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SERBIAFEBRUARY 2018

MARKET ACCESS:THE NOVARTIS

SUCCESS STORYPAGE 16

A HUB FOR THE REGIONPAGE 30

THE ROAD TO EU MEMBERSHIP

PAGE 14

BRIDGING SERVICES: FILLING

THE VACUUMPAGE 32

NEW PERSPECTIVES PAGE 21

2 Healthcare & Life Sciences Review: Serbia www.pharmaboardroom.com

Acknowledgements PharmaBoardroom would like to thank all the people, institutions and companies involved in producing this special report, for showing their tremendous support to Serbia and setting the example for potential new entrants in the market

Special thanks to:

Bojan Trkulja, managing director, INOVIA

Vesna Matovic, president, Serbian Society of Toxicology

Ana Grujovic, director, Swiss-Serbian Chamber of Commerce (SSCC)

Sanja Ivanic, director, French Chamber of Commerce in Serbia (CCFS)

Martin Knapp, managing director, German Chamber of Commerce (AHK)

Hristina Orlic, marketing manager, INNventa

Suzana Djordjevic, director, Hemofarm Foudation

Healthcare & Life Sciences Review: Serbia 3www.pharmaboardroom.com

The Healthcare & Life Sciences Review was produced by PharmaBoardroom.

Report Director: Carla Verdera Mateu Senior Editor: Louis Haynes Editor: Patrick Burton Report Coordinator: Magdalena Kantor Junior Journalist: Joseph Hall Report Publisher: Diana Viola Graphic design: Miriam León

For exclusive interviews and more info, please log onto www.pharmaboardroom.com or write to [email protected].

Copyright: All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including photo-copying, recording or any information storage or retrieval system without prior written consent of Focus Reports. While every attempt is made to ensure the accuracy of the information contained in this report, neither Focus Reports nor the authors accept any liabilities forerrors and omissions. Opinions expressed in this report are not necessarily those of the authors.

HEALTHCARE & LIFE SCIENCES REVIEW SERBIA

CONTENTS— February 2018

Exclusive interview with Predrag Bogavac

of Novartis16

New PerspectivesCover story21

Natural Products and Supplements

Feature35

2 ACKNOWLEDGEMENTS

5 FOREWORD

6 PREFACE

7 SNAPSHOT IN FIGURES

12 INNOVATORS IN SERBIA INTERVIEW Bojan Trkulja INOVIA

14 SERBIA AND THE EU FEATURE Membership Process

16 MARKET ACCESS AND STRATEGY INTERVIEW Predrag Bogavac, Novartis

18 CEO PROFILE FEATURE Ronald Seeliger, Hemofarm and STADA

19 LOCAL STRATEGY INTERVIEW Goran M. Orlic, INNventa

21 NEW PERSPECTIVES COVER STORY

22 Healthcare: Spending and Reimbursement Woes

24 MEAs: A Step in the Right Direction

25 Communication and Collaboration

26 Finding the Niches

27 The Price is Right

27 Greasing the Wheels: Service Providers

30 A Regional Hub

31 Hope on the Horizon?

32 MNC BRIDGING SERVICES INTERVIEW Predrag Lukic, Amicus

33 CSR FOCUS FEATURE GSK

34 REIMBURSEMENT INTERVIEW Nebojsa Skuljec, MSD

35 NATURAL PRODUCTS AND SUPPLEMENTS FEATURE Growth Spots

37 MEDTECH FEATURE BIOTEC International in Profile

38 HEALTH AND NUTRITION INTERVIEW Yana Mikhailova, Nestlé

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BRANISLAV KOTLARIK General Manager Balkans Region, Ferring

SUZANA DJORDJEVIC Director, Hemofarm Foundation, Serbia

DRAGAN ODZAKLIJEVIC CEO, acb, Serbia

CLAUDE BROUDIC General Manager, Servier, Serbia

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“When I think of Serbia, I think about undiscovered opportunities” Bojan Trkulja, managing director of Inovia #Innovation #SerbiaHealthcare

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Mr. Bogavac, head of BU #Oncology and GM of #Serbia and Montenegro at @Novartis discusses the process of bringing 9 new drugs to the market.

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Ksenija Purkovic of @AstraZeneca #Serbia discusses navigating the Balkan nation’s tricky reimbursement landscape

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Did you know? #Serbia expends 10.4 percent of its GDP on #healthcare, the highest in the region

Read the interview

https://pharmaboardroom.com/interviews/interview-branislav-kotlarik-general-manager-balkans-region-ferring/

https://pharmaboardroom.com/interviews/interview-suzana-djordjevic-director-hemofarm-foundation-serbia/

https://pharmaboardroom.com/interviews/interview-dragan-odzaklijevic-ceo-acb-serbia/

https://pharmaboardroom.com/interviews/interview-claude-broudic-general-manager-servier-serbia/

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STRAP IN HERE PLEASEStrap subhead in here please

To the healthcare and life science industry worldwide,Serbia is the land of new beginnings, where the past is not forgotten but the future

brings oceans of opportunities to our doorstep. At this crucial turning point, realising how important unity and transverse communication were, INOVIA, the Serbian Association of Innovative Pharmaceutical Industry, became an essential link of communication between the private innovative companies and the policy makers, the government and the companies’ headquarters. In light of the tremendous efforts undertaken by all stake-holders to create a competitive Serbian pharmaceutical industry, I am proud to present the Healthcare and Life Sciences Review on Serbia.

Against the backdrop of unprecedented economic and political changes, including the path towards European Union membership, Serbia now urgently needs to implement a long-term approach dedicated towards reforming its public healthcare system and aim-ing for excellence in the sector. The industry core drivers – innovation, attractiveness and efficiency – have justifiably been put under the spotlight.

Serbia is not only strengthening its positioning as one of the most promising pharma-ceutical markets in Central and Eastern Europe; our country has also truly demonstrated a commitment to step up the pace in the effort to build a safer and more efficient health-care ecosystem. Serbia’s economy and the country’s healthcare and life sciences sector are both set to display robust and promising growth over the next few years, thus an increas-ing number of pharma innovators are choosing Serbia and successfully increasing their international presence, leveraging Serbia’s geostrategic location as a gateway to Europe, Russia, CIS countries and Turkey.

The role of INOVIA has never been more crucial than in the context of the public private dialogue initiated by the government and convened by the World Bank strongly supporting the ongoing changes. This collaboration has augmented mutual understanding of the con-cerns industry is facing, binding both the public authorities and private stakeholders. Having identified market distortions, regulatory inefficiencies, miscommunications, and future sce-narios of growth, a series of actions have been taken of which we are already witnessing the results. Such actions aim at facilitating the pursuit of innovation and improvement in high value-added activities such as manufacturing, product development, and clinical trials.

The following report presents a comprehensive study of Serbia’s healthcare and life sci-ence industry and its players, the essential issues to the industry’s future development as well as the strategic opportunities one can find in the country, and as a head of INOVIA I am proud to introduce it to you as a roadmap to the exciting opportunities waiting for you in here.

Warm regards,

Bojan TrkuljaManaging DirectorINOVIA - Serbian Association of Innovative Pharmaceutical Industry


Situated on the edge of Europe and with a reputation scarred by the conflicts of the 1990s, Serbia is not often considered a promising investment destination within Europe, far less for its healthcare and life science industries. Sluggish economic growth and a regulatory system unconducive to the introduction of innovative pharmaceutical products has meant that the country has been out of the international limelight for a number of years.

However, change is in the air and new perspectives are developing both of and for Serbia and its people. Economic and political stability; the gradual alignment of procedures and standards as Serbia continues its path towards EU membership; a talented and well-educated human resource base; changing attitudes at government level towards healthcare; and the realization that Serbia can act as a well-connected hub to serve over 20 million people across the Balkans are all contributing to a new and more positive image of the country.

This report features the insights of international innovators who have navigated their way through difficult times and are now seeing the green shoots of optimism; the major learnings from domestic companies that have looked beyond Serbia’s borders to find funding, best prac-tices and export opportunities from abroad; as well as the advice of the local ‘fixers’ and service providers without whom the Serbian market could not operate.

Through the comments of these key personalities, a picture emerges of a nation not without its issues but with a potentially bright future and a pharmaceutical industry that holds numer-ous opportunities for bold international investors.

Preface


SNAPSHOT IN FIGURESMacroeconomy

Source: World Bank

POPULATION: 7.1 (MILLION)

SCHOOL ENROLLMENT, PRIMARY (% GROSS, 2014): 101.1

LIFE EXPENTANCY AT BIRTH, YEARS (2014): 75.3

GDP, CURRENT USD BILLION: 37.7

SERBIA FACTSHEET (2016)

Source: World Bank

SERBIA GDP PER CAPITA

2008 2009 2010 2011 2012 2013 2014 2015 2016

5509.065358.84

5411.885531.22 5501.7

5670.71 5593.065663.39

5852.08(USD)

Source: World Bank

REBALANCING SERBIA’S ECONOMY

WORKINGAGE

4.63 MTOTAL

POPULATION

7.18 M

WORKINGIN THE

PRIVATE SECTOR

1 M

NONWORKING

AGE2.55 M

1.08 M

INACTIVE

2.78 M

EMPLOYED IN PUBLIC SECTOR

EMPLOYED IN PRIVATE SECTOR

ACTIVE

2.85 M

0.79 M

EASE OF DOING BUSINESS WORLD RANKINGS 2018

GREECE

SLOVENIA

SERBIA

ROMANIA

HUNGARY

BULGARIA

CROATIA

37

43

45

48

50

51

67

Source: World Bank


SNAPSHOT IN FIGURESHealthcare

HEALTHCARE SPENDING GROWTH AND GDP GROWTH (2006-2015)

ROMANIA SERBIACROATIA ITALY UKGERMANYSLOVENIA SPAIN USABULGARIA FRANCE

HC spending growth GDP growth, real

-10%

0%

10%

20%

30%

40%

50%

60%

Source: The Economist Intelligence Unit, ‘Modernising Health Systems in the Balkans: Uneven Progress’

PRIVATE HEALTH EXPENDITURE

ALBANIA BOSNIA AND HERCEGOVINA

BULGARIA CROATIAMACEDONIAMONTENEGRO ROMANIASERBIA SLOVENIA

2011 20122013 2014

-0.00.51.01.52.02.53.0

4.0

4.5

3.5

(% OF GDP) Source: World Bank

SLO

VA

KIA

VE

NE

ZU

ELA

MA

CE

DO

NIA

HU

NG

AR

Y

NIC

AR

AG

UA

TUR

KE

Y

SUR

INA

ME

VIE

TNA

M

SER

BIA

GE

OR

GIA

LITH

UA

NIA

ALB

AN

IA

BU

LGA

RIA

LIB

YA

CA

BO

VE

RD

E

AZ

ER

BA

IJA

N

ALG

ER

IA

BR

AZ

IL

DO

MIN

ICA

N

RE

PU

BLI

C

LAT

VIA

JOR

DA

N

PAR

AG

UA

Y

THA

ILA

ND

IRA

N

BE

LIZ

E

JAM

AIC

A

SLO

VA

KIA

RO

MA

NIA

100

2030

4050

60

-30

-20

-10

-0

Ran

k hi

ghe

r fo

r ou

tcom

es t

han

for

spen

din

g

Ran

k hi

ghe

r fo

r sp

end

ing

tha

n fo

r ou

tcom

es

Source: The Economist Intelligence Unit. World HealthOrganization

EIU HEALTH OUTCOMES INDEX (2014)RANKING DIFERENCES: OUTCOMES VERSUS SPENDING


SNAPSHOT IN FIGURESPharma Market

Source: World Bank

Source: Dragan Cirkovic, Balkan Pharma Market Overview

MARKET STRUCTURE IN THE REGION

OTC SHARE IN MARKET VALUE

GENERIC SHARE IN MARKET VALUE

(2010-2015)

ROMANIA

CROATIA

SERBIA

26%

17%

12%

SERBIA

35%

SLOVENIA

10%

SLOVENIA

25%

ROMANIA

30%

CROATIA

41%

BULGARIA

21%

BULGARIA

36%

7,114,393

708

40

230

NA

14.4%

10,000

POPULATION 2015

TOTAL PHARMA MARKET 2014MIL. EUR

CORRUPTION INDEX

LOCAL PHARMA PRODUCTIONMIL. EUR

PHARMA R&DMIL. EUR

UNEMPLOYMENT RATE

EMPLOYMENT IN PHARMA INDUSTRY (PEOPLE)

879

41

115

NA

7.4%

9,900

630

51

412

40

12.7%

5,740

2,765

46

665

180

5.7%

21,000

537

60

872

161

7.6%

8,946

7,153,784 4,225,316 19,861,400 2,064,188

SERBIA BULGARIA CROATIA ROMANIA SLOVENIA

REGIONAL MARKET COMPARISON


2010

2011

2012

2013

2014

2015

265,787

537,530

214,177

648,068

661,373

739,276

708,528

718,203

241,894

248,130

243,212

MarketThousand Units

MarketEUR thousands


MARKET VALUE AND VOLUME DEVELOPMENT

192,834


SNAPSHOT IN FIGURESPharma Market

f= BMI forescast

HEADLINE PHARMACEUTICALS & HEALTHCARE FORECASTS (SERBIA 2015-2021)

Source: BMI

HEALTH SPENDING, USDBn

PHARMACEUTICALS SALES, % OF GDP

PHARMACEUTICAL SALES, % OF HEALTH EXPENDITURE

PHARMACEUTICALS SALES, USDBn

2015

2015

2015

2015

2016

2016

2016

2016

2017f

2017f

2017f

2017f

2018f

2018f

2018f

2018f

2019f

2019f

2019f

2019f

2020f

2020f

2020f

2020f

2021f

2021f

2021f

2021f

22.3 21.8 21.4 21.1 20.9 20.7 20.6

3.773 3.779 4.090 4.140 4.533 4.849 5.138

2.002.012.032.062.102.192.26

0.840 0.822 0.875 0.875 0.949 1.005 1.056

GENERIC SHARE (%) OUT OF TOTAL RX MARKET IN VOLUME AND VALUE (2010-2015)

2015 GENERIC, DOMESTIC VS FOREIGN SHARE

2010 2011 2012 2013 2014 2015

81.3

54.4 50.5 50.7 49.4 47.3 47.6

79.7 80.1 78.2 77.5 78.5

Generic share (out of total Rx) decreased, both in Value (from 54.4% to 47.6%) and volume (from 81.73% to 78.5%) in 5 years)

Out of total Generic market, domestic Generics de-creased share in volume from 78% to 68% in 5 years.

Value share for Domestic generics went down as well, from 71% to 57% of total Generic market.

Source: Dragan Cirkovic, Balkan Pharma Market OverviewSource: Dragan Cirkovic, Balkan Pharma Market Overview

57%

GENERIC DOMESTIC

GENERIC VOLUME

GENERIC VALUE GENERIC FOREIGN

43%

2015 2017 (e)2016 2018 (e)

600,000 600,000 600,000 600,000

700,000 750,000700,000 750,000

1,050,0001,100,000

1,051,0001,100,000

TOTAL MARKET SIZE

TOTAL IMPORTS

TOTAL LOCAL PRODUCTION

TOTAL EXPORTS200,000200,000200,000200,000

(USD

TH

OU

SAN

DS)

(total market size = (total local production + imports) - exports) (e) – Estimated

THE SERBIAN PHARMA MARKET

Source: Serbian Bureau of Statistics and independent experts EPISCOM | Report: The Pharmaceutical Market: Serbia



We are present in more countries than anyone else. We speak directly with healthcare leaders and pharmaceutical executives.We are ready to share their insights and experiences with you.

LOCAL CONVERSATIONSGLOBAL CONNECTIONS



INNOVATORS IN SERBIABojan Trkulja, INOVIA

HCLS: Recently, you warned that there are very limited amounts of innovative med-icines that are accessible for Serbian patients. How can the country balance the importance of access to medicine, while at the same time ensure that there remains a place for innovation and research?BOJAN TRKULJA (BT): First, in order to foster innovation, pro-

cedures and processes need to be made more efficient. There are many bureaucratic issues and unnecessary proce-dures that stop innovation. The processes are too complex and untimely, making innovation simply no worthwhile for many companies. What we at INOVIA are pushing for is a change of regulation. We started working with the EU through a pilot project back in 2014 on amendments to the medicines laws and it still, in 2017, has not been com-pleted. On the positive side, we are expecting to see changes in the regulation of clinical trials that will be aligned with best practices of the EU. Another thing we would like to see improvement on is the customs regulations, which is especially crucial for donations and early access programs, as well as the VAT being 10 percent on medicines, even on donated goods.

We believe that through regulation change, a change of the mindset will occur and help speed up procedures. Serious gains can be made and this market would be made much more appealing. It is the time for the government to

realize the crucial need for innovation, especially in our industry.

HCLS: How responsive is government to the conversation about improving the regulatory landscape as well as the need for innovation?BT: There has been a very significant improve-ment in the last few years. I believe that being ac-cepted as a candidate for the EU had an enormous impact on that. All the regulations now that we have prepared in Serbia need to be prechecked by the EU, which is an insurance policy for Serbian people that the regulation is there to help and is aligned with Best Practice Guidelines (BPGs). We

Bojan Trkulja, managing director of INOVIA, Serbia’s innovative drug manufacturers association, underlines the importance of cooperation not only between his members but also between all the key stakeholders of the Serbian healthcare and life science industry, con-cluding that the time for investment in Serbia is now and that the country has undiscovered opportunities waiting to be explored.

TIME FOR CHANGE IT IS THE TIME FOR THE

GOVERNMENT TO REALIZE THE CRUCIAL NEED FOR INNOVATION, ESPECIALLY IN OUR INDUSTRY.

Bojan Trkulja INOVIA


INNOVATORS IN SERBIABojan Trkulja, INOVIA

are part of the conversation, and the government is re-alizing the importance of the industry working togeth-er, so there are many joint initiatives INOVIA and other key stakeholders were a part of.

Being part of the conversation and cooperation is crucial, but what is still missing is direct action behind those talks. The improvements we agreed upon are not being implemented, so this needs to be improved in order for us to move forward.

HCLS: What will EU accession mean to your members and to the pharma ecosystem in Serbia?BT: While we are not part of the EU, we need to have local marketing authorization as well as EU marketing authorization in order to start the process. According to the law, for drugs to be registered by centralized pro-cedure it should take up to 150 days, while for others it should be 210 days. On average, procedures are 80 days late. It is much better than it was five years ago, but we are aiming to shorten it to 90 days. Medicines going through the centralized EU procedures should be gaining access immediately. Looking at the com-

plexity of the pricing procedure, it should also be made more efficient in order for us to fit with EU standards. Furthermore, we are pushing for the abolishment of the maximum price because of the lengthy process that is not regulated enough, as the government does not have a deadline to give you the price. It can be tomor-row or in three years. The reimbursement procedure is facing the same issues. It is unfair to innovative com-panies as they can only submit the application once in March while other companies can do it throughout the year. This is the time for the changes to be imple-mented and the industry believes the EU accession will be the power behind it all. The outcomes will allow for easier and much faster access to innovative medicines for the nation.

HCLS: Where will we see Serbia in the next five years? BT: I would like us to be if not a member then a can-didate with a clear date to be associated with the EU. Further I would like to see the regulatory landscape be filled with laws and policies aligned with BPGs. I would like Serbia to catch up with the region in terms of ac-cess to innovate medicines and become the heart of the region that we were prior to the wars of the 1990s. The nation still believes we are able to regain this position.

HCLS: As the managing director of INOVIA, how would you convince an innovative company to choose Serbia as an investment destination? BT: First and foremost, I would highlight the unmet medical needs of the country; making Serbia a perfect place for a pharmaceutical company offering innova-tive therapies. The patients are here. Further, the mind-set of the government is changing and the industry is expecting increased funding, starting next year, as the government is setting up a National Strategy on Medicines, strategic plan outlining the changes to be implemented in Summer 2018. The small wheels have started to turn and the big wheel will turn very soon, the change is happening. In order for companies to greatly benefit, they need to choose Serbia now and be a part of the process. If you look at the economic indicators, increasing healthcare budgets, increasing reimbursement, and everyone who is interested in this market, innovative players should not miss this train. The time is now!

Sanja Ivanic CCFS


SERBIA AND THE EUMembership Process

espite the uncertain timeline for Serbia becoming a full EU member, Sanja Ivanic, director general of the French Chamber of Commerce in Serbia (CCFS) asserts that “it is the process of joining the union that

counts and not so much the date that Serbia joins.” The importance of this gradual catching-up to EU standards is echoed by Themas Moustakas, general manager of Protonmed who urges, “Let’s not focus purely on the entrance into the EU but the ascension to the market and the changes it brings. After decades of uncertainty and troubles mixed with political risk, Serbia is on the right track; inflation is at stable low levels (2.3 percent) economic growth is steady (between three and five percent), and debt has been controlled.” In terms of how Serbia is viewed by international inves-tors, merely becoming a candidate has already had an impact, as Ivanic exclaims, “On the day that Serbia became an official candidate for the EU, the number of demands and requests that we received from French companies tripled!”

According to Borja Trkulja, managing director of Serbia’s association of pharmaceutical innovators, INOVIA, becoming an EU membership candidate has already had a big effect in terms of government recep-tivity to regulatory change and the need for innova-tion in the healthcare and life sciences arena. He notes that “There has been a very significant improvement in this sphere in the last few years. I believe that being accepted as a candidate for the EU had an enormous impact on that. All the regulations now that we have prepared in Serbia need to be prechecked by the EU.” Protonmed’s Moustakas is similarly ebullient and notes that “Opening Chapter 35 of the EU negotia-tions - Healthcare within the EU – will cause a cascade of reforms, leading to a more open, transparent and flexible system which will permit us to be more effi-cient in our Serbian operations.”

Zoltan Tamas, president of Serbia’s generics associa-tion, Genezis, takes a long-term perspective, asserting that, “Accession to the EU would, first of all, lead to the acceleration of many procedures. The regulatory frameworks would be uniform, and all the procedures would be in compliance with the EU which would make doing business a lot easier, since the principal companies of our members are located in Europe and

THE LONG AND WINDING ROAD

Serbia has been a full candidate for European Union membership since 2012 and Prime Minister Ana Brnabić has described joining the EU as the country’s “most important foreign policy goal.” However, the road to full membership status – possibly as soon as 2025 – will be long and winding with improvements needed in terms of rule of law and governance as well as the sensitive issue of normalized relations with neighboring Kosovo.

IT IS THE PROCESS OF JOINING THE UNION THAT COUNTS AND NOT SO MUCH THE DATE THAT SERBIA JOINS.

R EGULATIONSD


SERBIA AND THE EUMembership Process

they already do their business in compliance with EU regulations.”

Nenad Markovic, director of pharma MNC bridging service, ADOC, strikes a slightly more circumspect note in his assessment of the impact of EU entry. He proffers that, in terms of exports, although “I think EU entry will make life easier for exporters of prod-ucts to the EU … there are already special contracts

in place between EU governments and Serbian exporters where if over 50 percent of the final prod-uct is domestically produced then trading is more streamlined. The same goes for Russia, Turkey and other big markets where Serbia has excellent trading agreements in place.”

Furthermore, Serbia’s non-EU status has actually proved to be an advantage for certain local outfits with international horizons. Nenad Djordjevic, director of Esensa, which currently exports its ‘made in Serbia’ dietary supplements and OTC products to Europe as well as the Middle East and Asia, admits that “one of our strengths is that we are not currently in the EU with regards to regulations, allowing us to produce at a lower cost than the EU and export abroad.”

M ANUFACTURINGAND EXPORTS

November 7th 2007:

December 22nd 2009:

December 19th 2009

2023: 2025:

January 2014:

December 7th 2009:

March 1st 2011:

End of 2019:

Serbia initiates a Stabilisation and Association Agreement (SAA) with the EU

Serbia officially applies for EU membership

Visa requirement for Serbian citizens for Schengen countries dropped

Negotiations with EU to be completed

Possible date of accession

Opening of intergovernmental negotiations on Serbia’s accession

EU trade agreement with Serbia unfrozen

Serbia receives full official EU candidate status

Broad agreement on normalization of relations with Kosovo to be reached

SERBIA AND THE EU: A TIMELINE


MARKET ACCESS AND STRATEGYPredrag Bogavac, Novartis

HCLS: Given the challenging five years with no reimbursement of your products you overcame and the decisions made to keep Novartis going in Serbia, what advice would you give to your peers in other small markets facing similar problems? PREDRAG BOGAVAC (PB): We must engage all stakeholders, in particular, patients, for whom these are often literally life-or-death situations. No one can say they are doing this for commercial profit, because it is their own lives at stake. We also engaged the diplo-matic corps, with the former Swiss Ambassador, as well as various chambers of commerce such as AmCham and the Nordic Business Alliance. The latter actually connected us with companies like AstraZeneca and GSK, who then collaborated with us. It is for this rea-son that we are members of several chambers of com-merce, such as those mentioned above, as well as a local one, the National Alliance for Local Economic Development (NALED), which our Prime Minister, Ana Brnabić, previously headed.

We also work closely with the IT sector. With the rise in Real World Evidence (RWE) and Big Data, I think IT collaboration will feature heavily in the next chapter of the pharma industry. For instance, recently, we worked with Seven Bridges, a local IT company, as well as the Director of the Delivery Unit at the Prime minister

cabinet, to halve the approval time for clinical studies. This was accomplished very efficiently over three meet-ings in one month, through the use of digitalization and better electronic governance. Previously, it required six months to approve a clinical study, which was very uncompetitive. This obstacle has since been removed.

HCLS: Do you believe that Serbia can become a clinical studies hub for the region? PB: Absolutely! Serbia is often compared to Bulgaria due to similar population sizes: 7.7 million. However, despite having a slightly smaller healthcare budget, Bulgaria enjoys better market access and a pharma mar-ket almost twice as big as Serbia. This is rather curious. I think our healthcare system needs to be made more efficient.

The reason I refer to Bulgaria is that there is a huge number of clinical trials taking place there, which means that we have the potential to build a similar kind of eco-system. One advantage we have is that our hospital sys-tems are rather old-fashioned with a few large centers with hundreds of beds and patients. Take hematology, for example: we have centers with hundreds of beds and patients being overseen by the same doctor, something you will not find in more developed parts of Europe. This can greatly facilitate the conduct of clinical trials.

Clinical trials are also important when it comes to patient access to treatments. Given the tough

Predrag Bogavac, now country head, OGM Serbia and Montenegro, a.i. Oncology general manag-er Bulgaria and Macedonia at Novartis, discusses market access challenges and solutions, Serbia’s potential as a clinical trials hub, and the develop-ment of cancer treatment in the country.

CHANGING MINDSETS

Predrag Bogavac NOVARTIS


MARKET ACCESS AND STRATEGYPredrag Bogavac, Novartis

reimbursement market here, being able to run more clinical trials means offering patients another way to access new and innovative treatments.

There is also positive impact for the public healthcare system because 50 percent of clinical trials funding must legally go to the hospital, so that is essentially direct investment into the public system. We are trying to com-municate this to healthcare officials. A challenge here is that the industry is not very popular with the public – as seems to be the case globally – and sometimes, clinical trials are portrayed in the media as medical experiments on people, which is completely untrue. Therefore, there also needs to be a change in mindset.

are decreasing in most developed countries, unfortu-nately, they are increasing in Serbia.

Oncology is a priority for governments globally and we recognize this at Novartis as well. Some estimates suggest that by 2050, every single person above 65 years on the planet will suffer from some cancer-related dis-ease! For this reason, Novartis invests nearly 50 percent of our R&D expenditure into oncology.

Novartis is a global leader in oncology, with notable successes like Gleevec®, which was called the ‘magic bullet’, and our new product, Kymriah®. This is why we are extremely proud to be part of Novartis, but what frustrates us here is that we cannot bring our innova-tions immediately to the Serbian market. Novartis has an extremely robust and exciting innovative product pipeline globally and we would love to bring them to Serbian patients, but as a non-EU country, there is a delay between EU approval and national approval. Along with other barriers associated with the approval of maximum pricing and reimbursement, the histori-cal time period until reimbursement is over 1,000 days. This is how long patients have to wait for access.

What is positive is that I expect this to improve in the future, given that the Minister of Health has decided to adopt innovative strategies over the next five years. This is a step in the right direction, and we hope to see Novartis Serbia being able to launch more innovative therapies more quickly, very soon.

Another major issue with oncology is that treat-ments are highly sophisticated and very expensive, par-ticularly as we are seeing more personalized treatments like our Kymriah®*. As a company and as an industry, we need to find ways to collaborate with governments as partners to solve this. The Serbian government took a very important step last year when they unblocked reimbursement for oncology products as one of the four priority therapeutic areas. As a country, we need to prioritize cancer treatments.

GIVEN THE TOUGH REIMBURSEMENT MARKET HERE, BEING ABLE TO RUN MORE CLINICAL TRIALS MEANS OFFERING PATIENTS ANOTHER WAY TO ACCESS NEW AND INNOVATIVE TREATMENTS.

THE SERBIAN GOVERNMENT TOOK A VERY IMPORTANT STEP LAST YEAR WHEN THEY UNBLOCKED REIMBURSEMENT FOR ONCOLOGY PRODUCTS AS ONE OF THE FOUR PRIORITY THERAPEUTIC AREAS

HCLS: The mortality rate associated with cancer in Serbia is higher than in other parts of Europe. How have you seen the development of cancer treatment change in this country?PB: Serbia is one of the few markets where cancer still takes lots of lives. Whereas cancer mortality rates


CEO PROFILERonald Seeliger, Hemofarm and STADA

Ronald Seeliger has a dual role as vice president South-East Europe of the German company STADA as well as CEO of the Serbian Hemofarm Group, acquired by STADA back in 2006 in order to increase the size of its footprint in the CEE region. As a German national heading up a successful Serbian enterprise, Seeliger brings a unique perspective to the Balkans market.

AN INTERNATIONAL PERSPECTIVE

a v i n g j o i n e d Hemofarm in 2 0 1 0 , a t i m e in which the Serbian market

was suffering tremendously from the global financial crisis, with many companies going bankrupt and struggling with liquidity, Seeliger was faced with an arduous task to turn the company’s fortunes around. He describes his strategy at this point thusly: “I made it my intention to stabilize the compa-ny’s offering, make Hemofarm more profitable and develop our technical operations - not just to upgrade - but to grow our oper-ations. We now operate at a very high standard and are consist-ently approved for GMP and are often recognized worldwide.”

Culturally, Seeliger feels that “Being German, I bring a level of organization and ambition that complements the Serbian enthusiasm and skills available to me. The result is a robust and stable company that is consist-ently growing. It is an exciting mix and outsiders often com-ment on our happy, hard-work-ing and skilled staff. We use a

manage because the locals have the know-how. Our workforce is high-ly skilled, dedicated to the compa-ny and very much reflective of how Serbia approaches the workplace. We cater for the technically-advanced personnel available in Serbia in our offering to employees: cutting-edge technologies, strict and well-adhered to regulation and a keen eye for new business opportunities. I am proud that we are now far exceeding our pri-or objectives thanks to such a skilled workforce combined with a for-ward-thinking personnel program.”

team approach for almost all of our activities and therefore appreciate the need for each team member to com-municate well and to be up to speed with all opportunities.”

In contrast to his Serbian peers, Seeliger posits that he is able to take a more impartial, bird’s-eye view of the region and its dynamics and thus navigate it more effectively, including expanding into countries where other Serbian firms may find it troublesome to do so. He notes that “Being German – with Serbian residency – and conse-quently looking at the CEE market as an international, I can comment that although the war is far away in the past, the borders and tensions can occasionally manifest themselves in business operations. We at Hemofarm are big enough to do so, and we found out in recent years that we are one of the only Serbian companies to trade across all ten countries, including Albania. It is incredibly promising that we find ourselves in this position.”

Finally, Seeliger aligns with his counterparts elsewhere in Serbia by foregrounding the importance of the nation’s highly-skilled and hard-working human resource pool. He concludes, “I am the only foreign passport holder at headquarters, and across the region, it is the locals that

H

RONALD SEELIGER VICE PRESIDENT

SOUTH-EAST EUROPE STADA &CEO, HEMOFARM GROUP

CEO PROFILE


LOCAL STRATEGYGoran M. Orlic, INNventa

HCLS: What is the central idea behind INNventa?GORAN ORL IC (GO) : INNventa is small, young, private company that has most probably the fastest growth in the market today. We recorded 79 percent growth in 2017, and we intend to better that next year; current forecasts indicate we will double revenues in 2018, counting both own brand and tender business.

The main idea behind INNventa is offering inventive pharma solu-tions to improve patient care in the region. What makes INNventa unique is its tailor-made portfolio: a mix of innovation and invest-ment in products that are not rep-licas of someone else’s portfolio. The majority of our own brand portfolio is food supplements but there are also medical devices, and medicines. What we are promot-ing to doctors and pharmacists is their efficiency and well-proven effectiveness. This is not possible without a highly experienced and

GO: We rely on our experience and the relations and connections we have with key opinion leaders. Through the exchanging of ideas and asking questions as well as doing company-centric research; for exam-ple, implementing the experiences from more sophisticated and devel-oped markets, we identify niches. Serbia has low participation regard-ing OTCs and food supplements in contrast to conventional medicines.

The challenge is to maintain sta-bility, have aligned finances, HR, organization needs and quality recruitment, especially if the com-pany grows significantly in a short period. ‘Hands-on’ management and a highly motivated team are key. Regarding therapeutic areas, our pri-mary growth driver is urology, and we are aiming to be the leader in the field. Other areas we are exploring and improving are psychiatric, rheu-matology, orthopedics. Further, we are preparing products to be launch in the field of gynecology and laryn-gology.

Founder and general director of INNventa, Goran Orlic, dis-cusses the rationale behind establishing his own company that continues to double revenues year on year. He high-lights the company’s fundamental role in providing innova-tive solutions to Serbian patients, pharmacists and doctors.

EXPONENTIAL GROWTH

Goran Orlic INNVENTA

knowledgeable team, and we have the best players in the market in the key positions: best field force, sales and marketing managers available.

What is very important is that we have a transparent and robust incentive and bonus system policy. Exceptional management is neces-sary because fast-growing businesses demand a unique and custom-tai-lored approach. INNventa’s perfor-mance outlook for 2017 exceeded our expectations. The transition from a well-established tender business into a recognisable own brand com-pany was smooth, as we introduced our first product in March 2016 (D-manosInn). We are now selling our products in Serbia, Montenegro, Kosovo and Bosnia. Our marketing team is preparing the launch of six products in H1 2018 which will dou-ble our portfolio.

HCLS: How do you identify the needs and the niches in Serbia, and what are the company’s main growth drivers?

Photo © INNventa Team

http://www.innventa-pharm.com/en/


COVER STORYNew Perspectives

Changing thepractice of medicineAt Novartis, we harness the innovation power of science toaddress some of society’s most challenging healthcare issues.Our researchers work to push the boundaries of science, broadenour understanding of diseases and develop novel products inareas of great unmet medical need. We are passionate aboutdiscovering new ways to improve and extend people’s lives.

Innovative medicines

Changing thepractice of medicineAt Novartis, we harness the innovation power of science toaddress some of society’s most challenging healthcare issues.Our researchers work to push the boundaries of science, broadenour understanding of diseases and develop novel products inareas of great unmet medical need. We are passionate aboutdiscovering new ways to improve and extend people’s lives.

Innovative medicines SERBIAIn the four years since 2014, Serbia has jumped 50 places in the World Bank’s Doing Business Report rank-ings, from 93rd to 43rd position. While such rankings do not paint the full picture of a nation’s economic and political health, they are indicative of a country that is moving in the right direction. As freshly-appointed Prime Minister Ana Brnabić points out “Macroeconomic and fiscal stability have been achieved and condi-tions for doing business have improved significantly … What is important is that these positive trends are sustainable and that this government continues to build on the foundations set by its predecessors, as well as starts to seek growth in some non-traditional areas in order to create new perspectives for Serbia and all of its citizens.”

NewPerspectives



Internationally, Serbia’s reputation is closely inter-twined with the Balkans conflicts of the 1990s, some of the scars of which can still be seen on the streets of Belgrade. With GDP per capita at around USD 5,300 – compared to 7,300 in Bulgaria, 9,500 in Romania and 12,000 in Croatia – it is clear that Serbia has a long way to go to catch up with its regional rivals. With this low baseline and GDP growth of less than three percent, Serbia remains largely under the international invest-ment radar but, as Vera Nikolic, executive director of the American Chamber of Commerce (AmCham) in Serbia notes, Serbia can now be considered an “excel-lent investment destination with a very highly skilled and well-educated workforce, a competitive tax bur-den, a relatively stable macroeconomic outlook and we are in the process of entering the EU, which brings general predictability as to how our policies will develop.”

Sanja Ivanic, director general of the French Chamber of Commerce (CCFS) also has a positive outlook on Serbia’s investment prospects, noting that “Fiscal pol-icies in Serbia make it an attractive place for foreign companies to do business. Trade agreements also pro-vide benefits: Serbia also has a free trade agreement (FDA) with Russia.”

HEALTHCARE: SPENDING AND REIMBURSEMENT WOES

Despite this air of cautious optimism, one arena that needs considerable change in order for Serbia to catch up with that of its regional rivals is healthcare and the life sciences. As Ljubiša Mitof-Višurski, general

manager Adria Region for AbbVie posits, “Serbia has 7.2 million citizens and a pharmaceutical market worth EUR 0.6 billion, the same market size as Croatia which has four million people and Slovenia which has two million.” Serbia expends 10.4 percent of its GDP on healthcare, the highest in the region and a simi-lar proportion to that of Japan, Canada and Belgium, but spending is not delivering the expected health out-comes. The after-effects of the global financial crisis, compounded by corruption and financial mismanage-ment has led to Serbia severely lagging behind many of the countries in its region in terms of healthcare. Bojan Trkulja, managing director of INOVIA, Serbia’s innovative pharmaceutical manufacturers’ associ-ation, highlights “We recently conducted a study comparing Serbia to neighbouring countries such as Bulgaria, Croatia and Romania as they are most simi-lar in terms of economic indicators, and we concluded that our government medicine expenditure is 60 per-cent lower per capita than in Romania and Bulgaria.”

RS/OTH/0001/18, January 2018

Omladinskih brigada 88,Novi Beograd, Serbia

GlaxoSmithKlineRepresentative office Belgrade

BOJAN TRKULJA

managing director, INOVIA

CLAUDE BRODIC

general manager, Servier

KSENIJA PURKOVIC

country director, AstraZeneca



This lack of spending on healthcare has nowhere been more apparent than in reimbursement for innovative medicines. Indeed, between 2010 and 2012 just one of the 139 new medicines to receive market authorisations globally was approved for reimbursement in Serbia, com-pared with 44 in Bulgaria and 27 in Croatia; meaning a severe lack of patient access to much-needed treatments as well as an extremely challenging environment for inno-vative life science companies operating in Serbia. Predrag Bogavac, Novartis’s country head states that “as a result of the challenging reimbursement environment in Serbia, we did not have any product reimbursed between 2011 to 2016.” Servier’s general manager Claude Brodic has had similar woes and despairs that “we have been waiting for reimbursement since 2011 for one of the group’s innova-tions in heart failure, whereas this product is reimbursed in all other countries in the region where Servier is pres-ent.” Similarly, MSD has “200 products in our pipeline awaiting consideration” according to Nebojsa Skuljec, country lead Serbia and Balkans Emerging Markets.

This regulatory inertia is exacerbated not only by a lack of spending, but also by myriad bureaucratic issues, as AstraZeneca’s country director, Ksenija Purkovic, elu-cidates: “The local requirements for national registration of a drug in Serbia - since Serbia is not part of the EU and therefore the centralized registration does not apply - is that one can only apply when the European Medical Agency (EMA) approves the product. So once this hap-pens we receive the registration dossiers, then the regis-tration application is submitted, and once completed,

we can apply for price registration, and submit for reim-bursement. If you miss March for reimbursement appli-cation, however, then you will have to wait for another

Source: WHO Global Health Expenditure Database.

CROATIA

BULGARIA

BOSNIA AND HERCEGOVINA

ALBANIA

SERBIA

MONTENEGRO

ROMANIA

MACEDONIA

SLOVENIA

1,652

1,399

1,312

1,079

851

957

615

888

2,698

TOTAL HEALTH SPENDING PER CAPITA (2014)

Source: The Economist Intelligence Unit,

‘Modernising the Serbian Health System’ (2016)

BULGARIA

ALBANIA

SLOVENIA

ROMANIA

BOSNIA AND HERCEGOVINA

MACEDONIA

MONTENEGRO

CROATIA

SERBIA

9.6

9.6

9.2

8.4

7.8

5.9

6.5

5.6

6.4

HEALTHCARE SPENDING AS % OF GDP



of significant change. INOVIA’s Trkulja feels that “the mindset of the government is changing, and the indus-try is expecting increased funding, starting in 2018, as the government is setting up a National Strategy on Medicines, a strategic plan outlining the changes to be implemented in Summer 2018. The small wheels have started to turn, and the big wheel will turn very soon.”

In concrete terms, managed entry agreements (MEAs) - introduced after almost three years of nego-tiation between the industry, the health fund and the World Bank - have been key in initiating an improved market access situation in Serbia. MEAs - contractual agreements between companies and healthcare pay-ers introduced when decisive conclusions on price and reimbursement cannot be made due to uncertainties about the clinical evidence and/or financial impact of the drug – help share the cost of uncertainty between the payer and the company. Two models of MEAs are now being utilized in Serbia, as Trkulja explains: “First was the cross-product model where the company has to achieve savings for the Health Fund on the medi-cine that is already reimbursed, so that for the amount of saving they could get another product on the reim-bursement list. The second model related to rebates, where the company would give a certain percentage of the yearly amount of the product for free as a rebate.

year, because submissions for inno-vative products can only happen during March each year. All being said, access is a lengthy process that takes around a year’s time at best, several years at worst.” AmCham’s Nikolic also strikes a gloomy tone in saying that “Healthcare poli-cy and bureaucracy together with lengthy and complex processes has forced many of our members to decrease their presence or opera-tions here. In the situation as such where in six years very few innova-tive medicines were introduced in the market, it sends a clear signal that public health strategy is not geared towards innovation.”

MEAs: A STEP IN THE RIGHT DIRECTION

However, attitudes appear to be shifting and the Serbian healthcare and life sciences sphere stands on the brink

One area of Serbian healthcare in which significant pro-gress has been made is e-Health, the process of ‘informa-tizing’ the entire system to increase efficiency and reduce costs. As Prime Minister Ana Brnabić has noted, this is part of a wider government strategy to draw on Serbia’s IT ex-pertise and create a more efficient, attractive, digital eco-nomy: “Many projects related to improving conditions for doing business have already been launched, the e-taxes system has started operating, we will soon finalise e-Heal-th booklets, the government adopted the draft Law on e-Commerce and forwarded it to the Assembly.”

In terms of e-health specifically, the World Bank has positio-ned itself at the forefront of driving change in Serbia. Ana Holt, senior health specialist at the World Bank in Serbia, explains that “The World Bank has been active in health in Serbia since 2002. In 2002 the healthcare system needed equipment, refurbishment and informatization because at the time it was almost non-existent. The World Bank pro-

jects supported the Serbian Ministry of Health to informatize 158 primary heal-thcare centres and 24 hospitals across the country, laying the foundations for e-health. We further supported efforts of the Government of Serbia to initiate e-health in 2016; a very comprehensive system with a lot of modules, providing the conditions for informatization in both primary care and hospital care.”

In addition to this drive to digitalize Serbia’s healthcare system, the World Bank has also helped introduce centra-lized procurement and framework contracts in the country which, as Holt proudly points out, “was a completely novel project at the time: we were the first country in the region to do so and therefore, in this respect, Serbia is leading the way.”

The World Bank and e-Health

ANA HOLT— senior health specialist, World Bank in Serbia

VERA NIKOLIC

executive director,American Chamber ofCommerce (AmCham)

SANJA IVANIC

director general,French Chamber ofCommerce (CCFS)



Currently we are working on the third model: the ‘hid-den price’ model. The main characteristics of this mod-el is that you are obliged to offer the medicines at a lower price than listed on the reimbursement list. This is hugely important as in Serbia prices of medicines are not freely formed. Here, the government sets the prices, and the process is very lengthy and complex.”

Mylan’s country manager for Serbia, Slovenia, Montenegro and Macedonia, Milos Davidovic, now sees a “willingness of the Ministry, of the national agency as well as of the healthcare fund, to listen to what the indus-try needs and has to offer and to find better solutions for the country” while MSD’s Skuljec describes how “In 2016, our relationships with healthcare authorities dras-tically improved, to such an extent that they now rec-ognize patients’ needs and openly discuss with pharma-ceutical companies on our shared goals.” While Serbia still has a long way to travel on this front, AstraZeneca’s Purkovic considers MEAs to be “a light at the end of the tunnel … Some of the Big Pharma companies in Serbia have managed to sign MEAs and have shown the neces-sary flexibility and pricing strategies to introduce new molecules into the market. For example, 23 molecules were reimbursed this year, this was the first reimburse-ment update in the last five years.”

COMMUNICATION AND COLLABORATION

This upturn in regulatory receptiveness to the needs of the pharmaceutical industry in Serbia is, however, a rel-atively recent phenomenon that did not come about at random. Novartis have been at the forefront of pushing for change, as Predrag Bogavac explains: “In response [to a lack of reimbursement], since I became country head, we launched a major public affairs initiative locally with the help of the Economist Intelligence Unit in London, which produced a special case study on healthcare and market access within the Balkans with a focus on Serbia in order to put pressure on the authorities to improve the reimbursement situation. This, in collaboration with other stakeholders like patient advocacy groups, created a pressurized environment that seemed like it would boil over – and it did, last year! It felt like a huge miracle.”

Other outfits that have utilized greater inter-stake-holder communication collaboration to navigate a

challenging market include Servier, which Brodic notes, “Despite the bleak economic climate in pharma in 2014, we took the decision to develop the way in which we pro-moted our products in Serbia by adapting to healthcare organiza-tions and starting to educate family doctors, the first and main contact of patients.” Milica Glisic, country manager West Balkan Region for the German-headquartered Wörwag Pharma, also underlines the importance of “offering full and accurate information to healthcare professionals and trying to support them to decide the best possible thera-peutic solutions.”

For MSD’s Skuljec, the difficult period of 2010-16 has led his affiliate to develop a more efficient and productive way of working. “During [these years] we discovered two essential practices in combatting potential difficulties

MILICA GLISIC

country director,Wörwag

BIOTEC International d.o.oResavska 2, 11000 Beograd.

Tel/Fax: +381 11 /3231 561 Email: [email protected] 1483341 350



in the Serbian market: business to business communication and system awareness. Sometimes the two pull against each other and lead pharma companies to fall into the trap where, due to the unpredictable nature of the market, innovative drugs are not reim-bursed. Overall, however, we under-stand these two arms of operations and have improved our business planning to combat government processes and budgeting, to ensure that we continue to deliver innovation,” he posits.

FINDING THE NICHES

In such a challenging domestic market, the companies that have achieved the most success have been those that have tailored their product offering specifi-cally to the needs of Serbian patients. As Predrad Lukic, general manager of Amicus, a bridging service for MNCs hoping to enter the Balkans region, astutely asserts, “30 years ago it was possible to simply enter the market and sell things – nowadays, you need to be systematic and pragmatic in your approach to ensure the offering you produce or sell matches market needs”.

One such example of a systematic and pragmatic approach to the Serbian market is that of Protonmed, the Serbian representative of Health Watch Swiss AG, a Switzerland-based organi-zation focused on the marketing, regis-tration, and sales of prescription medi-cines into South East Europe. Themis Moustakas, CEO and president of Health Watch Swiss and general man-ager of Protonmed says, “Since 2013 we have successfully become the mar-ket leaders in the country through the introduction of therapies that previ-ously were not available in the Serbian

The leaders of three of the major MNC affiliates operating in Serbia out-line the secrets of successful operations in what can be a challenging market

“Never accept the status quo! There is a tendency for people to shy away from confrontation or stay quiet. I take a different approach. It is important to come to discussions with the authorities or other relevant stakeholders with facts and arguments, ei-ther through legal or public affairs means. Those who stay silent will never achieve what they want. A key lesson learnt in this experience is to fight hard all the time.”- Predrag Bogavac, Novartis

“The secrets to success in Serbia are people, knowledge, trust, patience, and love. Love for the job that you do and a dosage of passion. I remem-ber my first welcome message when I joined Abbo-tt six years ago, was: “It will be difficult, but try to have fun as much as you can.” I continue to enjoy what I do, I still come to work with a smile, and ha-ving the right team beside me makes it all possible. First and foremost, you need to be professional, and the knowledge will follow. If there is no trust, you lose your team. If you do not have patience, you might miss the opportunities that are waiting ahead. Some things need time to come; they come in a particular order.”- Milos Davidovic, Mylan

“Two vital things to remember: there are immense opportunities for growth in this market and [the en-try of an external general manager] to the Serbian market would be most welcome. I believe that the inbound pharma manager should be aware of the healthy business community we have in place here: a supportive network that nurtures a tight-knit busi-ness culture. INOVIA and AmCham amongst others exemplify the sound nature of activities here and connect business people domestically and from abroad. On top of this, we have a government that is open to general advice on best practices and healthcare initiatives from across the globe, also is often keen to implement ideas and processes pic-ked up from more-developed countries abroad.”- Nebojsa Skuljec, MSD

The Secrets of Success in the Serbian Market

PREDRAGBOGAVAC— head of repre-sentative office & oncology general manager Serbia & Montenegro, Novartis

MILOS DAVIDOVIC— country manager Serbia, Slovenia, FYR Macedonia and Montenegro, Mylan

NEBOJSA SKULJEC— country lead Serbia & Balkan Emerging Mar-kets, MSD



we didn’t copy and paste pre-existing structures but instead tailored our approach.”

For Hemofarm, the Serbian market leader owned since 2006 by the German STADA Group, the poor state of cancer care in Serbia stood as a big opportuni-ty. Indeed, as of 2012 the standardised death rate from cancer in Serbia was 50 percent higher than the EU average. Ronald Seeliger, the German national wearing multiple hats as both CEO of the Hemofarm Group and vice-president of STADA South-East Europe, explains that “When Hemofarm noticed that patients were not receiving necessary oncology treatments here in Serbia, we looked to provide solutions with a series of new products. With the help of remote portfolio man-agement from STADA, we intend to roll out oncology products over the coming months, backed by a budget of over EUR 80 million.”

Servier’s Claude Brodic meanwhile chose to focus on hypertension and high blood pressure; an affliction affecting 47 percent of Serbia’s adult population accord-ing to one 2012 study. He states that “While waiting for

pharmaceutical market. Curiously, despite trading in generic products, we often play the role of the innova-tor because we have presented the first product within each category to be launched.” Through Protonmed’s focus on ophthalmology and nephrology, Moustakas explains that “We want to cater for therapeutic solu-tions that haven’t been available previously. The reci-pe for success here was listening to the market in that

Serbia has undergone a gradual privatization and inter-nationalization of its formerly largely domestically-run pharmaceutical market over the last two decades to the extent that two thirds of the Serbian pharma market is now internationally owned. As Martin Knapp, managing director of the German Chamber of Commerce (AHK) notes, “The Serbian government offers generous incen-tives to potential investors, foreigners as well as locals. This policy has often been criticized, yet it shows more and more companies either establishing their presence here or buying Serbian companies.”

In 2006, the German STADA Group acquired Hemofarm for EUR 480 million and at the end of 2017, EMS, Brazil’s largest pharmaceutical company, acquired the Serbian state-owned Galenika for EUR 16 million with an agree-ment to wipe out Galenika’s EUR 25 million worth of bank debt and the promise to continue manufacturing in Serbia. Investing in a company that previous interna-tional bidders have shied away from due to its debts and heavily unionized workforce, EMS owner Carlos Sanchez said, “We want to have a really successful com-pany with employees with good salaries that will conti-nue to develop in Serbia,” outlining the potential that EMS sees in the country and the region.

Hemofarm’s Seeliger describes the boost that STADA gave his organiza-tion upon acquisition. “When STADA acquired Hemofarm it was already a well-established brand in Serbia. The push that we at Hemofarm received from Germany was significant. Sales increased, our portfolio expanded and issues such as liquidity - which is still a problem in the pharma world - were dealt with efficiently,” he re-minisces. Alongside this financial boost, Seeliger also highlights the perspicacity of STADA’s ‘hands off’ strategy with Hemofarm, elucida-ting that “At the outset, the focus of STADA was two-fold: to leave us to deal with the market in the way we were doing so: after all, who knows how to deal with the local market better than the locals? STADA was intelligent in this matter and ensured the pipeline for progression was well organi-zed. Secondly, STADA intended to increase our output on the production side. If we compare with the 2006 standings, we are eight to ten times more productive concerning volume and complexity.”

Local Champions: An International Touch

RONALD SEELIGER— vice president South-East Europe, STADA; CEO, Hemofarm Group

PREDRAG LUKIC

general manager Serbia; regional director Montenegro, Macedonia, Bosnia and Herzegovina, Kosovo, Amicus

THEMIS MOUSTAKAS

CEO, Health Watch Swiss AG; general manager, Protonmed

MARTIN KNAPP

managing director, German Chamber of Commerce



points out that “we will not be impacted as much with the patent loss of [cardiovascular drug] Crestor in Serbia in comparison with Europe, because it was never reim-bursed in our country. This because we could not match the generic copies prices, which are very low. Instead we have looked at discounting schemes to ensure the best deal for patients.”

GREASING THE WHEELS: SERVICE PROVIDERS

The historical complexities, regulatory inertia and lack of funding in the Serbian pharma market – while making operations difficult for multinational affil-iates – has also created opportunities for domestic operators able to utilize their local know-how. Amicus is one such example, the company created in 2013 spe-cifically to fully replace multinationals’ subsidiaries in those countries that the multinational chooses

the reimbursement of our inno-vations, we decided to strength-en ourselves in hypertension, our field of expertise in Serbia. With a majority of patients not controlled, we launched new fixed-dose combi-nations in order to simplify the life of patients with products that are highly effective in reducing blood pressure and that provide greater comfort, as patients take fewer pills per day.”

THE PRICE IS RIGHT

In addition to identifying which niches and therapeutic areas to pursue, some companies have embraced inno-vative pricing strategies in order to stay competitive in Serbia. Marija Krstic of GSK - which in 2016 ranked first globally in the Access to Medicine Index for the fifth consecutive year – describes how “Our top priority is to ensure access to innovative medicine to all patients in need. Bearing this in mind - and taking into consid-eration our country’s budget constraints on one side and patients’ unmet needs on the other - we invest our efforts in adjusting the prices of our medicines through our flexible pricing strategy.” This strategy bore fruit when, “in 2016 four new GSK respiratory and HIV drugs were included in the drug reimbursement list … in 2017, two more drugs - respiratory and HIV - were reimbursed by applying the same tailored-pricing strategy.”

AstraZeneca - another British-headquartered company - has embraced the fact that Serbia is not yet part of the EU and therefore not subject to European pricing stand-ards to alter its pricing structures for some of its key products facing loss of patent and the threat of being undercut by generic copies. Ksenija Purkovic gives the example of [asthma or chronic obstructive pulmonary disease (COPD) medication] Symbicort – the company’s number one product both globally and in Serbia – not-ing that, “once the product lost exclusivity, AstraZeneca decided to go with a lower price to stay competitive on the market. This reflects the entrepreneurial element of our company, as we managed to benefit from the fact that we are not part of the EU.” Furthermore, Purkovic

MARIJA KRSTIC

general manager, GSK Serbia & Montenegro

LOGISTICS SERVICE

SALES TOOLS

CONSULTINGSERVICES

PHARMACY IT SOLUTION

[email protected]

www.farmalogist.rs



market by using our sales and mar-keting expertise. For example, we are agents for Roche Diagnostics specifically in their diabetes care programme.” ADOC’s success in this field is succinctly summed up by Markovic: “We’ve managed to develop the business to become one of the market leaders in the areas of diabetes and diagnostics and have been doing so since 2004.”

Another issue for multination-als operating in Serbia is that the engineering solutions they might require for their laboratories and manufacturing facilities have to be provided by international com-panies whose prices may not be commensurate with the size of the

not to enter - or to exit - across the Balkans. With a client list including both BMS and Amgen in Serbia, general manager Predrag Lukic summarizes, “our goal was to design a company that would be able to replace the hole left by MNCs and bridge MNC operations

GORAN DJURIC

managing director, EuroCons Group

NENAD MARKOVIC

company director, ADOC

Distribution and wholesaling services are of crucial im-portance to pharma companies wherever they operate in the world, often with the expectation of international standards of service at locally appropriate price points.

Within Serbia, Farmalogist is one of the major distribu-tion and wholesaling specialists fulfilling this need and already counts AstraZeneca, Boehringer Ingelheim, GSK and Sanofi among others as valued clients. However, such companies do not take the decision to partner with a local distributor lightly. “Companies seeking pre-who-lesale, distribution or logistic services conduct compre-hensive audits within their selection processes. Our faci-lities, operations and procedures – including our IT and warehouse management systems – are subject to com-prehensive quality audits. Pfizer and Sandoz are good examples. After very comprehensive audits of quality systems, we were chosen as the logistic service provider for these companies in Serbia,” asserts the company’s managing director, Silvana Džudžević.

Džudžević notes that MNCs’ business models are chan-ging and, therefore, Farmalogist too must adapt to new realities. She explains that “Until recently, international pharma companies’ main activities in Serbia were marke-ting their products, taking care of their registrations and market authorizations, and having their medical repre-

sentative teams provide information to the healthcare sector about their product portfolio. However, a new trend is for these companies – as a reaction to the pricing situation and cost pressures – to begin to import their products and enhance their own distribution offering. They are loo-king for existing local partners, such as Farmalogist, who can provide lo-gistic support and services and take on the management of distribution.”

As a member of the European As-sociation of Pharmaceutical Whole-salers (GIRP) since 2009, Farmalogist has been engaged with the pharma logistics trends of Europe’s most advan-ced markets; the learnings from which it can then apply in Serbia. As Džudžević sees it, “[GIRP membership] has been a good opportunity for our employees to stay on top of all the trends occurring in other European markets. For instance, our colleagues in the distribution depart-ment can attend workshops on Good Distribution Prac-tice (GDP) and share best practices. Our IT department also follows up all workshop guidelines that we receive from GIRP; meaning that we can better predict both the short- and long-term future of the market in Serbia.”

Farmalogist: The Distributor of Choice

SILVANA DŽUDŽEVIĆ— managing director, Farmalogist

in the Balkans. We, therefore, needed to have a reliable sales and marketing team and to develop all functions of an MNCs – in such a way, we mirror their activities but on a more local scale. In essence, current trends dictate that there is a vast number of innovative com-panies and we look to provide what these innovative enterprises lack.”

Another local agency with a big-ticket client book – theirs including Roche, AstraZeneca, Merck and MSD among others – is ADOC. The company’s direc-tor, Nenad Markovic, explains that “as an agency, we work as a bridge for multinational compa-nies who seek to access the Serbian



non-EU members, EU candidates, and countries that do not yet meet the EU criteria to be a candidate, there are specific dynamics and complexities to be considered here. From the aspect of the pharmaceutical business, this means that, as a regional director, I am managing portfolios with EU approved products, as well as non-EU approved products, which internally is a highly complex process.” Mylan’s Milos Davidovic – whose job covers Serbia, Slovenia, Montenegro and Macedonia – is also keen to emphasize regional differences and the folly of following a single strategy in each country. “I believe all four countries in the West Balkans have to have their own identity and must possess that unique spark. If you combine them and create an overly unified structure, you will lose the best of the country,” he asserts.

Branislav Kotlarik, Ferring’s general manager for the Balkans – whose remit includes Hungary, Romania and

domestic market. Enter EuroCons Group, whose managing direc-tor, Goran Djuric, explains the company’s genesis: “I worked for Hemofarm for 11 years, and during this time I realized that companies similar to Hemofarm who required [engineering and construction] ser-vices had to work with foreign play-ers who were usually from Austria, Germany or Italy. What character-ized those service providers was

European prices which were often too high for our mar-ket. So the idea was to establish a local player in the field that would price itself competitively.”

A REGIONAL HUB

With signs of progress economically, politically and in the regulatory sphere; where then does the future of Serbian healthcare and the life sciences lie? For some indus-try figures, the nation holds the potential to become a hub for the entire region. Logistically speaking, as the French Chamber’s Sanja Ivanic elucidates, “Belgrade is the only metropolitan hub in the Balkans and it also sits on the Danube. Most companies look fondly at its cen-tral location in terms of working with clients in Serbia and the surrounding region – it’s a regional hub with a European feel. In such a way, you have access to 700 million clients in Europe from a strong strategic posi-tion.” AbbVie’s Ljubiša Mitof-Višurski feels that “Serbia, with Belgrade as its capital, has vast potential to become the hub for the region and in some ways, it is already close to such achievement. Corporate taxation policies are particularly attractive for companies wishing to oper-ate from Belgrade.” However, Mitof-Višurski is quick to sound a note of caution: “Concerning legislation, laws, and bylaws, Serbia has to work towards simplifying the regulations and business models, so that external com-panies have easy access to the market and do not have to worry about too much bureaucracy.”

Managing the entire Balkans region from Belgrade – the capital of the former Yugoslavia – is logical but not without difficulties. Mitof-Višurski highlights the fact that “Because this region comprises EU members,

SERBIABOSNIA

KOSOVO

Belgrade

Skopje

Pristina

Sarajevo

Podgorica

Tirana

ALBANIA

MACEDONIA

MONTENEGRO

BU

LGA

RIA

ROMANIA

HUNGARY

CROATIA

SLOVAKIA

GREECE

ITALY

AUSTRIA

BALKANS EU CANDIDATES

Source: The Econimist

EU members

Official candidates

Potential candidates

BRANISLAV KOTLARIK

general manager for the Balkans, Ferring



Bulgaria as well as all of ex-Yugoslavia – also faces an extremely complex task. He describes how “In this market we are facing the huge complexity of managing 12 quite different countries, some of which are in the EU, some of which are not. We have to adjust our strategies to every individual market in order to succeed here. Ferring affiliates in the region have different states of development and different structures. In a few markets we have fully fledged legal entities that handle distribu-tion, whereas in others we only have marketing departments, and in others we operate through co-promotion agreements with distributors. All of the activities engaged in in this cluster must be tailored to the individual markets.”

HOPE ON THE HORIZON?

It is clear that Serbia and its healthcare and life science sphere still face a lot of issues, including sluggish GDP growth, an unfavourable interna-tional reputation, the problems of brain drain, and EU membership postponed until at least 2025. As INOVIA’s Trkulja bemoans, “The fact is that Serbian GDP is low; even a high growth percentage is not going to be enough to catch up with the neighbouring countries.”

However, hope springs eternal, and industry stakeholders have seen a genuine shift in gov-ernment attitudes since 2016. With a greater willingness to find ways to reimburse innovative therapies and a wider international understand-ing of Serbia’s greatest resource – its people – new perspectives on an often-misunderstood nation are emerging. Trkulja optimistically posits that “public debt is on the downward path, unemployment is decreasing, and this is a good signal for the companies looking at Serbia. Many of the big names are already realizing this potential, including Fiat, Swarovski and Bosch amongst others. Expected growth in expendi-ture on healthcare, a better regulatory landscape and positive changes related to EU accession have already started shaping the bright future of Serbia.”

One area in which all stakeholders are in agreement on is the importance of Serbia’s highly-skilled and well-educated work-force. Protonmed’s Themis Moustakas posits that “in this market there is a large pool of educated and highly-skilled peo-ple. There are competent professionals with qualifications and relevant experien-ce. Because of this, Serbia is a powerful recruitment tool.” Ana Grujovic, execu-tive director of the Swiss Chamber of Commerce (SSCC) concurs, noting that “not only is the labor force qualified, English proficient and of course cheaper than Switzerland, but they are often ex-cellent in IT.” Market leader Hemofarm -

although under German ownership - still draws heavily on the Serbian HR pool. As CEO Ronald Seeliger points out: “I am the only foreign passport holder at headquarters, and across the region, it is the locals that manage because the locals have the know-how.”

Nenad Djordjevic, director of Serbian natural product manu-facturer Esensa, is keen to highlight the skills of a new gene-ration of Serbians, which are helping his company expand to regions as diverse as Kazakhstan, Saudi Arabia and Hong Kong. He claims that “In the former Yugoslavia the model of working was quite stale, where all companies were publicly owned. There was a generation who were still working in this way even after the fall of Communism, then a gap, and now this new generation is coming out of the universities – es-pecially in pharmacy which is highly competitive here – and bringing a lot of new and innovative ideas to the table. By taking on the best and brightest of this generation at Esensa we can provide an example to the world of how Serbia can potentially grow.”

In a country with an average monthly salary of EUR 386 and an average pharmaceutical industry salary of EUR 679, this expertise and proficiency comes at an extremely attractive price point for international companies operating in Serbia. However, the other side of this coin is ‘brain drain’ as young, educated Serbs leave the country in search of better pros-pects abroad. Indeed, the World Economic Forum’s Global Competitiveness Report 2017-18 ranks Serbia a lowly 134th out of 137 countries surveyed for ‘country capacity to retain talent’. CCFS’s Ivanic adds that “Serbians are particularly skilled in tech and, unfortunately, tech giants such as Micro-soft often come snooping to try to poach skilled workers.”

Retaining Talent

ANA GRUJOVIC— executive director of the Swiss Chamber of Commerce (SSCC)


MNC BRIDGING SERVICESPredrag Lukic, Amicus

HCLS: Please explain Ami-cus’s operations in Serbia.PREDRAG LUKIC (PL): I accepted the invitation to join Amicus because when we ob-served the current situation in Serbia and across the region, we realized that there are huge op-portunities and gaps in the mar-ket. During the formation of the company, questions we asked

ourselves were ‘what type of company would be best equipped to improve the offering in Serbia?’, ‘how do we approach a territory that is somewhat fragmented?’ and ‘what innovative therapies would suit patients’ needs here?’ In summary, our goal was to design a company that would be able to replace the hole left by MNCs and bridge MNC operations in the Balkans.

We, therefore, needed to have a reliable sales and mar-keting team and to develop all functions of an MNCs – in such a way, we mirror their activities but on a more local scale. In essence, current trends dictate that there is a vast number of innovative companies and we look to provide what these innovative enterprises lack. With the correct structure and using local expertise, we can create a business prosperous enough to catch the eye of big MNCs, which, in turn, creates international part-nerships. When you look at the size of the ex-Yugosla-vian countries – where we seek to establish ourselves

– then you see the potential to grow: there are over 20 million inhabitants and developing economies in each region.

HCLS: How do you intend to further your rela-tionships?PL: Firstly, you must consolidate the existing part-nerships that you manage. Amicus has over 100 em-ployees in Serbia (in three years of operations!), and as such acts as a business hub for the West Balkans. That said, we have representative offices, sales reps and marketing teams in the field in each country so that we can supply hospitals and pharmacies efficiently. With the help of these dedicated and ambitious people, we have managed to build upon existing partnerships and develop and prospect new associates.

Compliance is an essential facet of our organization. We need to put in place the necessary defense and pro-tection to ensure our patients receive the utmost care. Our partners recognize our high-quality regulatory ser-vices, and again this is shown in our sales. Our turno-ver in Serbia this year was EUR 15 million (USD 18 mil-lion), and our total turnover is EUR 40 million (USD 47 million): our target next year is EUR 60 million in existing territories with new products’ portfolios as the main driver of growth.

Healthcare authorities are also more open to explor-ing innovating therapies and solutions, and so we can expect even more promising results next year.

Predrag Lukic, general manager Serbia, and region-al director Montenegro, Macedonia, Bosnia and Herzegovina, Kosovo, of Amicus, a new and excit-ing bridging service for MNCs looking to expand into Serbia and the Balkans, reveals the keys to accessing the region. Through careful study of the market and by understanding the dynamics of the Serbian economy, Amicus has grown exponentially in the past three years

BRIDGE OVER TROUBLED WATER

OUR GOAL WAS TO DESIGN A COMPANY THAT WOULD BE ABLE TO REPLACE THE HOLE LEFT BY MNCS AND BRIDGE MNC OPERATIONS IN THE BALKANS.

Predrag Lukic AMICUS


CSR FOCUSGSK

POSITIVE PARTNERSHIPS

has foregrounded patient-cen-tricity and corporate social responsibility (CSR) in its

corporate culture in recent years. As Marija Krstic, general manager of GSK Serbia and Montenegro, notes, GSK has “challenged the traditional industry model by being the first company to increase transparency around clin-ical trial data, being the first to declare support to patient organizations, and being the first to abolish individual sales targets for medical representatives.” On top of this, GSK has firm-ly committed to ensuring that large patient populations can access its lifesaving medicines and ranks first globally in both the Access to Medicine and Access to Vaccines indexes.

Within Serbia, GSK has committed to a num-ber of CSR initiatives in partnership with both state and civil society actors to aid some of the most vulnerable groups within Serbian socie-ty. Recognizing the vulnerability of the Roma people – one of the poorest and most margin-alized groups in Europe – Krstic explains that GSK has initiated a project called “‘Together for Better Health’ with UNICEF, which aims to improve access to healthcare services, hygiene, nutrition, immunization and early stimulation of children and positive parenting practices in the Roma communities.”

Another group on the margins that GSK’s CSR program targets is the estimated 2,700 adults and children currently living with HIV in Serbia. Although AIDS-related deaths remain low in Serbia at less than 100 per year, the num-ber of people living with HIV and incidence of new HIV infections are, slowly, on this rise, according to UNAIDS. To combat this issue,

Kstic highlights GSK’s ‘Positive Partnership’ program, “which aims to improve the quality of life of people living with HIV through facil-itating multi-sectoral access and assistance to numerous programmes and initiatives in local communities.”

GSK

IN SERBIA, GSK RECOGNIZED THE OPPORTUNITY THAT GLOBAL PARTNERSHIP OFFERS Marija Krstic GSK

A third vulnerable group is refugees. As a result of the arrival of large numbers of peo-ple into southern Europe that accelerated in 2015, there were 7,600 refugees in Serbia in 2017 – including 900 unaccompanied minors – according to the UN refugee agency (UNHCR), mostly living in state-run asylum centres that provide basic necessities. Krstic points out that “In Serbia, GSK recognized the opportu-nity that global partnership offers, establishing local collaboration with Save the Children [the UK-headquartered charity that GSK also part-ners with globally with the goal of saving one million children’s lives – ed.], to support the Serbian government’s efforts during the ref-ugee crisis. Within the partnership a ‘Mother and Baby Corner’ and ‘Children’s Corner’ were established within a refugee center in Belgrade as a safe place that provides support to the most vulnerable people within migrant fami-lies seeking shelter in Serbia.”


REIMBURSEMENT Nebojsa Skuljec, MSD

Nebojsa Skuljec, country lead Serbia and Balkans Emerging Markets at MSD, discusses Serbia’s ap-proach to generics and innovative drugs, highlights the progress that MSD has already made in getting some of its important innovative medicines reim-bursed, and calls for patience in waiting for medical breakthroughs to come to Serbia.

WAITING FOR THE FLOODGATES TO OPEN

HCLS: What is the current state of Serbia’s ap-proach to generics and innovative drugs? NEBOJSA SKULJEC (NS): We are aware that Serbia’s healthcare spending per capita is the lowest in the region, despite the fact that Serbia benefits from a relatively large healthcare budget, and the ratio be-tween innovative and generic products is less favorable to MSD.

We at MSD believe that the government may consider recognizing the need to invest more in innovative med-icines. For every product that we submit for reimburse-ment, there are strict rules to follow and the process is time-consuming. Despite this, there is clear evidence that the innovative medicine will benefit all parties; for example, the patient will live longer and enjoy a bet-ter quality of life, the government sees less long-term expense and the budget for pharma medicines is well distributed. There have, of course, been some improve-ments, for example in the reimbursement of 23 drugs last year – a phenomenal success – nonetheless, we have 200 products in our pipeline awaiting consideration. We hope the floodgates will open shortly, and we look forward to seeing the government’s next steps in this

matter. In the meantime, we will endeavor to anticipate the state’s movements to improve our reactiveness to regulatory decisions.

HCLS: Where would you like to lead MSD Ser-bia over the next five years? NS: The end goal is to make all of our products available to all the patients that need them. Bearing in mind our current portfolio, we are already on the way, and we take great pride in our achievements. Indeed, I would avoid, where possible, measuring our success in euros or percentage market share, but instead, focus on lives saved and improved.

We need to be persistent, positive and engage with our belief that this is a manageable aspiration. Sometimes you wake up, and you hear of the leaps for-ward in medicinal progress in countries like France, Germany or Slovenia and you feel a certain desper-ation about not being able to follow the same pace. I overcome this by reminding my team – and myself – to be patient; these successes will come and we will be proud in the same way that other more developed countries are proud.

Ultimately, we all have friends or relatives who need the medicines that we manage in our portfolio at MSD and seeing this benefit first-hand and know-ing that we will continue to provide high-quality healthcare services in the future is a powerful source of motivation.

Nebojsa Skuljec MSD


NATURAL PRODUCTS AND SUPPLEMENTSGrowth Spots

RAYS OF LIGHT

In a market environment that, up until recently, has been severely difficult for producers of chemical pharmaceutical products to operate in, three enterprising Serbian companies – Pharmanova, INNventa and Esensa - have found success by stepping up their offering in dietary and other health supplements, as well as cosmetics and simple medical devices.

leksandra Miric, director of Pharmanova, describes how her company – focused on the dietary supplement, OTC drug and medical device market – has “developed from a modest galenic laboratory to a modern production facility in Obrenovac which was designed, built and maintained in accordance with strict

European standards, i.e. Good Manufacturing Practice guidelines. Since 2008, our production has been conducted in a plant we consider to be one of the showcase facilities of Serbia’s pharmaceutical industry.” Miric points out that the “dietary supplements, OTC drug and medical device markets, where Pharmanova conducts its activities, are still growing, and domestic manufacturers have a chance to be important stakeholders in these areas.” Serbia’s manufacturing footprint in these niches is also drawing internation-al attention. Miric notes that “We are very proud when we manage to raise the interest of partners from developed European markets for our products or when we draw them to manufacture their brands here. We promote our-selves as a capable partner, not just as a cheap manufacturing base.”

A

WE PROMOTE OURSELVES AS A CAPABLE PARTNER, NOT JUST AS A CHEAP MANUFACTURING BASE

Esensa, another ‘made in Serbia’ success story which grew by 30 percent in 2016-17 and plans to grow by 50 percent in 2017-18, has rapidly expand-ed its wide ranging-product offering of medical devices, food supplements, cosmetics and general use products abroad in the last two years. Director Nenad Djordjevic sees that “Having a 200-strong product portfolio has actu-ally been a big help in [internationalization]. Every country is shaped by its regulatory standards, so we decided to find out which global markets were suited for the product documentation that we were already in possession of. That is how we discovered that many of our cosmetics could freely be export-ed to Hong Kong without additional documentation, as it has comparatively low import barriers.” However, Esensa is not limiting itself to these easily accessible markets. Djordjevic asserts that “Azerbaijan and Kazakhstan, on

Aleksandra Miric Pharmanova


NATURAL PRODUCTS AND SUPPLEMENTSGrowth Spots

the other hand, have very restrictive regulations. The Kazakh Ministry of Health came and inspected our facility in Belgrade fully in order to obtain a permit. We have short-term plans for the countries for which we already have full documentation ready and long-term plans for the Middle East, Africa, and other complicated markets where it takes over two years to register a product. Generally, it takes around 18 months to register the production site and eight months per product.”

The third player in the triumvirate is INNventa Pharm, a young Serbian com-pany formed in 2008 which represents and distributes medicines from some of the world’s largest pharma companies as well as produces its own dietary products and medical devices, with the primary focus on prevention ther-apy. General manager Goran Orlic proudly exclaims that “We recorded 79 percent growth in 2017, and we intend to better that in 2018; current fore-casts indicate we will double revenues in 2018, counting both our own brand and tender businesses.” Orlic highlights the company’s focus as “bringing inventions to the market … this might mean trying out different business solutions, specific dosage forms, or re-introducing old products to the mar-ket if needed.”

Additionally, the fact that some of INNventa’s products are ‘natural’ and non-chemical has not been a barrier to innovation and meeting unmet medi-cal need, as in the case of the company’s UrolitINN product. Orlic elucidates: “UrolitINN is the result of combining the words urolithiasis and INNventa. It consists of eight natural herbs that enable the elimination of stone and sands from the urinary tract. This is extracted from natural products of herb-al origin; therefore, there are no chemical agents present. There is no other product in the same field, so we have significantly grown in this particular segment and overachieved the goals we have set for it. No other medicine on the market helps in prevention, and it is incredibly beneficial in kidney crisis management.”

EVERY COUNTRY IS SHAPED BY ITS REGULATORY STANDARDS, SO WE DECIDED TO FIND OUT WHICH GLOBAL MARKETS WERE SUITED FOR THE PRODUCT DOCUMENTATION THAT WE WERE ALREADY IN POSSESSION OF

Nenad Djordjevic Esensa

WE RECORDED 79 PERCENT GROWTH IN 2017, AND WE INTEND TO BETTER THAT IN 2018 Goran Orlic INNventa Pharm

BIOTEC HAS NAVIGATED THROUGH TURBULENT TIMES IN SERBIA FROM THE 90S TO OUR CURRENT STAGE WHERE THE ENVIRONMENT IS GEARED TO GROWTH


MEDTECHBIOTEC International

in Profile

NAVIGATING TURBULENT TIMES

ordana Juran-Zdravkovic, BIOTEC International’s founder and managing director, explains that “BIOTEC has over 25 years of business expertise and one of its unique features is the portfolio of world-wide companies [including Snibe, Celonova, Teleflex Rusch and Alfa Wassermann – ed.] which we represent. We cover different

areas of innovative new technologies, which are proven on the global scale but which in Serbia are under development. BIOTEC brings innovations to the Serbian healthcare system.”

Zdravkovic acknowledges that the company’s journey to its current posi-tioning has not been plain sailing: “BIOTEC has navigated through turbulent times in Serbia from the 90s to our current stage where the environment is geared to growth. From our pioneering beginnings where we immediately rep-resented the biggest medical companies in Serbia, we now work in represent-ing and placing sophisticated diagnostic equipment, laser surgery equipment, equipment for vaccine production, intervention cardiology device, and medical devices and materials for operating theaters.”

These turbulent times appear to be largely a thing of the past for BIOTEC, with Zdravkovic noting a sea change in government attitudes toward medtech innovations: “This year we have managed to finalize most of our big activities and investments in introducing innovative technology to key opinion leaders. We have managed to get very positive feedback from the market, where launch-ing new technologies is very difficult. The reason for that is certainly the strong orientation of our government and Ministry of Health who are trying to bring new visions and strategies of developing the healthcare sector for the next five years and, from this perspective, approach the standards of EU countries.”

Looking towards the future, Zdravkovic sees her company and industry as emblematic of a change she would like to see across society, optimistically con-cluding that “We need to leave to our children a powerful legacy of an organ-ized, clean and honest country and the medical sector is a great place to start this. Profit is not the end goal; this should be patient care - approached honest-ly. It is best to take the habits and traits that make you good in life and bring them to business models.”

G

In parallel to the pharmaceutical industry’s struggles to bring latest-gen-eration therapies to Serbia; international medical device players have also struggled to make much of an impact of what was until recently a very innovation-resistant market. Within this context, BIOTEC Interna-tional, a Serbian outfit with over 27 years of experience of the domestic market, has partnered with some of medtech’s biggest and most innova-tive players to ensure that the Serbian healthcare system has access to technologically advanced and often vital medical technology.

GordanaJuran-Zdravkovic

BIOTEC International


HEALTH AND NUTRITIONYana Mikhailova, Nestlé

YOU ARE WHAT YOU EAT

HCLS: As a nutrition and health food company, what is your potential added value when it comes to prevention of disease? YANA MIKHAILOVA (YM): Our purpose is to enhance quality of life and contribute to a healthier future. We help individuals and families live healthier and happier lives by providing food of excellent quality, bearing in mind that nutrition plays an essential role in life. The power of food and its impact on our health is crucial - therefore, being a leader in the food industry creates an obligation to explain to consumers how nu-trition impacts the body and what the comprehensive ingredients information on the packaging of our prod-ucts mean. We get to grips with and demonstrate the nutritional value of what we eat, but as well we educate and explain how nutrition affects the development of people and their overall physical condition.

Our aim is to raise awareness of the connection between nutrition and health, whether it concerns obe-sity or malnutrition. To tackle problems like these, you need to develop a deep understanding of the subject. Nestlé is certainly well-versed in improving people’s lives through food, but also through knowledge about good nutrition and ingredients.

HCLS: How does Nestlé establish a shared value through health and nutrition?

YM: Creating shared value is a fundamental guiding principle for how Nestlé does business. Our positive impact on society focuses on enabling healthier and happier lives for individuals and families, on helping the development of thriving and resilient communities and finally, on stewarding the planet’s natural resourc-es for future generations, with particular care for water.

Our policy is that there is always more we can do, and I believe that everything starts with the products. As experts in food processing, we understand how food and its nutrients affect the body, which is why we are constantly searching for ways to enrich our products. The labels on the packages of each of our products have comprehensive information about all ingredi-ents, and by this Nestlé ensures that this information is unambiguous, simple and easy to understand. For Nestlé, it is essential that consumers are well-informed of what is in their food. Precisely this is at the core of our Kitchen Cupboard approach – we are using famil-iar ingredients that individuals and families know well and love, and which could be found in homes around the world.

Research confirms that Serbians are very health-con-scious, because this topic always features in the top three concerns of people in the country; it might change positions, but it always remains among the most important, along with job security and the eco-nomic situation. Therefore, we enhance our products so that all the necessary proteins, fibers, wholegrain cereals and vitamins are present, while at the same time reducing the ingredients which should be decreased – such as salt and sugar content.

Yana Mikhailova, CEO of Nestlé South East European market – Adriatic region, Bulgaria and Romania, dis-cusses the connection between nutrition and health, nature of her work in 2018, the power of food and the importance of good nutrition and physical activity.

Yana Mikhailova NESTLÉ


HEALTH AND NUTRITIONYana Mikhailova, Nestlé

In fact, excessive salt intake might provide certain risks for health. Although salt is an important ingre-dient and the most used taste enhancer, quantities should always be well observed. Our primary goal is, therefore, to fulfill consumer preferences and expecta-tions while informing them of the nutrients they are consuming.

In line with this, the Nestlé Healthy Kids project cre-ates shared value, because we know that educating chil-dren on forming healthy habits at an early age leads to longer and healthier lives. In seven years since it began, 59,000 kids in the Adriatic region, out of which over 25,000 were from schools across Serbia participated in this program, where they were taught about the impor-tance of a balanced diet and healthy hydration with an active lifestyle i.e. regular physical activity. The idea was to focus on ‘why’ are these topics so important, so that children understand that good habits lead to a good life. This project has also been implemented in Croatia and Bosnia and Herzegovina and is the largest project of this kind in this part of Europe.

Furthermore, Nestlé has committed to remove at least 18,000 tons of sugar from the products it sells in Europe by 2020.

HCLS: How far can a company such as Nestlé help to combat chronic illnesses, especially that of cardiovascular disease and diabetes, in Serbia? YM: I think that companies should focus on the areas of their competences. For Nestlé, this means pro-viding good, high-quality products and using the in-gredients our consumers know and love. For example,

when we are developing the recipe for a soup, we take great care in ensuring that the exact levels of ingredi-ents are well chosen, balanced and labeled. We always work on promoting an active lifestyle, as - although everything starts with our products – i.e. food – we still need to encourage people to move and be active.

In this region, that means providing recipes and pre-cise information about the nutrition value of meals. Across the Adriatic region home cooking is a cherished part of everyday life, and most families eat together and enjoy a home-prepared meal. Interestingly, it is not nec-essarily significantly healthier than eating out, because people are not aware that salt is not good in large quan-tities and can lead to cardiovascular problems; in fact, there is a direct link between large quantities of salt and heart problems.

HCLS: Nestlé Adriatic covers several countries from Serbia to Slovenia, what persuaded you to set up one of the main offices in Belgrade?YM: Out of 22 million consumers in the Adriatic, seven million live and work in Serbia. Logistically, Belgrade is a good location because it is very well con-nected to each city, whether by car, plane or train. However, we should not get lost in the detail of a ‘Head Office’, as this culture belongs to the business practices of the past decade. For me, a Head Office is a concept – wherever I go with my laptop and have access to the exceptional minds in Nestlé, we can work productively.

The key is to look for the synergies between coun-tries. The region is fragmented and requires a holis-tic approach in order for it to be efficiently managed. Belgrade is convenient, especially because of the diverse nature of the region, in which every country is unique. We must, therefore, look for similarities in the area, such as the relationship with food within homes: across the region, we realize that similar cultures and nutrition behaviours are common and respected in the field of home-cooking meals and ingredients usage.

FOR ME, A HEAD OFFICE IS A CONCEPT – WHEREVER I GO WITH MY LAPTOP AND HAVE ACCESS TO THE EXCEPTIONAL MINDS IN NESTLÉ, WE CAN WORK PRODUCTIVELY.


TRANSPARENCYThemis Moustakas, Health Watch Swiss AG; Protonmed

CEO of Health Watch Swiss and general manager at Protonmed Serbia, Themis Moustakas has built a quality company thanks to Swiss practices and an entre-preneurial spirit over the last four years. Moustakas discusses how Serbia can better align with EU standards and introduces a few of the company’s milestones.

DEVELOPED MARKET STANDARDS

HCLS: How much of a problem is the informal, untaxed ‘grey economy’ in Serbia and what im-provements have you seen in this regard since estab-lishing a footprint in the Balkans?THEMIS MOUSTAKAS (TM): To be frank, Serbia is already doing a huge amount to counteract the grey economy’s harmful impact. Even over the past cou-ple of years, we’ve seen a tremendous improvement in business transparency, both regarding corruption and ease. The government is very pro-investment, pro-busi-ness and subsidizes manufacturing labor forces. The labor environment’s legislation is quite flexible and very pro-business, so the fundamental aspects of developing business-friendly practices exist.

Of course, there is still some way to come, and I think there is only so much that the government can do. Responsibility also lies with us to do what is necessary to bring our business activities to a level of soundness that is required to be part of the EU. In fact, this is a collec-tive responsibility shared by every stakeholder, in doing the right thing to support a more transparent economy.

HCLS: Please introduce Health Watch Swiss and Protonmed and the milestones in your journey into the Balkans.TM: Health Watch Swiss is a branded company based in the canton of Zug which deals with marketing, regis-tration, and sales of prescription medicines into South East Europe: this is our primary geographical focus. We have a well-developed network here, differentiated from market to market across 13 countries.

The most significant moment in the history of the company is the establishment of Protonmed. Protonmed is the highest achieving, most profitable and strongest facet of our business operation in the Balkans. Since 2013 we have successfully become the market leaders in

the country through the introduction of therapies that previously were not available in the Serbian pharmaceu-tical market. Curiously, despite trading in generic prod-ucts, we often play the role of the innovator, and this is because we have presented the first product within each category to be launched.

Secondly, Health Watch Swiss Albania (set up in 2016) is another important milestone. It is the latest development and complements the program we have just started in Bosnia and Herzegovina. This is the first year that we have won two successive state tenders for nephrology and have managed to build upon our oph-thalmic portfolio. We expect to bring new ophthalmic products to the market in 2018.

HCLS: During this transformation from a small company to a multi-million-euro business, how have you kept your unique spirit? TM: We try to combine the principles of a Swiss or-ganization and bring them to a region that has histori-cally been multi-cultural, multi-faith, diverse and some-what politically-sensitive. By virtue of these ‘Swiss watch’ principles, we can successfully navigate and manage the region, employing the standards, methodologies, and regulations that typically pertain to Western Europe. It can come across a little awkward approaching the area in this way – but although challenging at first, we have successfully established a different pathway.

WE TRY TO COMBINE THE PRINCIPLES OF A SWISS ORGANIZATION AND BRING THEM TO A REGION THAT HAS HISTORICALLY BEEN MULTI-CULTURAL, MULTI-FAITH, DIVERSE AND SOMEWHAT POLITICALLY-SENSITIVE.

ThemisMoustakas

PRONTONMED

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Photo © cover: World Expo 2010 - Serbia Pavillion | Photo © page 2: Beogradski Mostovi. Flickr: mcveja | Photo © page 5: Milovan De Stil Marković - Lik i lice | Photo © page 12-13: Serbia Pavilion. Image © Andrea Avezzù, Courtesy of la Biennale di Venezia | Photo © page 14-15: Miriam León | Photo © page 16-17: Parliamen Flickr: Lauras Eye | Photo © page 21: Olga Jančić | Photo © page 32: Belgrade. Pixabay. Public domain | Photo © page 33: Milovan De Stil Marković | Photo © page 34: Carla Verdera Mateu | Photo © page 35-36: Shutterstock. | Photo © page 37: Belgrade night map | Photo © page 38-39: Freepik.com

AbbVie 22, 30

Acb 4

ADOC 15, 29

American Chamber of Commerce in Serbia (AmCham) 22, 24

Amicus 26, 27, 28, 32

AstraZeneca 4, 16, 22, 23, 25, 28, 29

BIOTEC 25, 37

Esensa 15, 31, 35, 36

EuroCons Group 29, 30

Farmalogist 28, 29

Ferring 4, 30, 31

French Chamber of Commerce in Serbia (CCFS) 2, 14, 22, 24, 30

Galenika 27

Genezis 14

German Chamber of Commerce (AHK) 2, 27

GSK 16, 22, 28, 29, 33

Hemofarm 2, 4, 18, 27, 30, 31

INNventa 2, 19, 35, 36

INOVIA 2, 4, 5, 12, 13, 14, 22, 24, 26, 31

MSD 23, 25, 26, 29, 34

Mylan 25, 26, 30

Nestlé 38, 39

Novartis 4, 16, 17, 20, 23, 25, 26

Pharmanova 35

Protonmed 14, 26, 27, 31, 40

Serbian Society of Toxicology 2

Servier 4, 22, 23, 25, 27

Swiss-Serbian Chamber of Commerce (SSCC) 2, 31

World Bank 5, 21, 24

Wörwag 25



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