Adam Smith Conferences

The 5
th
CIS Pharmaceutical Forum

Overview of Ukrainian pharmaceutical market
Gorlova Irina, CEO

February 12, 2014
Ukraine remains the 2
nd
largest market in CIS, shows
positive growth in values and still slow down in units
2
Population,
MM
CTYs MM$ Growth, %$ MM Units Growth, %Units
143 Russia* 25 800 13% 5 501 -0,72%
46 Ukraine 3 730 9% 1 260 -2%
17 Kazakhstan** 1 559 24% 660 2%
30 Uzbekistan 948 8% 603 6%
9 Belarus 933 41% 366 15%
9 Azerbaijan 650 24% 199 3%
4 Georgia 458 33% 103 3%
4 Moldova 234 11% 92 5%
5 Turkmenistan*** 200 8% 90 0%
3 Armenia 163 31% 33 19%
8 Tajikistan 110 8% 56 4%
6 Kyrgyzstan 112 21% 93 2%
283 TOTAL 35 000 9 056
Source: SMD 2012, *DSM 2012, ** Vi Ortis, ***SMD estimation
76%
10%
4%
3%
2%
2%
1%
1%
1% 0%
0%
0%
Market share of CTYs in values (USD)
Russia*
Ukraine
Kazakhstan
Uzbekistan***
Belarus
Azerbaijan
Georgia
Moldova
Turkmenistan**
Armenia
Tajikistan
Kyrgyzstan
64%
13%
7%
6%
3%
2%
1%
1%
1%
0%
1%
1%
Market share of CTYs in units
Russia*
Ukraine
Kazakhstan
Uzbekistan***
Belarus
Azerbaijan
Georgia
Moldova
Turkmenistan**
Armenia
Tajikistan
Kyrgyzstan
FY 2013 results
Per capita spending in values (USD) and units in CIS,
FY2013 results
3

Per capita consumption in units is much higher in countries, where there are prototypes of
reimbursement system and government participate in compensation of treatment for
population (Kazakhstan, Belarus)
180 81 92 32 104 72 95 59 40 54 15 19 123
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$

per capita $ per capita units
Ukrainian pharma market is passing through market
redistribution due to obligatory GMP certification
4
Current Market Trends
Market is driven by out-of-pocket spending

Obligatory GMP certification market has
been cleared from products and
companies, that do not meet the
requirements

Obligatory GMP certification
concentration of sales among leading
companies and products in therapeutical
niches

Growth in segment of food supplements,
switch of products from OTC to FS

Effect of reimbursement pilot project
products against hypertension growth
in cardiology segment

Ukraine: Market Trends in Values (USD)
Source: SMD Retail & Hospital Data; includes all categories
(Rx, OTC, Food Supplements, Patient & Personal Care);
price level pharmacy purchase price for retail, tender price for
hospital data
41%
27%
21%
28%
-9%
7%
12%
16%
9%
-20%
-10%
0%
10%
20%
30%
40%
50%
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
2004Y 2005Y 2006Y 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y
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5
Ukraine being the 2nd biggest market in CIS, remains
mainly out-of-pocket
Source: SMD Retail & Hospital Data; includes only medicines
Retail segment
Market size - 3 bln USD
Growth in values (USD) +9,3%

Hospital Central Budget
Market size - 0,25 bln USD
Growth in values (USD) +12%

Hospital Regional Budget
Market size - 0,28 bln USD
Growth in values (USD) +14%

Individual tender hospital
purchases
Market size - 0,16 bln USD
Growth in values (USD) - 6%
Sources of financing
81%
4%
8%
7%
Retail - Out-of-
pocket
Hospital Individual
tender purchases
Hospital Regional
Budget
Hospital Central
Budget
690 MM USD
Top 20 corporations in retail segment local companies
improved position considerably
6
USD(Rank) USD(Rank) Corporation MM USD USD(%) USD(+-%) Ev Index
Y2012 Y2013 RETAIL SEGMENT 3 034 100,0% 9% 100
1 1 FARMAK 136 4,5% 4% 96
2 2 SANOFI 130 4,3% 7% 98
3 3 NOVARTIS 125 4,1% 15% 106
4 4 MENARINI GROUP 123 4,0% 15% 106
5 5 TAKEDA 108 3,6% 12% 103
6 6 TEVA 101 3,3% 10% 101
8 7 DARNITSA 93 3,1% 19% 109
7 8 SERVIER GROUP 90 3,0% 7% 98
10 9 ARTERIUM 83 2,7% 13% 103
11 10 BAYER HEALTHCARE 82 2,7% 18% 108
9 11 GLAXOSMITHKLINE 82 2,7% 10% 101
12 12 GEDEON RICHTER 73 2,4% 16% 106
13 13 KRKA 67 2,2% 14% 105
14 14 ZDOROVJE GROUP 64 2,1% 12% 102
19 15 KIEV VITAMIN FACTORY 51 1,7% 26% 115
17 16 ACTAVIS 51 1,7% 12% 102
16 17 INTERCHEM UKR 51 1,7% 7% 98
18 18 ABBOTT 50 1,6% 20% 109
20 19 BORSHCHAHIVSKY CHIMPHARM 45 1,5% 16% 106
21 20 STADA 39 1,3% 11% 101
Main trends among corporations in retail segment
Many companies lost position and some of them
almost left the market due to GMP certification
(Genom, Grindex, Belbiopharm, Mili, Apotex);
small Indian, Russian, Pakistan companies left the
market.

Some companies used opportunities and
substitute vacant niches (Kiev Vitamin factory,
Abbott, Bayer Consumer, Novartis Consumer,
Astellas, Kuzum)

Local manufacturers lost sales in antibiotic
segment, ophthalmology and antivirals.

Some foreign lost sales in cough & cold,
especially combined ones, musculoskeletal anti-
inflammatory agents and antibiotics.

7
Corporation SU MS (%) 2012Y 2013Y Grw MS
KRKA 42,8% 43,6%
SANOFI 13,6% 13,0%
ACTAVIS 1,1% 6,3%
KIEV VITAMIN FACTORY 4,9% 4,9%
FARMAK 5,4% 4,7%
ASTRAZENECA 3,7% 4,7%
RANBAXY 3,4% 2,9%
MENARINI GROUP 7,6% 2,8%
KUSUM HEALTHCARE 2,3% 2,7%
PFIZER INCORPORATED 2,1% 2,3%
DR.REDDYS LAB 1,7% 1,7%
POLPHARMA 0,9% 1,7%
GEDEON RICHTER 0,6% 1,4%
SERVIER GROUP 0,3% 0,9%
TEVA 1,2% 0,8%
Example from Statins life
Source: SMD Retail Data;
Small companies left the market. As well non-GMP factors
played role, shortage of stocks, etc.
Market results of a/hypertensive pilot project growth in
SU (Standard units) +34% vs retail market decrease (-0,2%)
7 molecules participate in project since May 2012; + 3 combinations were added since June
2013
In Y2013 state budget allocated 39 MM USD, less than half was used
The highest growth in SU was demonstrated by Lisinopril (+84%), Amlodipin (+64%) Nebivolol
(+65%), Bisosprolol (+47%)
The best results were demonstrated by Teva, KRKA, and local companies Farmak, BHFZ,
KievVitamin factory and Kusum
8
0
50 000 000
100 000 000
150 000 000
200 000 000
250 000 000
2004Y 2005Y 2006Y 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y
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AMLODIPINE AMLODIPINE+LISINOPRIL
BISOPROLOL ENALAPRIL+HYDROCHLOROTHIAZIDE
ENALAPRILI MALEAS LISINOPRIL
LISINOPRIL+HYDROCHLOROTHIAZIDE METOPROLOL
NEBIVOLOL NIFEDIPINE
9
INN MM USD USD(+-%) Units(%) SU(+-%)
7 INNs of project since May 2012 78 23,68% 100,00% 33,86%
AMLODIPINE 14 26,76% 15,45% 64,16%
BISOPROLOL 23 23,38% 19,22% 46,97%
ENALAPRILI MALEAS 13 1,77% 35,09% 14,52%
LISINOPRIL 15 53,00% 16,35% 83,44%
METOPROLOL 3 -1,68% 4,52% 7,94%
NEBIVOLOL 8 44,83% 3,63% 65,05%
NIFEDIPINE 3 3,08% 5,74% -2,13%
Additional 3 INNs, enter project in June 2013 27 14,26% 100,00% 5,97%
AMLODIPINE+LISINOPRIL 7 13,05% 9,18% 10,48%
ENALAPRIL+HYDROCHLOROTHIAZIDE 11 5,88% 62,81% 0,45%
LISINOPRIL+HYDROCHLOROTHIAZIDE 10 25,99% 28,02% 15,64%
Source: SMD Retail Data
Market results of a/hypertensive pilot project growth in
SU (Standard units) +34% vs retail market decrease (-0,2%)
10
The fastest growing ATC3 classes cardiology and
diabetes
Units(Rank) ATC3 Name Units(%) SU(+-%)
Retail Market growth 100,0% -0,2%
6 M01A Anti-rheumatics, non-steroidal 3,5% 6%
14 C09A A inhibitors, plain 1,6% 24%
22 A05B Hepatic protectors, lipotropics 1,1% 9%
26 C07A Beta-blocking agents, plain 1,0% 25%
27 A03A Plain antispasmodics and anticholinergics 0,9% 11%
33 B01C Platelet aggregation inhibitors 0,7% 6%
38 C08A Calcium antagonists, plain 0,6% 28%
65 A10J Biguanide antidiabetics 0,3% 19%
67 A11X Other vitamins 0,3% 6%
72 N05C Tranquillisers 0,3% 5%
73 L03B Interferons 0,3% 17%
80 N07X All other CNS drugs 0,2% 9%
83 S01G Ocular anti-allergics, decongestants, antiseptics 0,2% 11%
91 C10A Cholesterol and triglyceride regulating preparations 0,2% 18%
100 R03X All other anti-asthma and copd products 0,2% 8%
102 C09D Angiotensin-II antagonists, combinations 0,2% 22%
111 C09C Angiotensin-II antagonists, plain 0,1% 16%
Source: SMD Retail Data
11
Top 20 leading products generations change on the
market. Modern and more effective come.
2004Y MM USD
Cost of pack ,
USD

2013Y MM USD
Cost of pack
, USD
ACTOVEGIN 7 11,7

ACTOVEGIN 33 23,0
ESSENTIALE FORTE N 7 6,3

CODTERPIN IC 27 1,9
MILDRONAT 6 4,9

NO SPA 19 2,9
NO SPA 6 2,4

CARDIOMAGNYL 18 3,9
NATRII CHLORIDUM 5 0,4

ESSENTIALE FORTE N 17 9,4
FESTAL 5 2,2

GROPRINOSIN 13 12,5
MEZYM FORTE 4 1,1

SPASMALGON 13 2,3
VIAGRA 4 25,2

NIMESIL 13 10,1
CAPTOPRES DARNITSA 4 0,9

NATRII CHLORIDUM 13 0,6
KETANOV 3 2,7

CITRAMON DARNITSA 13 0,3
LASOLVAN 3 3,7

CERAXON 13 41,4
PHEZAM 3 2,5

PREDUCTAL 13 12,2
PREDUCTAL 3 10,3

LINEX 12 4,8
NAPHTHYZIN 3 0,2

CARSIL 12 5,2
BISEPTOL 3 1,1

CANEPHRON N 12 8,3
GLUCOSE 3 0,5

AUGMENTIN 11 6,9
PROSTAMOL UNO 3 8,4

AMIXIN IC 11 8,4
FLUCONAZOL 3 2,4

HEPTRAL 11 46,0
CORVALOL 3 0,2

DETRALEX 11 18,7
FERVEX 3 2,0

DIABETON 10 7,8
Source: SMD Retail Data
12
1 2 3 4 5 6 7 8 9 10 11 12
OPTIMA BADM ALBA
VENTA FRA M FARMPLANETA
Leading retail wholesalers ongoing concentration
MS Y 2012 MS Y2013
OPTIMA 29% 30%
BADM 26% 29%
ALBA 18% 12%
VENTA 8% 12%
FRA M 5% 4%
FARMPLANETA 4% 2%
Retail sales during Y2013 ongoing concentration Top 6 make 89% of retail sales

Leading wholesalers have different portfolio specialization on foreign vs local products, ATC
groups, etc.
Due to obligatory GMP certification, that took place on the market in Y2013, leading wholesalers
were effected as well. As some products and companies dropped off their portfolio and should
be substituted in short time period

Source: SMD Retail Wholesalers Report
Leading wholesalers in Hospital segment level of
concentration is much less
13
Top 5 companies make 53% of hospital market
From retail wholesalers BaDM and Alba are either
strong as in retail sales
Rank
LEADING WHOLESALERS IN
HOSPITAL MARKET Y2013
USD (%)
HOSPITAL MARKET 100,0%
1 BADM 18,0%
2 ASTA 17,0%
3 ALBA 7,9%
4 MEDFARKOM CENTER 5,4%
5 FRA M 4,9%
6 LUDMILA FARM 4,5%
7 FARMADIS 4,4%
8 LINK MEDICAL 4,1%
9 BIOFARMA 3,5%
10 INDAR 3,1%
11 OPTIMA 2,6%
12 OTHERS (143) 24,5%
18,0%
17,0%
7,9%
5,4%
4,9%
24,5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
OTHERS (143)
OPTIMA
INDAR
BIOFARMA
LINK MEDICAL
FARMADIS
LUDMILA FARM
FRA M
MEDFARKOM
CENTER
ALBA
ASTA
BADM
Source: SMD Hospital Wholesalers Report
Main trend in retail pharmaceutical chains-kiosks left the
market, number of point of sales decreased to level of 2002
Total number of point of sales decrease due to the fact that kiosks were closed
Total number of point of sales according to licenses 20,5 K 15,3K pharmacies and 4,2K
points

14
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TOTAL
PHARMACIES
KIOSKS
POINTS
Dynamic of licensed point of sales in Ukraine YY 2002 - 2013
Source: State Drug Authority
Main trends retail chains ongoing concentration,
nationalization, competition becomes stronger
In (N) number of oblasts, where there are point of sales
15
# REG PHARMA CHAINS POS# MS
1 UKR (26) MED SERVICE 352 2,29%
2 UKR (19) APTEKA ZDOROVJA 115 2,15%
3 UKR (16) BAZHAEMO ZDOROVJA 105 2,09%
4 UKR (7) APTEKA NIZKIH TSIN/BLAGODIYA 162 1,72%
5 UKR (18) FARMASTOR 119 1,63%
6 LUG LUGANSKAYA FARMACIA 452 1,57%
7 UKR (4) UKR PHARM HOLDING 174 1,55%
8 DON ARNIKA 129 1,32%
9 KIEV KIEV FARMACIA 164 1,19%
10 UKR (17) FALBI 188 1,09%
11 POL POLTAVAFARM 225 1,01%
12 DNE APTEKI MED ACADEMII 22 0,82%
13 UKR (8) SALVE 136 0,76%
14 UKR (2) ODESSA FARMACIA/ APT GAEVSKOGO 144 0,74%
15 UKR (2) KONEKS 64 0,68%
16 KIR LIKI KIROVOGRADSCHINI 159 0,68%
17 DON ECOILLICHPRODUCT 51 0,61%
18 DON DONBASS FARMACIA TRAIDING 117 0,59%
19 UKR (8) FAR TOP 94 0,59%
20 UKR (8) TVA GROUP 58 0,58%
Source: SMD Retail Pharmacy Chain report
Background for forecast
Potential constrains

Destabilization of internal political situation, threat of military option to resolve the
conflict
Growth of currency exchange rate and risk of hryvna devaluation
Ongoing economic recession, loss of purchasing power by population

Potential Drivers

The National Bank of Ukraine moved to a flexible exchange rate, according to
recommendations of IMF
International monetary support tranches of the credit from Russia; potential credit
line from IMF
Ongoing reimbursement in form of co-payment within pilot projects (hypertension,
oral anti-diabetic products)
16
Current economic and political situation in the country gives no hope for a speedy recovery in the
current year.
Given the high level of inertia in demand for medicines, we expect a positive rate in pharmaceutical
market dynamic in 2014 at the level of 6 - 8% in values (USD).
18
Dynamic of market in values (USD) will slow down in the
short term prospective and will come back to higher growth
with implementation of reimbursement
23,1%
22,5%
24,9%
-6,7%
6,4%
13,2%
12,4%
9,3%
7,3%
9,6%
12,0%
-10,0%
0,0%
10,0%
20,0%
30,0%
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
2006Y 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y
Growth rate
Values (thnds
USD)
Retail market (thnds USD) Growth rate

Thank you!
Ukraine, 03680
Bojenko str., 86i, Kiev
Tel/Fax: +38 044 206 17 17/18
e-mail: office@smd.net.ua
http://www.smd.net.ua