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Kazakhstan Pharmaceuticals and Healthcare Report Q4 2008
Kazakhstan’s pharmaceutical market has emerged as one of the more promising prospects within the Emerging Europe region. In the BMI Business Environment Ranking matrix for Q408, Kazakhstan moved up from 15 (out of 17 markets surveyed in the region) to joint 11th position, alongside the more established market of Slovakia. While the country is disadvantaged by low per capita spend on medicine and the lack of universal reimbursement, the forecast growth of its pharmaceutical market (at a CAGR of over 1935% in US dollar terms) makes for a very attractive proposition.
The above view is supported by the recently published data by the Kazakhstan Pharmaceutical Herald, which show that retail sales grew by 33% year-on-year (y-o-y) in H108 to US$388.3mn. In the same period, volume of packs sold rose by 43% to 252.5mn. While the figures are above BMI’s estimates, our calculations are reinforced by sales data from the Association of International Pharmaceutical Manufacturers in Russia (AIPM) and Research Marketing & Business Consulting Company (RMBC).
AIPM/RMBC figures showed hospital sales increasing 18% y-o-y in Q108, while retail sales increased 17%, suggesting a possible slowdown in the latter segment.
The top three drugs by sales reported by the Kazakhstan Pharmaceutical Herald were Nycomed’s Actovegin (deproteinised calf blood derivative), Novartis’ over-the-counter (OTC) flu treatment Theraflu (acetaminophen + chlorpheniramine + dextromethorphan + phenylephrine + pheniramine + diphenhydramine + guaifenesin) and Berlin-Chemie/Menarini’s Mezim forte (mixture of digestive enzymes). The above information is indicative of the import-dependent market, with the domestic industry only meeting 10% of the local demand, as well as the high market penetration of OTCs, in the absence of a comprehensive reimbursement system.
The high cost of healthcare system modernisation will continue to drive the development of the OTC market, as the government seeks measures for containing healthcare as well as pharmaceutical costs.
Given that hospitals remain a key point of access for much of the population, the government’s recently announced creation of a centralised system for drug distribution comes as no surprise. The new system, due to cover up to 80% of all drugs supplied to hospitals, will mean that a single company will reap considerable benefits in terms of volume, although values are likely to suffer in the face of anticipated lower tendering prices.