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February 2 of this year Final conference “FARM BUSINESS: CONCLUSIONS 2016 – EXPECTATIONS 2017” was held in Kyiv, organized for the sixth time by the Legal Alliance Legal Company.
During the event, representatives of the pharmaceutical business summed up the past year, discussed past and future regulatory changes in the industry, and shared forecasts of market development in 2017.
The event was attended by more than 100 representatives of pharmaceutical companies, professional associations, mass media, as well as state institutions that regulate the industry
According to the feedback of its participants, over the years of its existence, the Conference has become not only a tool for obtaining high-quality analytics and regulatory forecasts regarding the farm market, but also established itself as a platform for free and honest discussion with colleagues on the market and representatives of the regulator.
This year, the Conference was opened by an overview of the state of the pharmaceutical market, presented by the director of the SMD company, Iryna Horlova , who informed the participants of the event with the main results of the functioning of the pharmaceutical market of Ukraine in 2016 in numbers.
The report presented data on the dynamics of the market, which in 2016 showed an 11% drop in dollar terms. The speaker noted that today 86% of medicines are financed at the expense of the consumer. Hospital sales account for only 6% of the total volume of drug sales through various channels. Speaking about the dynamics of retail market segments in 2016, Iryna Horlova emphasized that all segments, except patient care products, showed negative dynamics in packaging. In hryvnia terms, the most dynamic growth occurs in the dietary supplements and prescription drugs segment. At the same time, over-the-counter drugs show worse dynamics than the prescription group. High rates of growth of domestic companies compared to foreign ones were also noted. Speaking about the segment of tender purchases, Ms. Horlova reported that the amount of purchases for all products, including centralized purchases, donor organizations, tender purchases and sub-threshold purchases by regional departments and hospitals, for 11 months of 2016 amounted to 6.4 billion hryvnias. In 2016, the most significant growth indicators were demonstrated by the segment of centralized procurement, as well as the segment of direct hospital tenders (+21% in 2016).
The first session of the event was traditionally devoted to issues of pharmaceutical business regulation.
The session was moderated by Dmytro Aleshko , a partner of Legal Alliance , who talked about the main regulatory changes that shook the market in 2016, in particular, the resolutions of the CMU “On state regulation of prices for medicinal products” and “On the introduction of reimbursement of the cost of medicinal products” . and also about the new National List of Medicines. Next, Mr. Aleshko gave the floor to Oksana Lebeza , senior technical adviser for pharmacovigilance and rational use of medicinal products of the USAID/SIAPS project, who in her presentation focused more on the National List, as well as on the prospects and possible risks for business, which its implementation in 2017 entails . Olena Matveeva , Director of the Department of Pharmacovigilance of the SE “State Expert Center of the Ministry of Health of Ukraine”, Deputy Head of the Expert Committee on the Selection and Use of Essential Medicines, touched on the topic of the introduction of the National List in her speech. In her speech, Ms. Matveeva tried to dispel fears expressed by business representatives, talking about the positive experience of implementing the National List in European countries, such as Hungary, Slovenia, the Czech Republic, and Latvia. Nataliya Sergienko , Executive Director of the Health Care Committee of the European Business Association, in her turn, touched on the issues that currently most concern representatives of international pharmaceutical companies operating in Ukraine. Ms. Sergienko expressed hope for their successful decision in 2017. Representatives of two leading profile organizations of the pharmaceutical business – Volodymyr Ignatov , Executive Director of the Association of Representatives of International Pharmaceutical Manufacturers AIPM Ukraine, Head of the Representative Office of IPSEN Pharma in Ukraine and Moldova, and Volodymyr Redko , Executive Director of the Association of Manufacturers of Innovative Medicines APRaD, spoke about unanswered questions that left the market last year. In particular, on the reform of the procurement system and on the state regulation of prices for medicinal products. It was on this topic that a lively discussion unfolded in the hall in the subsequent question-and-answer session.
Dmytro Aleshko commented: “The timing of the conference coincided with serious changes in the regulation of prices for medicinal products, which were initiated by the Cabinet of Ministers of Ukraine. Conference participants had the opportunity to hear a possible scenario of how the situation will develop from April 1, 2017. In addition, representatives of leading professional associations formulated their position on this issue.
In the focus of the second session of the Conference, under the general title “Pharmabusiness: issues left to lawyers” , three legal vectors of significant importance for pharmaceutical companies were discussed at once: anti-corruption legislation, taxation, as well as the main aspects of antimonopoly and competition law, which have become especially important relevant in 2016, in connection with the policy of AMCU regarding pharmaceutical companies.
Oleksiy Bezhevets , a partner of Legal Alliance Law Firm , opened the session with a report on taxation of pharmaceutical representative offices. The report contained practical information about a number of nuances of pharmaceutical business taxation – from the moment of doing business when the need to pay taxes arises, to the new topical topic of BEPS (Base Erosion and Profit Shifting). Next, Oleksiy Bezhevets gave the floor to Lidia Sanzharovska, a senior lawyer at the Legal Alliance JC . In her presentation, Ms. Sanzharovska summarized the most relevant issues of compliance, such as financing the participation of doctors in events, giving doctors gifts and souvenirs, sponsorship and charity, as well as the peculiarities of marketing interaction of health care institutions with pharmaceutical representatives. The session was concluded by Andrii Gorbatenko , an associate partner of Legal Alliance , who noted in his report that for the pharmaceutical market, 2016 was full of events related to the activities of the Antimonopoly Committee of Ukraine. In particular, several cases regarding contracts for the distribution of medicinal products were completed, and recommendations were made to the Ministry of Health. In addition, the Antimonopoly Committee of Ukraine provided a detailed report on its vision of the situation in the pharmaceutical market of Ukraine. “The analysis of decisions and actions of the Antimonopoly Committee of Ukraine in 2016 allows us to draw several conclusions. First of all, it should be noted that significant progress has been made in the approaches of this state body to assessing the market situation. It is also impossible not to mention the real openness of AMCU to dialogue with market participants. However, the decisions made by AMCU in 2016 exacerbated a number of problems in this area. In particular, the market suffers from a lack of AMCU recommendations that would create a safe harbor for market participants. To date, the phrase “approaches and practice of AMCU” remains too mysterious and mysterious. We sincerely hope that our efforts in 2017 will help to advance in this direction,” concluded Mr. Horbatenko.
Commenting on his session, Oleksiy Bezhevets noted: ” Three very important and relevant topics for the market were discussed at the session. First of all, we raised questions about the development of pharmaceutical companies in the light of new trends and trends in the field of taxation , in particular , transport pricing and business schemes under which the majority of foreign pharmaceutical companies of Ukraine work. We are talking about the relationship between the parent company and the representative office or subsidiary companies of Ukraine. In quite many cases, these relationships are subject to careful review and analysis in order to avoid negative consequences in the field of taxation. Secondly, we have once again drawn the attention of respected pharmaceutical companies to the need to comply with all requirements in the field of anti-corruption legislation and compliance. The approaches that are used by successful pharmaceutical companies in the market in the field of promotion and interaction with health care specialists were once again summarized . And, finally, in the third part of the session, Andriy Gorbatenko spoke in detail about the antimonopoly committee’s approach to distribution agreements. This is an extremely relevant topic. Our company has positive experience in solving issues arising in connection with these contracts. We believe that we have outlined the way the company should move in 2017. “
The third, final session of the Conference “Opportunities vs. Dangers: Forecasts from Opinion Leaders” was held in the format of a panel discussion of opinion leaders of the pharmaceutical market. It was moderated by Ilya Kostin, the partner of Legal Alliance, and the Executive Director of AIPM Ukraine, Volodymyr Ignatov, Head of IPSEN Pharma’s representative office in Ukraine and Moldova. Among the experts of the session, only representatives of real business were represented: Yevhen Zayka , Regional Director of Acino Group (Switzerland) in the CIS, General Director of Pharma Start LLC, Georgy Viktorov , Head of the Abbott Laboratories HMBH Representative Office in Ukraine, Head of the Committee on Health Protection of the European Business Association, Anatoly Revin , General Director of the Representation of “Aegis PHARMACEUTICALS PLS”, President of AIPM Ukraine, as well as Stanislav Kornev , Director of the Representation of the company “YUSB Pharma GmbH” in Ukraine, Vice-President of AIPM Ukraine.
The session began with the moderators presenting the results of a survey of representatives of the pharmaceutical business, which was conducted on the eve of the conference. The vast majority of respondents were foreign companies or their representative offices (subsidiaries) that do not have production localization in Ukraine.
Among the main problems of the current state of the Ukrainian pharmaceutical market, the state of the economy, the low solvency of the consumer and the imperfection of the legislative regulation of the industry were singled out.
The main factors that will affect the pharmaceutical market in 2017 were the change in the pricing model for medicinal products, the introduction of reimbursement, as well as the transition to the new National list of medicinal products.
At the same time, the majority of those interviewed noted that, first of all, the spheres of public procurement and pricing of medicinal products require improvement of state regulation. More than 66% of respondents hold this opinion. Along with them, there is a noticeable imperfection of regulation in the tax field and in the field of intellectual property protection in the pharmaceutical business.
In view of the dynamic regulatory regulation of the industry, experts were cautious in their forecasts, agreeing that the reform of the health care sector in the field of insurance medicine can be a long-awaited way out of the crisis and a window for new opportunities, both for medical institutions and for pharmaceutical companies.
Ilya Kostin summed up the expectations of the pharmaceutical market for the coming year: “Unfortunately, the future, both near and distant, today lacks optimistic forecasts. Managers of the pharmaceutical business cannot tear themselves away from reality, in which the unstable state of the country’s economy plays a huge role. Legal uncertainty, low quality of regulatory documents, populism, reluctance to listen to representatives of the pharmaceutical business – professionals, people who have devoted more than a dozen years to this profession – are factors that determine today’s state and mood of the market. In the perspective of the next three years, we expect the disappearance of the market of branded generics in Ukraine – we will see its transformation into the market of ordinary generics. Reimbursement will increase, the number of nosologies will increase. However, the withdrawal of a number of companies from the market is inevitable due to a sharp decrease in purchasing power, as well as the state’s acceptance of foreign companies exclusively in order to make their products cheaper. The issue of quality, unfortunately, will take a back seat. Already today, this is evidenced by the numerous controversies surrounding the notorious 21 INN, as well as the strategy for implementing the National List of Medicines. The pharmaceutical industry can develop only thanks to investment activity, which, unfortunately, is practically reduced to zero. Investing money and making a profit in this area today can be done only by individuals who are ready to take risks. Pharmacists also voiced their expectations for changes in the field of medicine, as pharmaceuticals, in fact, is an industry auxiliary to medicine.”
The attendees were satisfied with the atmosphere of lively discussion in which the Conference took place, as well as the relevance of the issues raised during the event. By holding such a large-scale event at a high level, the Legal Alliance demonstrates not only the high quality of its professional expertise, but also the ability to predict market development and accurately guess the needs of the pharmaceutical business.
We would like to express our special thanks at the end of the Conference to the companies, organizations and mass media that supported the informational event. Among them: Association of representatives of international pharmaceutical manufacturers AIPM Ukraine, Association of manufacturers of innovative medicines APRaD, Association “Operators of the market of medical products”, European Business Association, SMD, Brandberg, PharmaGate, MultiPrint, YouControl, Medical Marketing Agency, Twiga and MedInform, Health Media , UKRMEDSERT, LavConsult, Annual competition of pharmaceutical industry professionals “Panaceya”, Healthcare Creative Forum, Depharm portal, Pharmaceut Praktik, Pharmaceutical Industry and Modern Pharmacy magazines, as well as the exclusive legal media partner of the Conference – the publication “Yuridichna Gazeta”.
Published based on the materials of the “Legal Alliance” JC