The Pharmaceutical Industry of Ukraine Is Becoming Increasingly More Sophisticated and Innovative - Study

The pharmaceutical industry of Ukraine is becoming increasingly more sophisticated, advanced and innovative. The introduction of the European standards in the manufacturing along with the high rates of investments makes the pharmaceutical industry one of the most dynamic sectors of economy with high added value. The industry increases the availability of modern medicines and makes a considerable contribution to the development of the Ukrainian economy. This is stated in the infographic reference book "Pharmaceutical Industry of Ukraine 2020", prepared by Top Lead with the support of Darnitsa Pharmaceutical Company and analytical partner BusinessViews.

Dmytro Shymkiv, Chairman of the Board of Directors of Darnitsa Group, notes that over the last year the pharmaceutical industry developed mainly due to the active use of state of the art technologies. “Leading Ukrainian companies apply robotics, artificial intelligence, computer modeling, blockchain, cloud technologies in practice, and manage the manufacturing remotely due to the industrial Internet of things. The pharmaceutical industry ranks second in terms of investment intensity and creates UAH 30 billion of added value. Therefore, we can say with confidence that the pharmaceutical industry is an industry that develops the national economy,” Shymkiv emphasizes.

Stanislav Shum, Top Lead CEO, is also sure that the Ukrainian pharmaceutical industry may be considered a model of what industries should be in economically developed countries. “One worker in the industry creates more added value than workers in many other industries. It is growing dynamically - faster than the economy as a whole, provides high wages, creates and maintains many jobs in related industries. Pharmaceutical industry is one of the most knowledge-intensive industries, and the volume of investments in R&D is growing from year to year. Ukrainian drug manufacturers are successfully competing in the domestic market and are increasing export volumes. Therefore, it is important to keep the pharmaceutical industry on the radar and study the reasons of its success. For this, we annually prepare an infographic study "Pharmaceutical Industry of Ukraine" together with Darnitsa, one of the most innovative and successful drug manufacturers in Ukraine."

The study indicates that the volume of the pharmaceutical market keeps on growing, the consumption of medicines per capita is increasing, and the share of prescription drugs is growing.

The dominant role is still played by the pharmacy segment - 89% of the market is financed directly by consumers and only 11% - by the state. The average annual growth rate of the pharmacy market over the past 5 years was 12%. In 2019, pharmacy sales amounted to $ 3.4 billion. Against this background, the dynamics of the hospital market remains low - 6% over the past 5 years, and its volume last year was $ 0.4 billion.

Estimating the volume of consumption of medicines, analysts note that in 2019 it grew by 28% to $ 105 per person. At the same time, 61% of the consumption structure falls on prescription drugs.

The Ukrainian pharmaceutical market is characterized by high segmentation and competition. About one-third part of sales falls on the TOP-10 largest companies, of which 6 are Ukrainian.

The authors of the study note that the volume of investments in the pharmaceutical production has not recovered to the pre-crisis level, but the intensity here is higher than in other industries and it keeps on growing. Today, one employee of the pharmaceutical industry creates the largest added value in Ukraine - UAH 1.2 million, ahead of the IT sector - UAH 0.8 million and metallurgy - UAH 0.4 million.

Speaking of the challenges for the pharmaceutical industry in the period of COVID-19, the authors of the reference book note that, in general, the pandemic has strengthened collaboration and prompted many manufacturers and developers in different countries to start joint research to find a vaccine against COVID-19. Permission to order drugs online had a positive impact on market growth, since it expanded the availability of drugs for Ukrainians.

As a reminder, earlier analysts of Fitch Solutions stated that the Ukrainian pharmaceutical market will grow in the coming years and remain attractive to investors. Fitch Solutions classifies Ukraine as a high-reward market, that is, market with high potential.