Pharmaceutical industry

Kazakhstan has several pharmaceutical plants including Santo in Shymkent, Karaganda Pharmaceutical Plant, Almaty Pharmaceutical Plant nd etc. However the local production does not cover the state demand for pharmaceutical products. Thus in January – October of 2009 87.4% of drugs were imported while the local production was 12.6% only. Import of pharmaceutical products for the same period was 89.6%, while the local production 10.4% out of 100. In January – December of 2009 Germany was the main import source of the given products with a share in Kazakhstani import of pharmaceuticals 17.1%. Next came France with 10.1% out of 100, Russian Federation with 8.4%, Austria 7.4% and India 5.6%. Total Kazakhstani import of pharmaceutical products for January – December of 2009 was 759 625.4 mln USD.

For the development of pharmaceutical industry and in order to increase of competitiveness and sustainability of local producers Kazakhstan created SK-Pharma. One of the prerogatives of SK-Pharma is to organize state purchases of pharmaceutical products and some services in the framework of guarantee capacity of free medicare through public tenders. The tenders are opened for participation for local well as foreign producers/suppliers, however the local produces have a preferably.

Social Factor Influencing Pharmaceuticals Industries Of Kazakhstan:

Pharmaceuticals industries in Social pharmacy and medicines policy focuses on the economic and social factors influencing drug utilization, production as well as manufacturing and the drug market. This includes medicines policy, the risk management of counterfeit medications and investigating unused medications. Methods that can be used within pharmacy education are a main goal.

Government is continuously trying to increase various types of facilities for Heath care, State Programmed of Health Development. Every district in the country has a hospital, and medical care is free; patients only pay for drugs and specialized tests and care.

Governments create Concept of Health Care Reform called for the following reforms are establishment of a health insurance scheme, decentralization of administration, and priority for primary health care.

The government owns 80 % of medical institutions in Kazakhstan, thus the government plays a significant role in medical issues.

The Salamatty Kazakhstan State Programmed of Health Development for 2011 - 2015 has set the goals are Changing to low-cost forms of medical care ,Increasing availability and quality of care, Expanding social services, improving the training of Employees, Adapting methods to modern requirements .

Technological Factor Influencing Pharmaceuticals Industries Of Kazakhstan:

In Kazakhstan There are some hospitals where it is possible to get good health care, but many more are in poor repair, without heat or electricity, lacking basic drugs and medical supplies, and staffed by under qualified and severely underpaid doctors and nurses.

Advanced Technology and automated machines have increased the output and reduced the cost medicines.

Doctors are still trained under the Soviet system of specialties, with very few general practitioners. Doctors also rely heavily on symptomatic diagnosis, as they do not have access to the latest machines and testing devices; often simple blood tests cannot be done. Nevertheless, doctors are trusted and respected.

Computerization has increased the efficiency of the Pharma Industry. The huge unemployment in Kazakhstan prevents industries from going fully automatic

as the Government as well as the Labor Unions voice complains against such establishments.

Economic Factor Influencing Pharmaceuticals Industries Of Kazakhstan:

The Pharmaceutical Industry in Kazakhstan is the fastest growing sector of the economy. Medicines are produced domestically in Kazakhstan there are total 5 major companies

which are major supplier of medicines. The five companies are Khimpharm, Global Pharm, Nobel AFF, Romat and Karaganda. Foreign Investment in Kazakhstan’s pharmaceuticals industry is growing. Foreign

pharmaceutical companies have invested at least $100 million in it over the past two years. Foreign investors have bought several factories to modernize and expand them.

Government is continuously trying to increase various types of facilities which can be helpful to pharma companies in order to expand the provision of material and technical equipment.

The Salamatty Kazakhstan State Programme of Health Development for 2011 - 2015 has set the goals of:

Changing to low-cost forms of medical care Providing preventative industry Increasing availability and quality of care Expanding social services improving the training of Employees

Adapting methods to modern requirements Introducing market mechanisms.

Kazakh Government Maintains Ambitious Plans for Pharma Sector Development As Hospital Market Grows 53%

With increasing medicine consumption and growing expectations from its citizens, the Kazakh government is seeking to reduce the costs it will face by boosting domestic production; this is borne out by the figures for the hospital market in the first half, which show a major increase in the consumption of more expensive medicines in particular.

Imports of medicines into Kazakhstan are worth around 142 billion tenge (USD939.427 million) which is 86% of total market share.

In its drive to increase the share of the market controlled by the domestic industry, however, the Kazakh government is investing considerable sums in various projects to boost capacity.

Six projects were launched in 2010, while in total, some 12 projects worth 27.7 billion are planned, including projects involving the production of oncology, diabetes and cardiovascular medicines.

The biggest-selling medicine in the Kazakhstan hospital market remained cancer agent Taxotere (docetaxel; Sanofi, France), sales of which grew 46%, while in second place was Roche's oncology drug Herceptin (trastuzumab), with sales at 2.7 times. In third place was anaemia drug Eprex (epoetin alpha; Janssen Cilag), sales of which grew 3.2 times.

Environmental Factor Influencing Pharmaceuticals Industries Of Kazakhstan:

Kazakhstan inherited significant environmental concerns related to past military nuclear testing programs, industrial and mining activities, as well as land degradation, desertification, and water scarcity problems. Air and water pollution are a significant environmental concern in Kazakhstan. Environmental monitoring systems are not adequately funded to reflect the current pollution load on the environment. The Government has made progress in environmental management, but significant challenges remain.

Air pollution in Kazakhstan is another significant environmental problem. Acid rain damages the environment within the country and also affects neighboring countries. In 1992 Kazakhstan had the world's 14th highest level of industrial carbon dioxide emissions, which totaled 297.9 million metric tons, a per capita level of 17.48 metric tons. In 1996, the total had dropped to 173.8 million metric tons. Pollution from industrial and agricultural sources has also damaged the nation's water supply. UN sources report that, in some cases, contamination of rivers by

industrial metals is 160 to 800 times beyond acceptable levels. Pollution of the Caspian Sea is also a problem.

Kazakhstan faces several important environmental issues. As the site of the former Soviet Union's nuclear testing programs, areas of the nation have been exposed to high levels of nuclear radiation, and there is significant radioactive pollution. The nation also has 30 uranium mines, which add to the problem of uncontrolled release of radioactivity. Kazakhstan has sought international support to convince China to stop testing atomic bombs near its territory, because of the dangerous fallout.

Most of Kazakhstan’s water supply has been polluted by industrial and agricultural runoff and, in some places, radioactivity. The Aral Sea, which is shared with Uzbekistan, has shrunk to three separate bodies of water because of water drawdowns in its tributary rivers. A Soviet-era biological weapons site is a threat because it is located on a former island in the Aral Sea that is now connected with the mainland. The reduction in the Aral Sea’s water surface has exacerbated regional climatic extremes, and agricultural soil has been damaged by salt deposits and eroded by wind. Desertification has eliminated substantial tracts of agricultural land. Plants in industrial centers lack controls on effluents into the air and water. The Semey region in the northeast has long-term radiation contamination from Soviet-era weapons testing. The Ministry of Environmental Protection is underfunded and given low priority. Some new environmental regulation of the oil industry began in 2003, but new oil operations on Kazakhstan’s Caspian coast add to that sea’s already grave pollution. International programs to save the Aral and Caspian seas have not received meaningful cooperation from Kazakhstan or other member nations.

Political Factor Influencing Pharmaceutical industries of Kazakhstan

Despite the fact that the market for drugs of Kazakhstan (RK) represented 90% of imported drugs, the proportion of pharmaceutical production in Kazakhstan is growing over time. At the present time in Kazakhstan there are 115 entities that are licensed to manufacture drugs, the range of more than 760 titles.

The work of pharmaceutical companies focused on the concept of social-ethical marketing, the main condition of which is not only to ensure the long-term prosperity of the enterprise itself, but society as a whole. In the Government Programmer "Adaptation of certain sectors of the

economy during the transition period in Kazakhstan accession to the WTO," three groups in terms of production of medicines.

The first group includes the Joint Stock Company (JSC) "Him farm", released in 2005 to 18 million dollars of drugs. United States (about 45% of Kazakhstan's pharmaceutical products.) Operational decisions in the management of the pharmaceutical industry based on marketing analysis of the situation of affairs, and also short-term trends.

In this regard, the development of methodological approaches to organizing production and marketing of domestic pharmaceuticals in Kazakhstan is an urgent and very necessary in today's socio-economic conditions.

Governmental support

Long-term Government purchase of medicaments selling by national manufacturers of pharmaceutical products will be organized with only one distributor - "CC pharmacy "Samruk-Kazyna” LLP that will partially settle the issues of sale in the present field. Share of government purchases in the structure of internal market of pharmaceutical products will increase up to 45-50 %. Long-term contracts on Government purchases will be offered to enterprises with obligatory condition of investments in production modernization and productivity improvement.

Government Contribution

The Kazakhstani government will drive much of the market's development in coming years, in contrast with previous years, when out-of-pocket spending was the primary driver. The Ministry of Health said that it was putting forward a healthcare plan and would spend US$3.2bn between 2011 and 2015 as part of its ongoing 'single healthcare system' project, which is aimed at undoing the decentralisation of the previous two decades. In summer 2010, the government adopted the Pharmaceutical Industrial Development Programme for 2010-

2014, which provides loans and other incentives for privately-owned producers to open new production lines and facilities as well as attract foreign investors.

Underlying risks persist however. Just weeks after unveiling his ministry's spending plans, Health Minister Zhaksylyk Doskaliev was arrested in September 2010 on what were reported to be corruption charges. Though Doskaliev's ministry has not been directly involved in the Pharmaceutical Industrial Development Programme, which is managed by the Ministry of Innovation and New Technologies (formerly the Ministry of Industry and Trade), the episode underlines the prevalence of high-level corruption as well as the Ministry of Health's ongoing problems with leadership. The ministry is meant to play a major role in harmonising pharmaceutical regulations with Russia and Belarus as part of the Customs Union created in 2010, as well as aiming to reduce waiting times for medicines approval and finalising national Good Manufacturing Practice (GMP) standards.

Technical Regulations implementation

International GMP standards "Appropriate manufacturing practice" and European medical standards on production and operation of medical equipment in accordance with quality standard ISO 13485 will be implemented in big and middle-sized enterprises of pharmaceutical and medical industry of the Republic to the end of 2014.

Legal Factor Influencing Pharmaceuticals Industries Of Kazakhstan :

NPT | The Community of Big Thinkers “The next decade will see Kazakhstan become a success story in the pharmaceutical industry”. The National Welfare Fund, which controls all state critical assets, established SK Pharmaceuticals LLP in 2008 as the sole national distributor of medicine and medical devices. They establish long-term agreements with a 7-year purchase guarantee, direct purchase agreements with foreign producers, support the industry by searching potential local and foreign investors, and monitor Chimpharm JSC - the biggest local drug manufacturer within SPAIID. The government purchases and then provides medicinal drugs, devices, equipment and services to citizens free of charge within the framework of Guaranteed Volume of Free Medical Aid (GVFMA).

This support is given in the following areas: HIV, respiratory illnesses, newborn and maternal health, prevention and treatment of hepatitis B and C, oncology, tuberculosis, cardiology and gastroenterology.

June 2012 multi-industry - Kazakhstan Pharma Market: Kazakhification?

How to prepare for SK Tender:

Review the official tender list to ensure your products match dosage and form definitions

Ensure the maximum ceiling prices are suitable for your company Know your competitors and consider their minimum bidding price Research local manufacturers for your products If you have the only representative office, consult with your distributor Confirm that your distributor will attach the tender to your product Confirm final delivery price, terms and time Ensure you can provide the delivery on time, as required by SK Ensure you have a person/department dedicated to the SK Tender

Follow SK announcements and press releases How is the Regional Outpatient Tender made?

The SK Tender closes by September each year, and by mid-November the MoH announces the regional Outpatient Tender within the framework of GVFMA to supply medicinal drugs to regions and cities.

The drug list with maximum ceiling prices, product, dosages and forms is published with the following specifications:

The collection of orders with INN from hospitals by the Oblast and city healthcare departments around mid- September

The announcement of the tender list by MoH with product ceiling prices

Determination of drugs listed with quantities, dosages, and forms by regional authorities Bidding by the suppliers is completed from December - February Declaration of the winners by each regional authority, individually and independently.

Tens of millions of dollars can be made every year submitting tender with one or two products in a market with an estimated projected size of USD$2.5 billion in 2015.

How to avoid complications and create a sustainable business model for Kazakhstan Product Portfolio Management:

Assess your company’s strengths Analyze the market with the government’s reimbursement programs Determine profitable therapeutic areas and plan your 5- or 10-year forecast, analysis of

competitors, market dynamics, branding, positioning, and pricing Make sure that you have at least 3 or 5 products in each therapeutic area Consult with product experts, discuss the viability of the product with your distributor *

Important Note: avoid copy-&-paste style product portfolio management from your global HQ. Customize for Kazakhstan.

Regulatory affairs and registration: Due to the Eurasian Custom Union between Russian, Belarus, and Kazakhstan and the adaptation of European & American pharmacopeia in Kazakhstan, the ever-changing rules of product registration creates synergy between regulatory departments in ex- Soviet Union countries.

Review existing rules, regulations, and registration procedures Check your dossiers against all registration rules Beware of patent protection and trademark issues Be careful about the full description, dosage and form of your product in MA issued by

the MoH Pay attention to the fact that MAs are issued for 5 years, and once expired you can’t

import into Kazakhstan - re- registration takes 12 to 18 months FAMM: register a product that is only sold in the SK Tender from a local supplier

Conclusion Without considerable efforts, resources and commitment, success in the Kazakhstan’s pharmaceutical market is a challenge.

Kazakhstan is positioned for growth and the healthcare industry has seen significant change over recent years. The next decade will see Kazakhstan become a success story in the pharmaceutical industry. The market is destined to grow, so don’t miss out!

Mr. Seref Tasdemir is the chief pharma consultant at Ironstone Castle Ltd in Kazakhstan.

They provide a range of services including:

registration, market access, portfolio management, acquisition & merger, market analysis, toll manufacturing at GMP sites, product forecasting, business development & licensing for local and international pharmaceutical companies.

Ethical Factors Factor Influencing Pharmaceuticals Industries Of Kazakhstan :

Healthcare in the Kazakhstan is highly regulated. Fundamentally, the laws and regulations governing drug development, approval,

labeling, promotion and pricing exist to safeguard patient safety and privacy and optimize patient healthcare outcomes, as well as to protect government programs and third-party insurers that reimburse for or purchase prescription drugs.

Compliance is not just about rules and laws. Compliance encourages ethical behavior, fosters the right values and instills a culture of integrity.

Compliance empowers the Company to operate within the laws, rules, and policies that regulate the pharmaceutical industry.

Operating in compliance protects the Company, employees, Third Parties, shareholders, patients and the valuable products the Company offers to its customers. Preventing, identifying and correcting non-compliance is fundamental to the Company.

Not every employee is expected to be an expert in federal and state healthcare laws and regulations, but all Employees should understand and be guided by the principles these rules seek to advance. The standards and resources of the Company’s compliance and ethics program are intended to advance these principles and to provide employees with support in performing their job responsibilities.