28th October, 2015 This report is submitted to the US

Agency of International Development. The report was created by VI-ORTIS LLP

The USAID's Regional Economic Cooperation Project

Analysis of the pharmaceutical market and identifying barriers in this industry and

the potential markets for the promotion of pharmaceutical products manufacturers in Central Asia

research and review the market conditions for drug production, consumption, imports and exports. To show volume of pharmaceutical markets and their structures in the countries of Central Asia. To explore the potential for the production and sales of pharmaceutical products in the countries of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) for increasing the circulation of drugs in Central Asia. To show the strengths and weaknesses of the pharmaceutical market based on all the data and analysis.

The project aims:

Kazakhstan Population - 17,541,249 people GDP (2014) - $ 286.154 billions (41st) The market volume is 1.91 billion dollars, 0.2% of the world market The level of consumer status: $ 108.8 for one person per year

Central Asia overview

Uzbekistan Population - 31 025 500 people GDP (2014) - 183,933 billions (64th) The market volume is 0,9 billion dollars The level of consumer status: $29 for one person per year

Turkmenistan Population- 5 240 502 people GDP (2014) - 54,746 billions (85th) The market volume is 0,1 billion dollars The level of consumer status: $19 for one person per year

Tajikistan Population- 8 439 700 people GDP (2014) - 17,555 billions (127th) The market volume is 0,1 billion dollars The level of consumer status: $11.85 for one person per year

Kyrgyzstan Population- 5 919 700 people GDP (2014) - 18,001 billions (135th) The market volume is 0,3 billion dollars The level of consumer status: $50.68 for one person per year

Overview of the pharmaceutical market in Central Asia

*The high level of imports *Rates of growth *Focus on domestic markets *Slight dependence on exports *The low level of investment in the development of new drugs *The low level of per capita consumption

The level of consumer status of the population of Central Asian countries in comparison with the US, Japan and Europe.

108.8 286.49

906.2 1105.6

0 200 400 600 800 1000 1200

1

Kazakhstan The level of consumer status for one person per year, USD

США Япония Европа Казахстан

11.85 286.49

906.2 1105.6

0 200 400 600 800 1000 1200

1

Tajikistan The level of consumer status for one person per year, USD

США Япония Европа Таджикистан

29 286.49

906.2 1105.6

0 200 400 600 800 1000 1200

1

Uzbekistan The level of consumer status for one person per year, USD

США Япония Европа Узбекистан

50.68 286.49

906.2 1105.6

0 200 400 600 800 1000 1200

1

Kyrgyzstan The level of consumer status for one year, USD

США Япония Европа Кыргызстан

19 286.49

906.2 1105.6

0 200 400 600 800 1000 1200

1

Turkmenistan The level of consumer status for one person per year, USD

США Япония Европа Туркменистан

Overall SWOT-analysis of the pharmaceutical industry of Central Asia

STRONGS:

СЛАБЫЕ СТОРОНЫ: WEAKNESSES

Willingness to modernize the sector and the growing level of state support

The established pharmaceutical companies having a good knowledge of the specifics of the local market

Provision demand within the guaranteed volume of free medical care through government procurement of medicines, medical devices

Potential export markets of the Customs Union / EEA The developed network of logistics - from producers to distributors and

retailers Certification GMP / ISO enterprises

The dominant position of pharmaceutical companies from the EU, India, Turkey, the market of Kazakhstan

Low export potential due to a mismatch requirements of the international GMP standard

A shortage of qualified personnel Problems of access to credit Lack of modern production technologies Continuous registration procedure more than 8 months. The focus of the public procurement for the purchase of expensive

original drugs at the expense of mass generics The interest of a large part of doctors to prescribe imported drugs

and pharmacy staff - offering customers expensive imported drugs

OPPORTUNITIES:

THREATS:

Production of new generic products upon the expiration of patents on original drugs

Warranty sales to 7 years through long-term contracts Buy (transfer) technology will lead to the production of modern drugs Contract manufacturing organization with foreign companies The transition to sustainable drug supply, t. ie. increasing the domestic

consumption of generics

Dependence on imported pharmaceutical and medical products Dependence on imported raw materials and packaging materials The rapid development of the pharmaceutical industry in India and

China and an increase in imports Reduced exports of Central Asian countries with the introduction

of new production capacity of the pharmaceutical industry The increase in imports of pharmaceutical products to Russia,

Belarus and Ukraine

Uzbekistan and Kazakhstan export geography

Ukraine

Moldova

Georgia

Azerbaijan

Armenia

Turkmenistan

Kyrgyzstan

Tajikistan

Afghanistan

Mongolia

Russia

Barriers to the development of trade of Central Asian countries

Low quality and competitive price, because promotion of goods on the markets considered will depend heavily on the availability of competitive advantages and costs of production and quality characteristics, as well as the company's advertising budget

The delay of investment projects in switching to an industrial capacity

The opacity of drafting of Formulary list, approval of the list of basic essential medicines should provide for the inclusion of domestic producers of both countries, the definition of the original volume of production, life-saving medicines on the basis of pharmaceutical and biotechnology companies of the Republic

Limitations on liberal access to the markets of Central Asia (duty-free import of products and the absence of customs clearance on the territory of Central Asian countries)

1 2

3

4

Steps for development of the pharmaceutical industry

The fight against the production and distribution of counterfeit products;

approval of the list of basic vital drugs, including domestic products

Development of standards of diagnosis and treatment of diseases with the priority use of domestic pharmaceutical production;

Implementation of GMP standards;

The cost of the drug basket in month per capita in USD currency terms, Almaty by districts

4,4

46,70

19,7 23,5

5,6

42,8

6,55

12,3

The share domestic products of in districts of Almaty, %

January – 27,5% September – 29,4%

January – 22,7% September – 24,5%

January – 18,9% September – 23,8%

January – 25,6% September – 26,6%

January – 19,1% September – 21,4%

January – 25,3% September – 19,2%

January – 25,4% September – 29,1%

January – 21,2% September – 26,4%

The report was created by VI-ORTIS LLP

THANK YOU FOR ATTENTION!