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PHARMACEUTICAL MARKET OF THE REPUBLIC OF
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It should be noted that the pharmaceutical market of Kazakhstan is very dependent on imports, so in 2021 the share of foreign medicines in the market was 85.2%.
Produced Kazakh medicines are also made mainly from imported raw materials. Given these circumstances, government management during the pandemic was aimed at providing the population with basic inexpensive anti-covid medicines. The conflict between Russia and Ukraine also affects the shortage and cost of medicines, so in 2021 Kazakhstan imported 7.5 thousand tons of medicines from Russia, 879 tons from Ukraine and 863.8 tons of medicines from Belarus. Given that a total of 21.7 thousand tons of medicines were imported to Kazakhstan in 2021, the impact of the conflict on Kazakhstan is significant [5].
During the pandemic, in Kazakhstan, as in many other countries, the logistics routes for the supply of medicines were disrupted. The military conflict between Ukraine and Russia has further complicated the supply chains of medicines to Kazakhstan. The remoteness of Kazakhstan from sea transport routes and its relative geographical isolation makes Kazakhstan dependent on the supply of medicines through the territory of Russia, which ultimately leads to a rise in the cost of logistics.
The main countries exporting medicines to Kazakhstan are Germany, Italy, India, France, Spain, Poland, Switzerland, the USA and Turkey. According to WHO recommendations, in order to ensure national medicine safety, each country should produce 30% of the medicines consumed in monetary terms. In 1997, Kazakhstan launched a program for the development of the pharmaceutical and medical industries.
Since 1997, the share of Kazakh medicines in the pharmaceutical market in monetary terms has increased from 3% to 10% in 2009. With the help of the program for the development of the pharmaceutical industry for 2010-2014 and the comprehensive plan for the development of the pharmaceutical and medical industry for 2015-2019, Kazakhstani manufacturers managed to increase their share in the pharmaceutical market to 17% in monetary terms and up to 39% in physical terms. In 2020, the implementation of a comprehensive plan for the development of the pharmaceutical and medical industry for 2020-2025 began, according to this plan, Kazakhstani manufacturers should increase their market share to 30% in monetary terms and up to 50% in physical terms. The implementation of these goals will allow Kazakhstan to reduce import dependence in the field of medicines, as well as have a positive impact on the pricing of pharmaceutical products.
Developing the pharmaceutical market, the state should not forget about fair competition among market participants. The global COVID-19 pandemic has shown the presence in the Kazakh pharmaceutical market among the participants of cartel agreements and monopolies. In 2020, 33 medicine manufacturers were registered in the country, 17 manufacturers produced medicines according to GMP (good manufacturing practice) standards. Figure 1 shows the number of medicine manufacturers by years. As can be seen from the figure, since 2010 the number of manufacturers has been decreasing, this is largely due to the strict requirements of the state to comply with the standards for the production of medicines. So the number of medicine manufacturers decreased from 2010 to 2022 from 88 manufacturers to 32 manufacturers, respectively [5].
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Figure 1. Number of medicine manufacturers in Kazakhstan by years.
Of all Kazakhstani medicine manufacturers, only Chimpharm JSC and Nobel Almaty Pharmaceutical Factory are represented in the TOP-15 leading pharmaceutical corporations in Kazakhstan, the rest of the companies are foreign manufacturers.
Chimpharm JSC holds 6.4% of the market share, Nobel Almaty Pharmaceutical Factory holds 4.5% of the market share. Only 6 out of 33 manufacturers together produce 77% of all medicines in Kazakhstan. The leading Kazakhstani manufacturers also include: Karaganda Pharmaceutical Complex LLP, Abdi Ibrahim LLP, Kelun-Kazpharm LLP, DOSFARM LLP. During the pandemic, Kazakh companies produced medicines worth 138.3 billion tenge, the real growth in medicines production was 47%.
At the same time, the share of imports increased, if in January 2020 Kazakhstan imported medicines in the amount of 72.1 million USD, then in January 2021 this figure increased to 423 million USD. In 2019, the volume of imports amounted to 1.146 billion USD, during the pandemic, imports increased to 1.229 billion USD. In many ways, dependence on imports contributes to medicine shortages and price exposure.
In 2020, more than 8,000 pharmacies operated in Kazakhstan, including both single pharmacies and large pharmacy chains. Among the major pharmacy chains are:
EuroPharma, Biosfera, Tsvetnaya, Amanat, Pharmacom.Among more than 2 thousand companies involved in the distribution of medicines, 6 large companies can be distinguished. These companies occupy the following shares in the retail market:
INKAR LLP 21.5%; Amanat LLP 20.9%; LLP "Medservice plus" 17.1%; Amity International LLP 9%; Stopfarm LLP 8.7%; Ak Niet LLP 7.6% [6].
Thus, in Kazakhstan over the years of independence, the main participants in the pharmaceutical market have been formed. With a large number of participants, in each market segment there are 5-6 companies that occupy a leading position and determine the development of the market. Over the years, leading companies such as Stofarm, Medservice Plus, KazBelMedPharm have been recognized as participants in unfair competition. In 2017, SK-Pharmacy was fined 1.3 billion tenge for creating monopoly conditions for Stopharm in 2010-2015. Therefore, state and quasi-state bodies should prevent unfair competition and create equal conditions for all participants in the pharmaceutical market. By developing fair competition and developing transparent
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33 32
0 20 40 60 80 100
2010 2015 2020 2022
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rules, the state will help reduce the shortage of medicines, as well as fair prices for pharmaceutical products.
The consequences of the global COVID-19 pandemic and inflation have had a painful impact on the spending of Kazakhstanis. During the pandemic, the expenses of Kazakhstanis for medicines, medical devices and equipment increased by 63%. In 2020, on average, each household spent 47.1 thousand tenge on medicines, medical products and equipment. They spent the most in the city of Almaty (71.7 thousand tenge), the least in the Kyzylorda region (29.8 thousand tenge). Large expenditures of the population have been a typical problem for Kazakhstan for many years [5].
Thus, Kazakhstan needs to reduce import dependence on foreign medicines.
During the COVID-19 pandemic, Kazakhstan failed to ensure medicine safety, producing only 17% of medicines (in monetary terms). During this period, more than 20 countries and a number of international organizations sent humanitarian aid in the form of medicines to Kazakhstan. Therefore, the state needs to create favorable conditions for both Kazakhstani and foreign medicine manufacturers. It is also necessary to attract companies from Big Pharma to localize production in Kazakhstan.
It is worth considering the option of providing Kazakh companies with tax holidays and preferential loans. It is necessary to encourage Kazakh companies using "contract manufacturing" and to simplify unnecessary bureaucratic procedures.The state needs to create equal conditions for all participants in the pharmaceutical market. Lobbying the interests of any companies should be unacceptable. Fair competition forces pharmaceutical companies to improve the quality of work and reduce prices for their services and products.
References:
1. Zhalmagambetov B., Madikenova M., Paizullayeva S., Abbay A., & Gaipov A.
(2020). COVID-19 Outbreak in Kazakhstan: Current Status and Challenges. Journal of Clinical Medicine of Kazakhstan, 1(55), 6-8. https://doi.org/10.23950/1812-2892-jcmk-00763
2. Konstantinov V., Berdenova S., Satkangulova G. et al. COVID-19 Impact on Kazakhstan University Student Fear, Mental Health, and Substance Use. Int J Ment Health Addiction 20, 888–894 (2022). https://doi.org/10.1007/s11469-020-00412-y
3. Kitamura N., Abbas K. & Nathwani D. Public health and social measures to mitigate the health and economic impact of the COVID-19 pandemic in Turkey, Egypt, Ukraine, Kazakhstan, and Poland during 2020–2021: situational analysis. BMC Public Health 22, 991 (2022). https://doi.org/10.1186/s12889-022-13411-6
4. Tulegenova AM, Dauletova G, Nakipov Z, Sarsenbayeva G, Dossybayeva G, Sadibekova Z, Raissova K, Turgambayeva A. Assessment of the Quality of Life and Living Conditions of the Rural Population of the Kazakhstan during the COVID-19 Pandemic. Open Access Maced J Med Sci [Internet]. 2022 Jan. 3 [cited 2022 Jul. 22];
10(E):498-505. Available from: https://oamjms.eu/index.php/mjms/article/view/7879 5. Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan. Access point: https://stat.gov.kz/
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6. Aliyeva N. A. Kazakhstan’s pharmaceutical market in the context of global trends / N. A. Aliyeva, A. S. Manap, M. M. Issabayev // Economic series of the Bulletin of ENU. L.N. Gumilyov. – 2020. – № 4. – P. 21-35. – https://doi.org/10.32523/2079-620X-2020-4-21-35. – EDN GGUQYX.
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