Has the national pharmaceutical industry a future?

National security of the country involves many components. And pharmaceutical industry occupies rather important place in it. High dependence on the foreign medicinal products can lead to their shortage in critical time such as pandemic or war. Currently the share of the national pharmaceutical companies at the market is 65%* in packages. However, in money equivalent it is only 36%* of the market, as the foreign manufacturers are represented in more expensive segment. Now the Ukrainian manufacturers produce only 61% of medicinal products from the National List of medicines. However, they have enough capacity to increase the production.

Reducing the import dependence in the pharmaceutics is a priority of the country. Currently the Ministry of Health encourages the Ukrainians to buy the medicinal products manufactured in Ukraine and support the national manufacturer. Moreover, all medicinal products, both national and foreign, undergo the state registration, and therefore, they are all of the same quality. All national manufacturers are certified by the international standard of GMP (Good Manufacturing Practice), and this standard is used by the manufacturers all over the world.

Since the beginning of the full-scale phase of the war, the national companies are actively working and reaching the pre-war production volumes, and in addition, they help the Ministry of Health, medical institutions and volunteer organizations. At the beginning of full-scale military operations, a noticeable shortage of certain medicinal products (such as cardiovascular and systemic products) was observed. However, the logistic activities were fixed quite quickly, and the volume of consumption was restored. Currently, there is no shortage of medicinal products on the market.

Pharmaceutics is one of the most innovative industries in Ukraine and it continues to be actively transformed. Innovations are everywhere here — from production to document management. Based on the data in 2020, 53%** of enterprises are innovation-active. In the national pharmaceutical company Darnitsa — the only one of all enterprises of this industry in the Eastern Europe — the completely robotic warehouse has been functioning since 2007. Ergonomic planning and automatic cargo manipulators allow the company to store the products in the area that is 16 times smaller than a conventional warehouse, which would be needed for such a number of pallet positions. The company is also actively implementing the modern digitization systems: storage of medicinal product files in the cloud on the OtiPharm® Data Pro platform, the SMART HCM personnel management system using artificial intelligence, a modern system of reporting visualization and a new electronic document management system.

Moreover, the pharmaceutics has a large export potential. Within the last 5 years the export increased by 64%***, but there are obstacles preventing its further development.

The most important non-tariff barrier for the access of Ukrainian medicinal products to the European market is the non-recognition by the EU of international GMP quality certificates issued by the Ukrainian regulatory authorities. When exporting to the EU, Ukrainian manufacturers come across a double barrier: firstly, the European regulators has to recognize the compliance of manufacture with the requirements of GMP legislation, secondly, during customs clearance of the medicinal products, each batch of goods is subject to the repeated testing and inspection for compliance with GMP requirements of the European side (batch release testing). This, of course, has a significant effect on the final price of medicinal products and, as a result, the competitiveness of Ukrainian medicinal products abroad.

Another barrier for a pharmaceutical company to enter the market is obtaining the Marketing authorization. The most important is the implementation of the mutual recognition of the registration procedure, which will allow to speed up the market entry of our medicines.

“We hope that granting Ukraine the EU candidate status will speed up the process of signing the Agreements on Conformity Assessment and Acceptance of industrial Goods (ACAA) and medical devices. The removal of non-tariff barriers will open access for the national manufacturers to the EU market, as well as to other markets that require certification for compliance with EU requirements. For the Ukrainian pharmaceutical industry, it is not only the barrier-free access of its products to the EU market, it is also an additional increase of the level of investment attractiveness and huge support for the image of Ukrainian pharmaceutical products as meeting EU standards”, says Oleksandr Torhun, director on export and regulatory activities of pharmaceutical company Darnitsa.

Therefore, the national pharmaceutical industry of Ukraine is a new IT, with the modern technologies and innovative approaches, and due to the granting the EU candidate status this industry currently has high chances for the export development.

* Based on Proxima Research data

** State Statistics Service of Ukraine

*** Customs Service of Ukraine