Kazakhstan - Drugs and Pharmaceuticals Kazakhstan - Drugs/Pharmaceuticals
This is a best prospect industry sector for this country. Includes a market overview and trade data
Overview
According to the state program for the development of the pharmaceutical industry, the government’s priority task is to supply 50% of the market with locally produced medicines and healthcare products by 2018. To meet this goal, modernization of existing and construction of new pharmaceutical production facilities are planned. In January 2014, Kazakhstan adopted international GMP (Good Manufacturing Practice) standards for drug manufacturing. Currently there are 112 pharmaceutical manufacturers in Kazakhstan and seven of them are GMP certified.
Entrance to the Eurasian Economic Customs Union (EAEU) has affected the pharmaceutical market as customs fees for imported pharmaceuticals into CU member countries increased from zero to 5.7-12% depending on the type of pharmaceutical.
This local production is expected to concentrate in a wide niche of generics, which account for 85% of the overall market.
Accurate 2018 data on the amount of funds allocated from State and local budgets for the purchase of pharmaceutical products are not yet available. By some sources (Fitch Solutions) a market value of USD1.4 billion in 2018 represents 24% of total healthcare expenditures and 1% of the country’s GDP. Based on figures from previous years, government purchases of pharmaceuticals account for approximately 50% of the total market. Local production accounted for only 27% of the market in 2018. It is expected to account for 30% of the total market in 2019. Local manufacturers produce basic pharmaceutical products that do not require innovative technologies. Market demand for specific complex pharmaceuticals is met entirely by imports.
The largest share of imported pharmaceutics belongs to the U.S. followed by Germany, India, and France.
All imported and locally produced pharmaceutical products must be registered in Kazakhstan. The agency responsible for registration is the Committee for Pharmacy under the Ministry of Health. The National Center for Expertise under the Ministry of Health overseas the approval process for all pharmaceutical products to be registered. This process includes a number of physiochemical, biological, and clinical tests, which verify efficiency, safety, and quality of, imported pharmaceuticals.
Depending on the type of drug, a registration payment varies from USD3,000 to USD5,000. Generally, the manufacturer pays the registration fee.
From 2017 to 2018, the market for pharmaceuticals in Kazakhstan increased by an estimated 6%. The U.S. market share was approximately 13.5 % last year, valued at over USD200.0 million. Pharmaceutical imports in 2019 are expected to slightly increase by about 5%, reaching an estimated USD1.12 billion. Likewise, U.S. imports are predicted to increase slightly to an estimated USD220 million, keeping U.S. market share roughly the same.
For information on challenges related to market access and pricing for pharmaceuticals, refer to the American Chamber of Commerce in Kazakhstan’s White Paper on Building a World-Class Healthcare System in Kazakhstan.
Leading Sub-Sectors
The pharmaceutical market is divided almost equally into two major segments: State procurement and retail sales.
State Procurement
State procurement of pharmaceuticals is implemented through tenders announced by regional and city health departments. A State-financed program funds state procurement of oncology and diabetic medicines. In 2009, the Ministry of Health set up SK-Pharmatsiya LLP as a single distributor for supplying pharmaceuticals to State health institutions. The share of pharmaceuticals bought by the state through the single distributor system has increased and reached 95% by 2018. The remaining 5% of pharmaceuticals is directly purchased by hospitals and consists mainly of items less frequently used. In 2018 the single distributor bought pharmaceuticals worth approximately USD580 million.
U.S. companies producing the following pharmaceutical products have strong prospects:
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Vaccines and other immuno-biological medications for immuno-prophylaxis of population;
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Anti-diabetic medications;
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Oncology medications;
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Antibacterial medications;
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Medications and dialyzers, and medical supplies for patients with renal deficiency and patients operated on for kidney transplantation.
Generally, foreign suppliers participate in State-funded tenders through their local distributors.
Opportunities
Kazakhstan has one of the highest rates of drug consumption per capita among post-soviet countries. Despite government attempts to improve and increase local production of pharmaceuticals, Kazakhstan is still attractive for U.S. exporters as the production of highly efficient and innovative medicines is not considered a priority task in the state program. Severe diseases such as CVD, cancer, and diabetes still require imports of advanced pharmaceuticals.
IPR Protection
Protection of intellectual property can be a challenge for pharmaceutical companies in Kazakhstan. U.S. companies exploring opportunities in the market should consider the possibility of potential IPR violations that could include violation of data exclusivity rights, patent Infringements, voluntary licenses vs compulsory license issues, etc.
Web Resources
Ministry of Health
National Center for Expertise under the Ministry of Health and Social Development
Pharmaceutical news in Kazakhstan
SK Pharmatsiya
For more information contact Commercial Specialist Nurlan Zhangarin.