cis markets status and potential/ custom union markets in ...10% 45 30. 15. 0. 2011 2012. 2013....

CIS markets status and potential/ Custom union markets in focus

Nickolai Demidov

IMS Health

© 2014, IMS HEALTH

There is no “red zone” for the CIS markets growth still.

© 2014, IMS HEALTH2

Source: IMS Health Market Prognosis, Sept 2012 ; CIS + Georgia DB, 2012

Forecasted Sales and Growth Regional Performance*

Sales mln2013

Share 2013

CAGR 2013

RUSSIA 17 586,9 68,8% 5,2%

UKRAINE 3 130,0 12,2% 16,1%

KAZAKHSTAN 1 704,9 6,7% 18,0%

UZBEKISTAN 963,3 3,8% 17,7%

BELARUS 952,7 3,7% 21,6%

AZERBAIJAN 568,7 2,2% 20,1%

GEORGIA 219,9 0,9% 15,5%

MOLDOVA 179,7 0,7% 15,9%

KYRGYZSTAN 167,6 0,7% 0,0%

ARMENIA 104,5 0,4% 9,2%

CIS + Georgia 25 578,1 100,0% 3,1%

GrowthSales bn

0%

5%

10%60

45

30

15

0201620152014201320122011

Growth

Balkans

CEE

Russia + CIS

Baltics

Key factors in the CIS and Georgia market development in 2013

Share, % USD Growth, % USD

Import 79,2 +13

Local 20,8 +19

Rx 65,9 +14

ОТС 34,1 +15

Key elements

Territory: 4 203 th. sq. km population: 127,55 mln.

Ph

arm

am

ark

et

20

13

7,99 bln. USD in wholesalers prices

3,13 bln. packages

2,55 USD per package

62,65 USD per capita


Regulatory agenda in CIS

© 2013 IMS Health Incorporated o its affiliates. All rights reserved4

CIS market outlook in light of Global trends- N.Demidov

reimbursement

pricing regulations

VAT for drugs

registration

Local manufacturing protection

Customs union (?)

Regulatory agenda in CIS: what else?

© 2013 IMS Health Incorporated o its affiliates. All rights reserved5

CIS market outlook in light of Global trends- N.Demidov

Parallel trade

GMP

Localization of production

National programs enhance

The CIS and Georgia markets – 2013 vs. 2012, in value, in wholesalers prices, USD

3 316

1 549

945

747

447

180

162

143

91

3 839

1 705

963

953

569

220

180

168

104

0 4 000

UKRAINE

KAZAKHSTAN

UZBEKISTAN

BELARUS

AZERBAIJAN

GEORGIA

MOLDOVA

KYRGYZSTAN

ARMENIA

mln USD

2013

2012


+15,4%

+17,6%

+10,8%

+22,5%

+27,3%

+27,6%

+2,0%

+10,1%

+15,8%

retail only

• High performers:BEL (ret+hosp), AZ and GE grew above 20%

• Intermediate: ARM, KRG, UKR - 14-17,6%

• Below: UZB, KZ, MLD – 2-10,6%

Although hospital market in most countries is less then 20%, it has heavily contributed to overall growth (UKR, BEL, KGZ)

The CIS and Georgia markets – 2013 vs. 2012, in value, Units

1 436

565

498

345

107

105

88

58

30

1 434

574

476

370

132

107

105

65

33

0 500 1 000 1 500 2 000

UKRAINE

KAZAKHSTAN

UZBEKISTAN

BELARUS

AZERBAIJAN

KYRGYZSTAN

GEORGIA

MOLDOVA

ARMENIA

mln Units

2013

2012


+9,3%

+11,4%

+18,9%

+2,6%

+22,5%

+7,3%

-4,3%

+1,6%

-0,2%

retail only

• Vague doubts:AZ, GE, ARM – parallel import effect?

• Unusual phenomena:UZ decreases consumption volume

• Getting mature:UKR on plato level

Rapid increase of consumption in most of the countries shows the still existing unsatisfied demand, or tricks of specific operations

Pharma market growth in 2013

693 +6%7,5%

Total Market 2013

441

127

8739

Audited 2013

654

441

127

87

Audited 2012

608

400

128

80

RetailHospital

Federal Reimb.Regional Reimb.*

8%

-1%

10%

SA

LE

S B

Y V

ALU

E,

RU

B B

LN

Source: IMS Health. TRD prices*preliminary estimation for 2013

Growth rate fell out of double digit in 2013 with hospital sector stagnation

• Retail sector continued to drive the market

• State purchases are influenced by growing price competition and NOB/generics substitution

• EDL is still “hot topic”

• Further market shrinking is possible

Weak macro forecast HC spending is subject of

budget revision Most important reforms

might be postponed Evidences of activating of

the protective actions in the sales channel

Comments

© 2014, IMS HEALTH8Kickoff 2014

Key market segmentsKazakhstan represents almost a $2 billion market opportunity today, growing at CAGR of 15% over the past 5 years

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2010 2011 2012 2013

SALE

S B

Y V

ALU

E, $M

LN

Budget Retail

$ 1 804 Mln.

CAGR 2008-13 15%

Whole market; 12,7%; 20,3%

Retail; 11,7%; 16,1%

Budget; 14,2%; 28,5%

0%

5%

10%

15%

20%

25%

30%

35%

0% 5% 10% 15% 20%

SH

ORT-T

ERM

GRO

WTH

2012-2

013 (

% K

ZT)

MEDIUM-TERM GROWTH CAGR 2008-13 (% KZT)

*CAGR 2008-2013Size of bubble = 2013 sales $MLN


The CIS and Georgia market split: retail out of the pocket and hospital

84

57

74

88

85

86

89

77

85

16

43

26

12

15

14

11

23

15

0% 20% 40% 60% 80% 100%

UKRAINE*

KAZAKHSTAN

BELARUS

AZERBAIJAN*

UZBEKISTAN*

GEORGIA*

ARMENIA

MOLDOVA*

KYRGYZSTAN*

Retail Hospital/Reimbursement

%, USD


* Expert evaluation

• Kazakhstan with ongoing reforms went far ahead

• Despite modest budget capacity Belarus shows rather stable component belonging to social part

• Classic level for hospital is still 11-16% of the national market for majority of the countries

Citizens are still the key “sponsors” of pharma consumption –no changes

4,3

3,1 3,0 2,8 2,6 2,52,1 2,0

1,6USD

fo

r a

concr

ete

unit

Parallel trade, lack of regulation

Generics, protect local

Innovations expansion

The CIS markets demonstrate a high level of differences in price levels of drug consumption


The drug prices in CIS and Georgia, 2013

Price difference examples


AMOKSIKLAV

HEPARIN

MABTHERA

PriceRF, USD

$9,3

$3,9

$1538

Belarus Moldova

$1338$1347

Kyrgyzstan

$1534

Kazakhstan

$1441

Belarus Kazakhstan

$2,1$3,2

Azerbaijan

$4,1

Uzbekistan

$5,5

Kazakhstan Belarus

$7,8$7,0

Uzbekistan

$7,8

Armenia

$7,0

Avg. Pricediff.

countries, USD

NO-SPA $3,7

Belarus Moldova

$3,2$2,6

Kyrgyzstan

$3,3

Kazakhstan

$2,9

64,2% 65,9%

35,8% 34,1%

2011 2013

100%

RxOTC

100%

In Value In Units

Sales of RX drugs accounted for more than 60% in retail market in CIS


44,4% 45,9%

55,6% 54,1%

2011 2013

With the enhancement of reimbursement projects in some countries the share of Rx is increasing rapidly

4,4

3,7

3,4

3,2

2,5

2,5

2,4

2,3

2,1

2,1

0 2 4 6

SANOFI

BERLIN-CH/MENARINI

NOVARTIS

GSK

BAYER HEALTHCARE

GEDEON RICHTER

TEVA

FARMAK

KRKA

SERVIER

MS, %

TOP-10 corporations in the CIS, MS%+sales growth%. : 2013/2012 vs. CAGR


Growth of sales2013/2012, %

+19,5%

+20,5%

+18,3%

+4,6%

+15,7%

+15,3%

+15,8%

+5,6%

+10,1%

+17,5%

CAGR,2013/2011, %

+20,7%

+16,6%

+17,7%

+9,9%

+15,7%

+21,0%

+20,6%

+13,2%

+23,3%

+17,7%

Trend2013

0,47

0,43

0,57

0,48

1,11

1,14

0,47

0,68

0,38

0,47

0 0 0 1 1 1 1

KUSUM HEALTHCARE (INDIA)

ASTRAZENECA

ZHURABEK

OCTAPHARMA AG

NOBEL (TURKEY)

ASTELLAS PHARMA INC

MERCK & CO (USA)

KIEV VITAMIN FACTORY

LEKPHARM JLLC

POLPHARMA

Доля рынка, %

Sales growth, 2012/2011,

%

0,47

1,51

1,15

0,95

1,37

0,42

0,88

0,37

2,60

0,36

0 2 4

ROTAPHARM

ROCHE

MERCK SHARP & DOHME

ASTELLAS PHARMA INC

WORLD MEDICINE

POLPHARMA

NOBEL (TURKEY)

OCTAPHARMA AG

GEDEON RICHTER

G.M.P. LTD

Доля рынка, %

+38%

+38%

+39%

+40%

+41%

+43%

+48%

65%

+89%

+121%

+28%

+31%

+33%

+36%

+38%

+44%

+48%

+48%

+49%

+53%

Sales growth, 2013/2012,

%2012 2013

Top 10 corporations in the CIS in 2013, the growth rate has changed significantly comparing to 2012


Most countries in Emerging Europe will show a deceleration in sales growth ...

16

Doubts on positive forecasts right now? Don’t forget about the cycle specifics of economy developement

Relative Country Growth Performance

8%6%4%2%-2%

16%

14%

12%

10%

8%

6%

4%

2%

0%

-2%20%18%16%14%12%10%

Ukraine

Romania

Czech

Hungary

Kazakhstan

CAGR 2008-2012

CAG

R 2

013 -

2017

Montenegro

Armenia

TajikistanSlovakia

Estonia

Moldova

Latvia

Azerbaijan

Lithuania

Uzbekistan

Belarus

Bosnia & Herz.

Slovenia

BulgariaSerbia

Croatia

Macedonia

Turkey

Russia

Poland

Albania

CEE

Baltics

Adriatics

CIS

Balkans

Source: IMS Health Market Prognosis, Sept 2013

© 2014, IMS HEALTH

?

Crucial factors:Currency risksProtective mechanisms

Reimbursement factors (positive?):MoldovaKazakhstan, Azerbaijan

Key challenges:Pricing regulationsLocal protectionSales channel sustainabilityParallel trade Margin decrease

Key opportunities:space for expansions for gen/innov.consumer health: still far below the standards of consumption

Action points 2014

Unsatisfied demandHigh morbidityReplacement Sales channel developmentPromotionInvestments (gvts/business)

12

CIS markets: key objectives for 2014

© 2014, IMS HEALTH

-+

++

Key factors/challenges

Drivers’2013

+

+

Market accessIncrease of pricing competitionCost optimisationDrug affordabilityOperational integrationConsolidationBusiness models reshaping

3

17Kickoff 2014

-----

+

in anticipation of the opening of the Olympic gameslet’s always be the first on the shooting range

Seeing your competitors far behind ensure every next shoot will hit the target

© 2014, IMS HEALTH

cis markets status and potential/ custom union markets in ...10% 45 30. 15. 0. 2011 2012. 2013....

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