Belarus Pharmaceuticals and Healthcare Industry Update Quarter 2 2012

  • March 2014
  • -
  • Business Monitor International
  • -
  • 84 pages

Includes 3 FREE quarterly updates

BMI View: We continue to believe the Belarusian pharmaceutical industry has long-term potential due to the country’s favourable geographic position, demographic profile and low per capita spending. Nonetheless, BMI foresees continued deterioration in the country’s macroeconomic environment as the once carefully managed economy continues to implode. Currency weakness and an inevitable contraction in the state’s funding of a largely unreformed healthcare system will see the US dollar value of the pharmaceutical industry hit badly and many imported medicines will be priced out of the industry . We are sceptical of government announcements about new production projects given the political and economic instability, though for a player willing to shoulder major risks there is considerable long-term potential. In the meantime, the industry faces its biggest crisis in nearly two decades. .
Headline Expenditure Projections
.. Pharmaceuticals: BRB3,598bn in 2011 (US Dollar 692mn) to BRB4,877bn (US Dollar 610mn) in 2012; +35.5% in local currency terms and -11.9% in US dollar terms. US dollar projection downgraded due to macroeconomic developments.
.. Healthcare: BRB12,018bn (US Dollar 2.31bn) in 2011 to BRB15,230bn (US Dollar 1.90bn) in 2012; +26.7% in local currency terms and -17.7% in US dollar terms. US dollar projection downgraded due to macroeconomic developments.
.. Medical devices: BRB1,429bn (US Dollar 275mn) in 2011 to BRB1,828 (US Dollar 229mn); +27.9% in local currency terms and -16.9% in US dollar terms. US dollar projection downgraded due to macroeconomic developments.
Risk/Reward Rating:
Belarus is 18th out 20 Central and Eastern European (CEE) industry s again this quarter, a reflection of its poor and deteriorating economic and political situation. We believe the country’s way out of its current crisis will be some form of closer integration, rather than the largely symbolic union currently, with Russia. However, we believe instability will prevail for the time being.

Key Trends And Developments
.. In January 2012, the government announced plans to create a pharmaceutical cluster in the country aimed, partly, to attract contract production of innovative pharmaceuticals for foreign industry players without an existing production presence in the Commonwealth of Independent States (CIS). This is something of a new approach for the authorities, which have previously emphasised import substitution production of primarily generic medicines and vaccines, as well as unrealistic plans, in our view, for innovative drug development in the country. The project envisages guaranteed government purchases of medicines produced in the country. In BMI’s view, it reflects a more realistic approach to stimulating domestic production but has emerged too late into the economic crisis to be attractive to all but the most risk-taking foreign companies .
.. In February, Minister of Health Vasily Zharko told local media the country was in talks with industry players in India, Iran and Russia to develop pharmaceutical facilities in Belarus. The list of countries is telling, reflecting Belarus’ inability, in contrast to Russia, to attract multinationals based in the EU or North America. BMI believes the increasing power of Russia in the Belarusian economy will strongly favour Russian producers.
.. In March, President Alexander Lukashenko said children under three will receive free medications from the state’s 400-strong list of ‘major medicines’. He also said people with a certain severe disabilities should receive a 50% discount on medicines for their conditions. Lukashenko reiterated his vision that domestic medicines should account for 50% of the industry by 2015. BMI sees the expansion of coverage as good news but we continue to believe the government’s vision for coverage and industrial development is at odds with economic reality and unsustainable.
BMI Economic View:
In light of financial support from Russia and signs of stabilisation in inflation and the rouble, we have revised up our 2012 growth projection to 3.6% from 2.9%. However, risks to Belarus’ longer-term economic trajectory remain firmly to the downside, namely the potential knock-on inflationary effects of a too rapid a return to expansionary policy, as well as the need for structural reforms and economic rebalancing to help stimulate foreign investment flows.
BMI Political View:
While Belarus’ short-term political profile has improved slightly in light of nascent signs of economic stabilisation, Lukashenko nonetheless faces a difficult policy environment over the medium term. On the domestic front, opinion polls suggest very low support for the government and the president, and there is a risk the administration will resort to overly expansive policies to alleviate public discontent, which would sacrifice economic stability further down the line. Externally, Belarus’ increasing isolation from the EU is likely to lead to increasing economic and financial dependence on Russia.

Table Of Contents

Executive Summary .. 5
Industry SWOT Analysis . 7
Belarus Pharmaceuticals And Healthcare Industry Environment and Risk Analysis ...... 7
Belarus Political Environment and Risk Analysis ..... 8
Belarus Economic Environment and Risk Analysis ... 8
Belarus Business Environment SWOT . 9
Pharmaceutical Risk/Reward Ratings ....... 10
Data : CEE Pharmaceutical Risk/Reward Ratings, Q112 ..... 10
Rewards 11
Risks ..... 12
Market Summary ..... 13
Regulatory Regime .. 15
Counterfeit Drugs ... 16
Intellectual Property Rights ...... 17
Pricing And Reimbursement ..... 17

Industry Developments .... 20
Epidemiology . 20
Data : Disease Burden In CEE (DALYs Lost Per 100,000 Population) ... 21
Healthcare Segment ... 22

Market Projection Scenario ...... 24
Overall Industry Projection .. 24
Data : Pharmaceutical Sales, from 2008 to 2016 ... 25
Key Growth Factors - Market . 26
Data : Overall Healthcare Expenditure, from 2008 to 2016 ..... 27
Data : Government Healthcare Expenditure, from 2008 to 2016 ...... 28
Data : Private Healthcare Expenditure, from 2008 to 2016 ..... 29
Key Growth Factors - Macroeconomic ...... 30
Data : Belarus Economic Activity, from 2011 to 2016 ..... 32
Prescription Drug Industry Projection ... 33
Data : Prescription Drug Sales, from 2008 to 2016 ........ 34
Patented Drug Industry Projection ........ 35
Data : Patented Drug Sales, from 2008 to 2016 ..... 36
Generic Drug Industry Projection . 37
Data : Generic Drug Sales, from 2008 to 2016 ...... 38
OTC Medicine Industry Projection ........ 39
Data : OTC Medicine Sales, from 2008 to 2016 ..... 40
Pharmaceutical Trade Projection ........ 41
Data : Pharmaceutical Trade, from 2008 to 2016 .. 43
Key Risks To BMI’s Projections .. 44

Competition Overview ... 45
Domestic Drugmakers ..... 45
Foreign Drugmakers........ 47
Pharmaceutical Wholesale And Retail ........ 48
Research And Development ...... 49
Company Profiles .... 50
Belbiopharm .. 50
Lekpharm ....... 54
Country Snapshot: Belarus Demographic Data 55

Section I : Population ....... 55
Data : Demographic Indicators, 2005-2030 ........ 55
Data : Rural/Urban Breakdown, 2005-2030 ....... 56

Section II : Education And Healthcare 56
Data : Education, from 2000 to 2005 ... 56
Data : Vital Statistics, 2005-2030 ...... 56

Section III : Labour Industry And Spending Power .. 57
Data : Employment Indicators, from 2001 to 2006 . 57
Data : Consumer Expenditure, from 2000 to 2012 (US$) 57
Data : Average Annual Wages, from 2005 to 2009 . 58
Glossary . 59
BMI Methodology .... 61
How We Generate Our Pharmaceutical Market Projections .. 61
Pharmaceuticals Risk/Reward Ratings Methodology.... 62
Ratings Overview .... 62
Data : Pharmaceutical Business Environment Indicators ..... 63
Weighting ....... 64
Data : Weighting Of Components ...... 64
Sources . 64

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