Kazakh Pharmaceuticals Market Booms

ASTANA – Kazakhstan’s domestic drug market experienced booming growth of up to 15 percent last year.

Fueled by demand from a rapidly expanding middle class and a general rise in the standard of living around the country, the domestic pharmaceuticals market grew to a total value of $1.2 billion in 2012.

Kazakhstan’s domestic pharmaceutical market is young and only opened in the mid-1990’s. Today it is one of the developed in the Commonwealth of Independent States and since 2000 it has expanded by 500 percent. The domestic pharmaceuticals industry is expanding to try and meet the growing demand.

President Nursultan Nazarbayev in his December 14 state of the nation address stressed the importance of improving national medical services. This will include expanding the provision of material and technical equipment to medical institutions, raising the level of professionalism of doctors and nurses and introducing modern management practices into medical care. All these processes are addressed by the Strategic Health Development Plan to 2020.

The Salamatty Kazakhstan State Programme of Health Development for 2011 – 2015 has set the goals of:

• changing to low-cost forms of medical care
• providing preventative industry
• increasing availability and quality of care
• expanding social services
• improving the training of medical staff
• adapting health care programmes to modern requirements
• introducing market mechanisms

Under the 2011-2015 programme, additional funds are being allocated from central and local budgets for health care improvement.

Vyacheslav Lokshin, president of the Association of Foreign Pharmaceutical Producers in Kazakhstan, told The Astana Times that the government is currently investing 4 percent of Gross Domestic Product (GDP) in the domestic pharmaceutical industry and that figure will rise.

Lokshin said the domestic pharmaceutical industry would grow by another 15 percent this year, thanks to increased government investment, growing foreign investment and Kazakhstan’s participation in the Customs Union with Russia and Belarus.

“I think that the market of Kazakhstan is very interesting thanks to international pharmaceutical manufacturers who produce innovative drugs for patients with serious diseases. Investments are growing and will grow,” he said.

Lokshin said foreign investment in Kazakhstan’s pharmaceuticals industry is growing. He said foreign pharmaceutical companies have invested at least $100 million in it over the past two years. Foreign investors have bought several factories to modernise and expand them.

Lokshin said the government should raise regulatory standards over the pharmaceutical industry to European Union levels. “We are coming closer to the requirements of the European Union and the United States,” he said. “There are still barriers that should be overcome in the form of certification. However, we are working with the Ministry of Healthcare in this direction. I think that in the next few years we will have the same requirements.”

Lokshin said Kazakhstan’s accession to the World Trade Organization (WTO) will not affect the pharmaceutical industry. “We have a favourable situation in Kazakhstan, there is no value added tax (VAT), no duties on drugs and the costs are not very high. I think that there will not be any large fluctuations in prices,” he said.

IHS Global Insight said Kazakhstan imported medicines worth 142 billion tenge ($940 million) in 2011, comprising 86 percent of all pharmaceuticals used in the country. The government has announced plans to increase production to 50 percent in 2014, and has worked to improve the quality of local products made by foreign companies.

IHS Global Insight analyst Kavita Rainova said that in 2012, local companies produced only 15 percent of all pharmaceutical products used domestically and the government should set a less ambitious goal. “One of the positive factors of accession to the WTO is that foreign investors will need to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights,” she said.

The government still wants to expand domestic pharmaceuticals production and exports. However, it recognises that full access to foreign markets will only be possible after reorganising domestic production in accordance with international standards.

Several Kazakhstan companies are already successfully operating in Russia and Belarus. The Khimpharm Company annually exports more than 90 different products.

The pharmaceutical industry is the fastest growing sector of the economy.

Serik Sultanov, president of the FarmMedIndustry Association said that 90 percent of the medicines produced domestically came from five large pharmaceutical companies: Khimpharm, Global Pharm, NobelAFF, Romat and Karaganda.

All these companies already have foreign partners who have invested $180 million in them.

Sultanov said the country’s domestic pharmaceutical companies had set the goal of eventually expanding their exports to the countries of the European Union.

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