Pharmacological market demonstrates quantitative and qualitative growth

In 2016, 1 billion packs of medicine worth of 50,5 billion UAH (1,98 billion USD) were sold in Ukraine. If compared to previous year, the volume of sales increased by 5,7%, while the generated revenue by 21,9%. At the same time, it’s worth taking into the account that revenue increase is partially explained by the inflation, even though its impact diminished recently.

During the first quarter of 2017, the aforementioned trend continued to dominate the market – compared with the same period of the last year the sales increased by 9% (up to 497,665 million packages) while the revenues went up 16% (up to 21,335 billion UAH). In April 2017 the average price of 1 pack of medicine was 56,3 UAH. It means that this year not only the trend of sales increase remains relevant, but that for price Ukrainians are ready to pay for medicine as well. Buyers are gradually returning to middle and upscale product categories.

Ukrainian manufacturers are leading sales but not profits

Even though Ukrainian manufacturers have a larger market share in terms of sales (73%) than foreign companies, the considerable part of raw materials required for medicines’ production remain imported. It substantially increases the medicines’ prices, thus in order to further boost sales pharmacological companies are heavily investing in advertising – in 2015 they spent 7,2 billion UAH, while already 10,6 billion UAH were spent in 2016, which made them one of the largest advertisers. At the same time, 63% of the profit generated in the industry goes to foreign manufacturers.

Concerns of national producers are quite understandable – the new procedure of foreign medicines’ registration substantially facilitated the receipt of authorization for its import and distribution. If medicines are already certified in other countries, such authorization is provided under simplified procedure envisaging the registration data cross-check with the country where such authorization was obtained. Such approach should decrease prices for imported medicines as well as increase the internal market competition.

Revenues of pharmacies are restrained by the government

Pharmacies are currently facing major challenges on the pharmacological market: the government suppresses its profits by limiting the prices for some products. Furthermore, the profit margin was also limited to 5% or 15%. These regulatory measures are explained by the low purchasing capacity of the population, so the government tries to stabilize prices within limits affordable for the vast majority of people.  

According to the forecast, the pharmacological market in 2017 will grow by 14-18% in terms of revenues and by 2,9% in terms of sales.

The improved purchasing capacity of the population, as well as expected decrease of imported medicines’ prices and the increase of import raw materials’ cost, mean more fierce competition for Ukrainian pharmacological companies. In order to survive companies should aim for qualitative development – craft company’s brand and brands of separate products as well as make them more appealing with the help of the effective marketing.