Pharmaceutical market of Ukraine:

overview, legal and regulatory aspects

as of 01.09.2010

Kyiv 2010

I. Pharmaceutical market of Ukraine. Current

situation, trends and perspectives

Pharmaceutical market of Ukraine 1

Main parameters of the pharmaceutical market of Ukraine in 2009:
general volume of drug store sales UAH 20.3 bln (appr. EUR 2 bln.) for 1.8 bln packages;
volume of retail pharmaceutical market in dollar equivalent has decreased for 15.7%;
growth of internal pharmaceutical market volume compared to previous year: 26.18% in money
terms and 9.2 % in kind;
growth of drug store sales of domestic medications - 38.8%;
growth of drug store sales of imported medications - 24.1%;
index of consumer prices for pharmaceutical products, medical products and equipment 136.3%;
Sale extra charge for medications amounts in average to 28.7% on manufacturers price.

Pharmaceutical market of Ukraine 2

Peculiarities
large number of local producers of generic preparations;
large number of imported medications and raw materials;
resistance against crisis events;
stable yearly market growth;
educated and qualified personnel;
fragmented market (large number of drug store networks and distributors and no big
players);
no international relations;
no active M&A processes;
large number of representative offices but daughter enterprises of foreign pharmaceutical
manufacturers.
Weaknesses
no R&D centers in Ukraine;
complicated system for import of standard mixtures and chemical substances;
high prices for reagents;
lack of qualified personnel for production;
strict currency regulation;
conservative approach of specialists as to new technologies.
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Pharmaceutical market of Ukraine 3

Investment prospects of the Ukrainian pharmaceutical market

big population (46.000.000);

big market volume;
strategically advantageous geographical location;
relatively low competition;
considerable potential for market growth;
low but steady increasing expenses for medications per capita.

Threats

constant change of legislative basis;

state regulation of price policy;
uncertain economic forecast for countrys development;
perspective substantial legislative restrictions of promotion activities;
lack of reimbursement.

Pharmaceutical market of Ukraine 4

Possibilities

replace of import;
low number of enterprises with GMP certification;
few preparations, combinations and forms of medication presentations on the market;
perspective of insurance system implementation;
export of products to CIS and EU countries;
easy entry to medication distribution market;
placement of generic business;
allocation of pharmaceutical manufacturing on the territory of Ukraine.

LLC vs. RepOffice: pros and cons

LLC

RepOffice

Legal entity status;

License for wholesale, retail sales
including
- medications, medical products;
- free samples;
Import of medications, medical products:
custom clearance, storage and
transportation;
Clinical trials;
Settlements in national currency;
General taxation basis;
Work permit for foreign employees;

No legal entity status;

Licensing impossibility;
No customs operations;
Clinical trials profit-making activity (?);
Strict currency regulation;
0% tax rate;
No work permit for foreign employees;

International integration and adjustment of legislation

Approved:
Good Manufacturing Practice (GMP) (GMP requirements implemented to license conditions)
Good Clinical Practice (GCP)
Good Laboratory Practice (GLP)
Good Distribution Practice (GDP)
Draft laws:
Draft law of Ukraine On medications;
Draft law of Ukraine On medical products;
Draft law of Ukraine On obligatory state social medical insurance.

Joining of the State drug quality control inspection to the Pharmaceutical Inspection
Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S):
The final stage for joining of the State drug quality control inspection audit of the regulatory
authority on site in March 2010 has been passed successfully.

II. State regulatory policy as to the pharmaceutical

market

Existence cycle of a medicinal product

Idea, research

Development of a
medicinal product

Clinical trials

Manufacturing

Wholesale

Pre-clinical trials

Registration

Promotion

Utilization
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Registration of IP rights

Import

Retail

Pre-clinical trials

Peculiarities of pre-clinical trials of medications in Ukraine:

goal to determine specific activity and safety of medicinal products;
includes determination of pharmacological efficiency of medicinal products, study of
pharmacokinetics, toxicological study;
large number of institutions able to conduct pre-clinical trials;
adherence to GLP requirements;
contractual basis for conduction of trials;
terms for conduction: short-term 2-4 weeks, long-term 3-6 weeks;
storage of trial materials not less than 5 years (previously 15);
preliminary evaluation of ethical, moral and legal aspects of the trial;
main documents clinical trial protocol + report;
Types: study of the test-samples toxicity, reproductive toxicity, embryo-toxicity and
teratogenicity, mutagenicity and cancerogenic potential, pharmacodynamics, pharmacokinetics,
local effect of the test-sample;

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Clinical trials
Peculiarities of clinical trials in Ukraine
goal to determine the efficacy and safety of a medicinal product;
specialized prevention and treatment facilities having a license and accreditation certificate;
contractual basis;
Manufacturer and Client under clinical trial agreement may not be the same;
patients consent;
elaboration of liability insurance agreements;
adherence to international ethical principles;
adherence to GCP requirements;
conclusion of the State Pharmaceutical Centre of the Ministry of Health of Ukraine (not more
than 60 days, longer for gene therapy);
approval of the Central Ethics Commission;
tax aspects;
peculiarities of personal data usage in the light of the Law of Ukraine On Personal Data
Protection .
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State registration of medicinal products (authorization)

main condition for usage in Ukraine;
all medicinal products are subject to registration, except such made in pharmacies on
prescription and on request of medical institutions;
registration body the Ministry of Healthcare of Ukraine;
expert examination of a medicinal product not more than 210 calendar days;
payment for registration consists of fee for expert works + registration fee;
fee for registration of a medicinal product is set in EUR (min. 25 );
obligatory obtaining of conclusions of the State Pharmacological Centre of the Ministry of
Healthcare of Ukraine upon expert examination results;
term for decision making on state registration of medication 1month;
registration through issuance of a Decree by the Ministry of Healthcare of Ukraine, approval
of a pharmacopoeia item, assignment of a registration number, registration of a medicinal product
with the interagency data base, issuance of a registration certificate;
term of medicinal products registration in Ukraine 5 years;
re-registration is possible;
control over quality of a medicinal product; supervision over its turnover after registration
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Manufacturing of medicinal products - 1

Preconditions
1. Licensing
authority the State Inspection of Drug Quality Control of the Ministry of Healthcare of
Ukraine;
adherence to Licensing conditions (as to manufacturing, purchase, storage, transportation,
utilization, disposal of medicinal products);
decision making within 10 days after application receipt;
license is issued for an indefinite term (licenses issues before coming into force of the
Licensing conditions as of 03.03.2009 are valid till the end of their validity term), a new
Licensing conditions draft is in the stage of public discussion;
2. Certification
adherence to GMP requirements;
authority the State Inspection of Drug Quality Control of the Ministry of Healthcare of
Ukraine;
production facility inspection;
GMP certificate issuance;
validity term not more than 2 years .
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Manufacturing of medicinal products - 2

Peculiarities of marking and packing:
Requirements to the package and sticker: medicinal products name, name and address of the
manufacturer, registration number, series number, dosage, active substance dosage in each
unit and their quantity in package, shelf life, storage conditions, precautions;
Obligatory marking with Braille letters as of 01.01.2010
(list of medications not subject to marking with Braille letters is determined by the
Ministry of Healthcare of Ukraine);
content of the package insert: medicinal products name, general characteristics, information
on pharmacological properties, indications, interaction with other medicinal products, mode
of administration and dosage, side effects, precautions, presentation, sale conditions.

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Import of medicinal products to Ukraine - 1

Preconditions
1.Licensing
wholesale;
authority the State Inspection of Drug Quality Control of the Ministry of Healthcare of
Ukraine;
adherence to Licensing conditions;
decision making within 10 days after application receipt;
license is issued for an indefinite term (licenses issues before coming into force of the
Licensing conditions as of 03.03.2009 are valid till the end of their validity term);
2. Certification
adherence to GMP requirements;
authority the State Inspection of Drug Quality Control of the Ministry of Healthcare of
Ukraine;
report on quality of medicinal products is made once for the whole batch;
decision on acceptance of the conformity certificate - CANCELLED
State registration
registration regime for medicinal products manufactured in Ukraine;
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Import of medicinal products to Ukraine - 2

Import of medicinal products without state registration:

Pre-clinical study and clinical trials;

Quality certificate for a medicinal product;
Letter of the State Pharmacological Centre;
Registration of a medicinal product (samples of medicinal products in dosage form);
Presentation on exhibitions, fairs, conferences etc. without right to sell;
Permit of the Ministry of Healthcare of Ukraine;
Individual use by persons;
Permit of the Ministry of Healthcare of Ukraine;

Import of narcotics and psychotropic substances, precursors:

special permit - certificate of the Narcotics Control Committee of Ukraine;
prohibition of import for individual use.

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Import of medicinal products to Ukraine - 3

Peculiarities of customs procedure:
interagency data base of medicinal products registered in Ukraine;
manufacturer quality certificate;
preferential tax regime;
ecological, radiological, sanitary, phytosanitary, veterinarian control for ozone destroying
substances;
storage of medicinal product freight in special premises;
obtaining of a report on quality of imported medicinal products based on importers
application;

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Pricing
Resolution of the Cabinet of Ministers of Ukraine N 955 dd. October 17, 2008
Subject to state control are mark ups for medicinal products and medical devices:

Medicinal products and medical devices

Supply and sale

mark ups

Limited sale
(retail) mark ups

Medicinal products and medical devices

included into the National list of essential
medicinal products and medical devices, has
215 INN (approved by the Resolution of the
Cabinet of Ministers of Ukraine
Nu. 333 dd. 25.03.2009)

12% wholesale
price

25 purchase
price

Medicinal products and medical devices

purchased entirely or partially for budget funds
(list determined by the Resolution of the
Cabinet of Ministers of Ukraine N 1071 dd.
05.09.1996, has 784 INN)

10% wholesale
price

10% purchase
price

Medicinal products of domestic manufacturing, wholesale price of which is less than 12 UAH for
package are no subject to state regulations, except those purchased for budget funds.
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Sale of medicinal products - 1

Peculiarities of medicinal products wholesale:
license (unlimited);
accreditation of pharmacy (once in three years), category assignment;
trade patent (validity term 12 months);
pharmacy passport;
pharmacy warehouse (storehouse);
incoming control over medicinal products by an authorized person;
special requirements as to purchase, storage, trade, transportation, utilization and disposal of
medicinal products (licensing requirements);
exhaustive list of products (except medicinal products) to be sold and purchased in
pharmacies and their structural subdivisions;

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Sale of medicinal products - 2

Peculiarities of medicinal products retail:
license (unlimited);
simplified system for license obtaining (copy of a pharmacy passport) complication of the
licensing procedure is currently discussed;
accreditation of pharmacy (once in three years), category assignment;
trade patent (validity term 12 months);
pharmacy passport;
drug store facilities drug stores, pharmacies, branch pharmacies;
incoming control over medicinal products by an authorized person;
special requirements as to purchase, storage, trade, transportation, utilization and disposal of
medicinal products (licensing requirements);
special trade regime for medicinal products prepared in pharmacies;
exhaustive list of products (except medicinal products) to be sold and purchased in
pharmacies and their structural subdivisions;
minimal variety of medicinal products.
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Advertisement of medicinal products

specific advertisement object medicinal products, medical devices, prevention methods,

diagnostics, treatment and rehabilitation;
authorized medicinal products;
only OTC medicinal products;
determined information objective information, requirement as to necessity of doctor's
consultation, recommendation as to obligatory study of the package insert, no reference to
therapeutic effect as to illnesses which are not or hardly treatable, no participation of doctors or
other medical workers, famous people, respected organizations etc;
no advertisement of Rx medicinal products (exception: advertisement placed in specialized
editions designated for medical institutions and doctors as well as information distributed during
workshops, conferences, symposia on medical subject).

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Medical equipment and medical devices ()

Medical equipment and medical devices - devices, complexes, sets, instruments, accessories
materials or other products, which are used for:

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prophylaxis, diagnostics, treatment, control, patient relief in case of disease, trauma,

injury;

research, substitution or modification of structure (anatomy) of organs, tissues,

physiological processes;

control of the impregnation process.

Medical equipment and medical devices (I)

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registration: submitting of application + document package for registration with the State
Inspection of Drug Quality Control of the Ministry of Healthcare of Ukraine
term for examination of documents > 90 days;
conducting of expertise and trials by expert institutions, elaboration of a conclusion;
expertises volume depends on the level of potential risk from usage of a medical device in
medical practice;
safety class of medical devices is declared by an applicant and shall be confirmed by results
of technical expertise;
making the decision by the State Inspection of Drug Quality Control of the Ministry of
Healthcare of Ukraine on registration or refusal in registration based on results of expert
examination;
inclusion to the State Register of Medical Equipment and Medical Devices
registration validity term 5 years;
application for re-registration 120 calendar days and 90 calendar days till expiration of
registration validity term;
re-registration in accordance with procedure stipulated for registration.

Special dietary products

Foodstuff: dietary, health-improving, preventive products, baby food, athlete products, dietary
supplements etc. are NOT MEDICINAL PRODUCTS!

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recognition of food products as special dietary products by means of an expert examination;

submitting application + document package to the Ministry of Healthcare of Ukraine by a
manufacturer or a supplier;
expert examination by institutions of the Sanitary and Epidemiological Authority;
expert examination on contractual basis between an applicant and an institution;
terms for conduction not > 30 days after receipt of documents;
report on results of expert examination, approval by the Chief Sanitary Officer of Ukraine;
approval through report of the marking text;
registration and inclusion of the food products to the State Register of Special Dietary
Products, Functional Food Products and Dietary Supplements
registration validity term 5 years.

Curative cosmetics
Curative cosmetics in form of: cream, milk, oil, mask, gel, emulsion, powder, jelly, balm, lotion,
shampoo, lipstick, pen, salt, bath extract, antiperspirant, depilatory, tooth paste, elixir, sun
bock, insect repellent, soap etc.

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regarded as medicinal products;

subject to sale only in pharmacies (except for shampoos, tooth pastes, antiperspirants);
submitting of application + document package for registration with State Pharmacological
Centre of the Ministry of Healthcare of Ukraine;
expert examination of cosmetics at the State Pharmacological Centre of the Ministry of
Healthcare of Ukraine;
clinical trials of cosmetics (if necessary, upon decision of the State Pharmacological Centre of
the Ministry of Healthcare of Ukraine);
registration of cosmetics by the State Pharmacological Centre of the Ministry of Health of
Ukraine, issuance of registration certificate;
certificate validity term 5 years;

Unfair competition - 1
Antitrust regulation field
coordinated action;
monopoly abuse;
anticompetitive actions of state and local self-government authorities, administrative and
control bodies;
limiting and discriminating activity;
merger control.
Liability:
penalties/confiscation of income (proceeds);
indemnification;
forced demerger.

Important! Decisions of the Antimonopoly Committee of Ukraine can be contested in judicial or

administrative proceedings.

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Unfair competition - 2
Mechanisms of unfair competition:
use of a medicinal products name of another manufacturer;
use of a medicinal product of another manufacturer;
copying of appearance of products of another manufacturer of medicinal products;
comparative advertisement;
discrediting of a business entity;
forcing to boycott a business entity;
forcing suppliers to discredit buyers;
bribing of employees, officers of supplier;
collection, disclosure or forcing to disclosure, illegal use of commercial secrets;
distribution of misleading information.
Protection:
- penalty;
- product recall;
- indemnification;
- official contradiction of information.

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Intellectual property rights

Intellectual property objects in pharmaceutical sphere

Invention, useful model

Trade mark
Industrial sample
Commercial secret
Trade name

Protection of information on medicinal products (data exclusivity)

during pre-clinical and clinical trials;
5 years after registration of a medicinal product.

Legal mechanisms for protection of intellectual property rights

Administrative legal protection (Antimonopoly Committee of Ukraine, authorities of the
Ministry of Internal Affairs, Public Prosecution, State Customs, other state authorities);
Judicial protection.

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State procurement
Law of Ukraine On State Purchases dated 01.06.2010 No. 2289
- possibility of participation in state procurements procedure on parity basis for domestic and
foreign participants;
- in case of urgent necessity possibility to purchase medicinal products under shortened
procedure (term of such applications for competitive procurement can be reduced up to 15 days);
- appeal authority Antimonopoly Committee of Ukraine

Manufacturer-nonresident

Ministry of
Health

Representatives,
dealers, distributors
of the manufacturer

Medical
institutions
Manufacturers
residents
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III. Arzinger services in pharmaceutical sector

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Arzinger services

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Consulting as to business structuring;

Legal support by portfolio acquisition;
Investment structuring;
Consulting as to &A mechanisms;
Cooperation with regulatory authorities;

Support of M&A deeds

Support by strategy development;
Contact with M&A objects
representatives;
Consulting as to proposal formation;
Consulting as to LOI elaboration;
Legal DD;
Negotiations, agreement conclusion;
Concentration control;
Employment, tax and legal issues
Takeover protection;
Cooperation with regulatory authorities

Arzinger services
Antimonopoly regulation
Protection against coordinated actions;
Protection against monopoly abuse;
Protection against limiting and
discriminating actions of competitors and
other business entities;
Concentration or coordinated actions
permits;
Appeal against decisions of authorities in
judicial and administrative proceedings;
Legal support by initiation of proceedings
on violation of legislation on protection of
competition;
Cooperation with regulatory authorities

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Intellectual property rights

Registration and protection of rights to

trade marks, inventions, useful models,
copyright protection;
Elaboration of license and copyright
agreements; agreements on transfer of
intellectual property rights; R & D
agreements;
Legal consulting as to exclusivity of
registration data on medications;
Protection against unfair competition
Cooperation with regulatory authorities

Arzinger services
Preclinical and clinical trials
Elaboration of agreements between Client
and Contractor on medication preclinical
study;
Elaboration of agreements on medication
clinical trials;
Legal consulting as to researcher or
sponsor liability, elaboration of third party
liability agreements;
Legal consulting as to patients consent;
Consulting on taxation of clinical trials;
Cooperation with regulatory authorities.

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Registration (re-registration) of medicinal

products, medical devices, dietary
supplements, functional food and food
products for special dietary consumption
Support of expert examination of
registration materials/introduction of
amendments to registration materials;
Support by conduction of initial,
preliminary expert examination,
specialized, additional expert examination;
Elaboration/review of expert examination
agreements with the State
Pharmacological Centre;
Legal support as to approval of normative
and technical documentation on
manufacturing;
Support as to preparation of registration
files;
Cooperation with regulatory authorities.

Arzinger services
Import of medicinal products

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License obtaining;
Support by customs clearance, obtaining
of a permit for single-case import of
unregistered medicinal products by the
Ministry of Healthcare of Ukraine,
obtaining of a letter for import of
unregistered medicinal products for
preclinical study, clinical trial and state
registration purposes in the State
Pharmacological Centre;
Support by obtaining of certificates for
import into and export from Ukraine of
narcotics, psychotropic substances and
precursors in the Narcotics control
Committee of the Ministry of Health;

Support by obtaining of a report on quality

of registered imported medicinal products
in the State Inspection of Drug Quality
Control, including:
Consulting as to tax exemption;
Appeal against results of the state control
in administrative and/or judicial
proceedings;
Elaboration of foreign economic
agreements;
Cooperation with regulatory authorities.

Arzinger services
Manufacturing of medicinal products

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License obtaining;
Consulting as to manufacturing
(production) of medicinal products in
pharmacies;
Support by obtaining and recognition of
GMP certificate;
Consulting as to norms and requirements
of the State Pharmacopeia of Ukraine;
Control over legality of scheduled and
unscheduled inspections regarding
adherence to GMP requirements by the
State Inspection of Drug Quality Control
of the Ministry of Healthcare in Ukraine;

Appeal against inspection results of the

Drug Quality Control of the Ministry of
Healthcare in Ukraine in administrative
and judicial proceedings;
Legal consulting as to marking and
packing of medicinal products;
Cooperation with regulatory authorities.

Arzinger services
Sale of medicinal products

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Tenders/state procurement;
Legal consulting as to marketing activity
in the pharmaceutical sector;
Legal consulting as to advertisement in the
pharmaceutical sphere;
Consulting on employment issues,
delivery contracts, court representation,
tax issues;
Legal consulting as to liability distribution
for low quality medicinal products
between a manufacturer, an importer and a
seller;
Examination of eligibility of state control
over wholesale and retail;

Consulting on taxation of medicinal

products sales;
Appeal against administrative documents
of state authorities;
Cooperation with regulatory authorities

Arzinger services
Wholesale
Support by obtaining of a license or patent
for medicinal products wholesale;
Approval of a pharmacy warehouse
passport, including obtaining of a report
on existing premises and equipment of a
pharmacy warehouse;
Consulting on incoming control over
quality of medicinal products in
pharmacies, in particular:
Execution of an incoming control report;
Records keeping on received medicinal
products;
Records keeping on medicinal products
being sold.

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Retail
Support by obtaining of a license or patent
for medicinal products retail;
Approval of a pharmacy passport;
State accreditation of pharmacies;
elaboration of internal documents;
Consulting as to form of sale of medicinal
products and medical devices in
pharmacies and their structural
subdivisions, incoming control;
Legal consulting on receipt and storage of
medicinal products.

Arzinger services
Utilization and disposal of medicinal products

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Consulting as to waste handling;

Consulting on procedure for collection and
utilization of used containers and
packaging materials as secondary raw
materials;
Consulting as to economic stimulation in
the field of waste handling;
Cooperation with regulatory authorities.

Contact information
It will be an honor for us to be your long-term partner in the field of PPP!
Kyiv Office
Business Centre ''Eurasia'
75 Zhylyanska st., 5th Floor, 01032 Kyiv, Ukraine
Tel: +38 (044) 390 55 33
Fax. +38 (044) 390 55 40
Lviv Office
6, Generala Chuprynky st., office 1, 79013, Lviv, Ukraine
Tel: +38 032 242 96 96
Fax: +38 032 242 96 95

Odesa Office
33, Zhukovskogo street, office 601, 6th floor, 65045, Odesa, Ukraine
Tel: +38 048 711 74 74
Fax: +38 048 711 74 74
Key contacts:
Timur Bondaryev, senior partner: Timur.Bondaryev@arzinger.ua

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Arzinger PPP practice