industry 29
Recent Domestic Industry Developments 31
Wholesale And Retail 32
Wholesale And Retail Developments 33
Foreign Pharmaceutical Industry 33
Recent Foreign Industry Developments 34
Clinical Trials 35
Medical Devices 36
Industry Forecast Scenario 39
Pharmaceutical Market Forecast 39
Table: Pharmaceutical Sales Indicators 2008-2016 40
Key Growth Factors – Industry 41
Table: Healthcare Expenditure Indicators 2008-2016 42
Table: Healthcare Governmental Indicators 2008-2016 43
Table: Healthcare Private Indicators 2008-2016 43
Key Growth Factors – Macroeconomic 44
Prescription Drug Market Forecast 47
Table: Prescription Drug Sales Indicators 2008-2016 48
Patented Drug Market Forecast 49
Table: Patented Drug Market Indicators 2008-2016 50
Generic Drug Market Forecast 50
Kazakhstan Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd
Table: Generic Drug Sales Indicators 2008-2016 51
OTC Medicine Market Forecast 52
Table: OTC Medicine Sales Indicators 2008-2016 53
Pharmaceutical Trade Forecast 54
Table: Exports and Imports Indicators 2008-2016 55
Other Healthcare Data Forecasts 56
Key Risks To our Forecast Scenario 56
Competitive Landscape 58
Table: Top 10 Manufacturers By Retail Pharmacy Sales 59
Table: Top 10 INN By Value Of Retail Pharmacy Sales 60
Company Monitor 61
Domestic Companies 61
Multinational Companies 65
Novartis (Lek and Sandoz) 65
GlaxoSmithKline (GSK) 67
Merck & Co 69
Demographic Outlook 72
Table: Kazakhstan's Population By Age Group, 1990-2020 ('000) 73
Table: Kazakhstan's Population By Age Group, 1990-2020 (% of total) 74
Table: Kazakhstan's Key Population Ratios, 1990-2020 75
Table: Kazakhstan's Rural And Urban Population, 1990-2020 75
BMI Methodology 78
How We Generate Our Pharmaceutical Industry Forecasts 78
Pharmaceutical Risk/Reward Ratings Methodology 79
Ratings Overview 79
Table: Pharmaceutical Business Environment Indicators 80
Table: Weighting Of Components 81